Collateral analysis
Collateral analysis is the analysis of the ability of collateral to support a loan and the collateral proceeds to satisfy any remaining loan obligations. With the Titanium release, the Collateral Analysis page is introduced in Q2 Origination to provide an overall collateral analysis on the loan application by considering all the collaterals associated with the application and all existing loans associated with the collaterals in the application.
The Collateral Analysis page displays all the collaterals associated with the application and their prior liens (if any).
On this page, Advance Value, Appraised Value, Superior Liens, LTV, Available Value, and Collateral Coverage are calculated based on the Value of the collateral, Advance Rate, and Prior Liens (if any) whenever the collateral is added/updated/deleted. If the collateral type is All Business Assets, a breakup of all the business assets (Equipment, Inventory, Account Receivables) is considered for Advance Value, Appraised Value, Superior Liens, LTV, Available Value, and Collateral Coverage calculation.
Prerequisites
Before you proceed to view the collateral analysis summary, ensure that the following prerequisites are met:
Advance Rate needs to be configured per collateral type.
The Itemized Collateral Value checkbox is set to true for collateral type "All Business Assets".
Steps
To view the collateral analysis summary:
Log in to your Salesforce account.
Go to
(App Launcher) > Applications.
On the Applications tab, and from the list of applications, select the required application.
The loan dashboard is displayed.
Go to More > Collateral Analysis.
This page displays all the collaterals associated with the application and their prior liens (if any).
Field Name Description Loan Amount Amount requested for borrowing while creating the application. Collateral Analysis Collateral Name Name of the collateral specified while adding it. Collateral Type Name Type of collateral associated with the collateral such as Aircraft, 1-4 Family. Valuation Type Type of valuation method specified for the latest valuation record of the collateral, such as Appraisal, Book Value. Valuation Date The date associated with the latest valuation record of the collateral. The default value is the system date. Value Value of the collateral associated with the latest valuation record of the collateral. Advance Rate Advance rate of the collateral specified for the collateral type.
An advance rate is the percentage amount of the value of the collateral that a lender is willing to extend as a loan. This value can be modified by the Loan officer on the Collateral page.
Advance Value The advance value of the collateral is calculated as Advance Rate * Latest Collateral Value.
Prior Liens Collateral Name Name of the collateral specified while adding it. Collateral Type Name Type of collateral associated with the collateral such as Aircraft, 1-4 Family. Loan Amount Loan amount of the application with which the collateral is associated. Also, the loan amount is stored when an external lien is manually added. Lien Position The ranking of the lien of the bank in relation to that of the other banks. Bank Name Name of the bank in which the application is originated. Summary Appraised Value Sum of the value of all collaterals associated with the application.
For example, if collateral of value $200,000 and collateral of value $300,000 are attached with the application, the Appraised Value is $(200,000+300,000).
Superior Liens Sum of the loan amount of all collaterals associated with the application.
For example, if there are two loans of $50000 and $30000 associated with the collateral prior to this loan application, the Superior Lien is calculated as $(50,000+30,000).
Advance Value Sum of the advance value of all collaterals associated with the application. Available Value Available value of all collaterals. This is calculated as $(Appraised Value – Superior Liens). LTV It is the ratio of a loan to the value of an asset purchased. The term is commonly used by financial institutions to represent the ratio of the loan borrowed as a percentage of the total appraised value of a real estate property.
This is calculated as Loan Amount/ Available Value.
Collateral Coverage Collateral coverage refers to the amount of your loan that's backed by the collateral. This is calculated as $(Advance Value - Superior Liens - Loan Amount).
