Introduction

When operating lending programs, there are a variety of situations where you need to change the terms of a given loan. The best practices under why and when to do so can vary dramatically. For instance:

• You may have a variable interest rate clause
• You may have a program that allows borrowers to periodically draw additional funds, increasing the principal balance on the new loans
• You may run a loan program with clauses for borrowers to refinance different loans at different times or consolidate loans with different interest rates
• You may have a negotiated agreement with a specific borrower to reduce the interest rate on a loan or extend its duration.

How To Access

Loan restructuring can be accessed directly by calling the following endpoint:

POST /accounts/{account_id}/line_items/restructures/{line_item_id}

The line_item_id is of the loan being restructured, and the body of the request accepts the same parameters as the body of the loan creation endpoint. These parameters will be used by the newly restructured loan, and can be used to modify the behavior of the loan's following properties:

• Interest policies
• Fee policies
• Term
• Client ID to reference the restructured loan

Nice-to-knows

When a loan is restructured, its entire remaining principal is restructured over the new term. This includes any principal that is part of any form of min pay, either for the current due date or unpaid. The subsequent statement following a loan's restructure is its first cycle.

Any interest or fees that have already accrued due to the loan before restructuring are still owed, and are not included in the restructuring. Only the loan's remaining principal is restructured.

The same loan can be restructured multiple times, however for each restructure, the line_item_id of the currently active loan must be used, and not the on of the initial loan or any other loan line item that has already been restructured.

Advanced Usage

Loan restructuring can be scheduled to occur at a specific date using the effective_at parameter. If not provided, the restructure will occur immediately.

Handling Outstanding Interest and Fee Balances

There is the possibility that an account may have an outstanding interest and/or fee balance at the time you go to restructure the loan. Because loan restructuring only restructures the principal balance, it is recommended to execute a strategy to handle these balances prior to the restructure.

There are two recommended courses of action to handle outstanding interest and/or fee balances in these situations:

1. Capitalize the outstanding balance by creating a credit offset of the value of the outstanding balances and then creating a matching debit of type principal.
2. Have your borrower make a one time payment in the sum of the outstanding balances.

CanopyOS Demo

Below is a guided demo of how Loan Restructuring is displayed within Accounts inside of CanopyOS.