Policy Updates

The true power of lending technology lies not just in originating loans efficiently, but in adapting those loans to evolving circumstances throughout their lifecycle. Traditional lending systems trap you into rigid structures determined at origination, forcing uncomfortable choices between operational efficiency and borrower flexibility.

The policy engine operates on a fundamental principle: every aspect of loan behavior should remain configurable throughout the loan's lifecycle, not just at origination.

Interest rates can adjust to market conditions or borrower circumstances.
Payment schedules can accommodate seasonal businesses or temporary hardships.
Product structures can evolve as borrower needs change or risk profiles shift.

This comprehensive adaptability extends beyond simple parameter adjustments to include complete product transformations and restructuring capabilities that preserve relationship continuity while fundamentally altering loan economics.

Understanding this flexibility requires recognizing that Canopy maintains complete audit trails and event sourcing for every policy change, ensuring regulatory compliance and operational transparency regardless of how extensively you modify loan terms. The system treats each modification as a distinct event with clear before-and-after states, supporting sophisticated reporting requirements while enabling confident decision-making about portfolio management strategies.

Understanding the Spectrum of Policy Flexibility

Before diving into specific implementation approaches, it's essential to understand how Canopy categorizes different types of policy modifications based on their scope and impact. This categorization helps you choose the right approach for your specific situation while understanding the implications and capabilities of each modification type.

The spectrum ranges from simple parameter adjustments that affect individual loans to comprehensive restructuring that essentially creates new loan relationships while preserving historical context. Each approach serves different business needs and operational requirements, with increasing levels of complexity and capability as you move along the spectrum. Understanding these distinctions helps you match your modification strategy to your specific business objectives and borrower circumstances.

Individual Loan Policy Updates

Individual Loan Policy Changes

You can modify policies on specific loans without affecting your templates or other loans in your portfolio. This handles unique borrower situations or operational needs.

Available Endpoints

Use these API endpoints for individual loan changes:

Policy update endpoint: For most parameter adjustments
Interest rate change endpoint: Specifically for rate modifications
Credit limit change endpoint: Specifically for credit limit modifications

These endpoints include validation and create audit trails for the changes.

Common Examples

Payment due date changes: If a borrower wants to move their payment due date from the 15th to the 1st of the month, update the payment due offset policy. The change applies to future billing cycles without affecting the current cycle.

Interest rate changes: Use the dedicated interest rate endpoint for floating rate adjustments or special circumstances like military deployment. This endpoint handles regulatory requirements and timing automatically.

Important Considerations

Policy changes can interact with other loan settings and balances. Canopy's validation prevents changes that would create conflicts or violate regulations, but you should understand how different policies work together before making modifications.

Product Conversions

Product conversions change a loan from one product type to another while keeping the borrower relationship and loan history intact. This handles situations where borrower needs change beyond what simple policy adjustments can fix.

Common Examples

Construction to permanent loans: A borrower starts with a line of credit during construction, then converts to an installment loan to pay it off once construction is complete. The conversion changes how payments are calculated, how draws work, and sets a maturity date.
Credit product graduation: A student might start with a charge card to learn credit basics, then convert to a credit card with revolving credit features as they become more experienced with credit management.
Risk management conversions: A borrower having financial difficulties might convert from a revolving line to an installment plan for predictable payments. A growing business might convert from a term loan to a revolving line for more flexibility

Available Endpoints

The update policies endpoint will work to do the types of conversions above, however moving from product to another has some nuances, Canopy suggests speaking with Canopy before attempting this kind of policy conversion to ensure all necessary fields are included in the API request.

How Conversions Work

The system handles several technical requirements:

Records the exact conversion date and time
Carries forward accrued interest and fees from the original product where needed
Sets the new loan amount based on the current principal balance
Maintains complete history from both product phases

Data and Compliance

Canopy tracks the complete loan history across both product types. This supports:

Retroactivity Regulatory reporting requirements Customer service questions Performance analysis across different product phases

The conversion creates a clear before-and-after record (event) while preserving all historical data.

Frequently Asked Questions

Q: How do policy modifications affect existing billing cycles and borrower communications?

A: Policy modifications integrate seamlessly with Canopy's cycle management to ensure borrowers experience smooth transitions without confusion or operational disruption. When you implement policy changes that affect billing parameters like payment due dates, the system applies these changes beginning with the next billing cycle, preserving the current cycle's integrity while ensuring borrowers receive clear communication about upcoming changes.

For modifications that require immediate implementation, such as interest rate changes responding to index movements, the system calculates prorated adjustments within the current cycle and provides detailed explanations in subsequent statements. The event sourcing capabilities ensure that borrowers can always access complete records of what changed and when, supporting transparent customer service interactions and regulatory compliance requirements.

Q: How does dynamic policy management integrate with regulatory reporting and compliance requirements?

A: The event sourcing architecture that underlies Canopy's policy modification capabilities specifically addresses regulatory reporting and compliance challenges by maintaining complete, immutable records of every change throughout each loan's lifecycle. When regulators require historical loan status reconstruction or performance analysis across different policy periods, the system can precisely recreate loan states for any point in time.