Scenario 1 - Single application, Single collateral, No existing liens
| Loan Amount | $300,000 | |||||
| Collateral Analysis | ||||||
|---|---|---|---|---|---|---|
| Collateral Name | Collateral Type Name | Valuation Type | Valuation Date | Value | Advance Rate | Advance Value |
| Heavy Truck and Trailer | Titled Vehicles | Appraisal | 6/30/2021 | $400,000 | 80% | $320,000 |
| Prior Liens | ||||||
| Collateral Name | Collateral Type Name | Loan Amount | Lien Position | Bank Name | ||
| Summary | ||||||
| Appraised Value | Superior Liens | Advance Value | Available Value | LTV | Collateral Coverage | |
| $400,000 | $0 | $320,000 | $400,000 | 75% | $20,000 | |
Scenario 2 - Single application, Single collateral, Existing liens
| Loan Amount | $300,000 | |||||
| Collateral Analysis | ||||||
|---|---|---|---|---|---|---|
| Collateral Name | Collateral Type Name | Valuation Type | Valuation Date | Value | Advance Rate | Advance Value |
| Heavy Truck and Trailer | Titled Vehicles | Appraisal | 6/30/2021 | $400,000 | 80% | $320,000 |
| Prior Liens | ||||||
| Collateral Name | Collateral Type Name | Loan Amount | Lien Position | Bank Name | ||
| Heavy Truck and Trailer | Titled Vehicles | $80,000 | 1 | Other Bank | ||
| Summary | ||||||
| Appraised Value | Superior Liens | Advance Value | Available Value | LTV | Collateral Coverage | |
| $400,000 | $80,000 | $320,000 | $320,000 | 75% | -$60,000 | |
Scenario 3 - Single application, Multiple collaterals, Existing liens
| Loan Amount | $400,000 | |||||
| Collateral Analysis | ||||||
|---|---|---|---|---|---|---|
| Collateral Name | Collateral Type Name | Valuation Type | Valuation Date | Value | Advance Rate | Advance Value |
| Heavy Truck and Trailer | Titled Vehicles | Appraisal | 6/30/2021 | $400,000 | 80% | $320,000 |
| Government Bonds | Investment Securities | Appraisal | 6/30/2021 | $350,000 | 70% | $245,000 |
| Prior Liens | ||||||
| Collateral Name | Collateral Type Name | Loan Amount | Lien Position | Bank Name | ||
| Heavy Truck and Trailer | Titled Vehicles | $180,000 | 1 | Other Bank | ||
| Summary | ||||||
| Appraised Value | Superior Liens | Advance Value | Available Value | LTV | Collateral Coverage | |
| $750,000 | $180,000 | $565,000 | $570,000 | 70% | -$15,000 | |
Scenario 4 - Single application, Multiple collaterals, No existing liens
Loan Amount | $400,000 | |||||
| Collateral Analysis | ||||||
|---|---|---|---|---|---|---|
Collateral Name | Collateral Type Name | Valuation Type | Valuation Date | Value | Advance Rate | Advance Value |
Heavy Truck and Trailer | Titled Vehicles | Appraisal | 6/30/2021 | $400,000 | 80% | $320,000 |
Government Bonds | Investment Securities | Appraisal | 6/30/2021 | $350,000 | 70% | $245,000 |
| Prior Liens | ||||||
Collateral Name | Collateral Type Name | Loan Amount | Lien Position | Bank Name | ||
| Summary | ||||||
Appraised Value | Superior Liens | Advance Value | Available Value | LTV | Collateral Coverage | |
$750,000 | $0 | $565,000 | $750,000 | 53% | $165,000 | |
Scenario 5 - Single application, non-cross collateralized collateral, Blanket lien on business assets
In this scenario, the "All Business Assets" Advance Value is derived from the sum of all itemized business assets.
Loan Amount | $800,000 | |||||
| Collateral Analysis | ||||||
|---|---|---|---|---|---|---|
Collateral Name | Collateral Type Name | Valuation Type | Valuation Date | Value | Advance Rate | Advance Value |
All Business Assets of ABC LLC | All Business Assets | Book Value | 6/30/2021 | $850,000 | $637,500 | |
| Break up of All Business Assets (Itemized Collateral) | ||||||
Collateral Name | Collateral Type Name | Valuation Type | Valuation Date | Value | Advance Rate | Advance Value |
| Inventory | Inventory | Book Value | 6/30/2021 | $350,000 | 75% | $262,500 |
| Accounts Receivables | Accounts Receivables | Book Value | 6/30/2021 | $250,000 | 80% | $200,000 |
| Fixed Assets | Fixed Assets | Book Value | 6/30/2021 | $250,000 | 70% | $175,000 |
| Prior Liens | ||||||
Collateral Name | Collateral Type Name | Loan Amount | Lien Position | Bank Name | ||
| Summary | ||||||
Appraised Value | Superior Liens | Advance Value | Available Value | LTV | Collateral Coverage | |
$850,000 | $0 | $637,500 | $850,000 | 94% | -$162,500 | |