AFS Construction Lending
Overview
Manual steps are reduced, resulting in fewer errors and exceptions and ultimately, lower labor costs. Automated generation of correspondence and disbursements ensure timely exchange of information among the lender, the customer, the contractor, the inspector and other third parties, as well as enhance the lender's ability to improve responsiveness and shorten delivery times. By providing tracking and reporting, AFS Construction Lending gives lenders budget management control, particularly in handling large volumes of transactions, with oversight capabilities to manage risks and grow profitability.
Fully integrated with AFS' loan accounting system, the AFS Construction Lending module shares data between systems, eliminating duplicative processes, automating updating, and ensuring information consistency. While customization to a lender's own workflow remains a key component of all AFS deliveries, primary features of AFS Construction Lending common to all lending environments include the following:
- Creation and storage of budget templates
- Automated generation of correspondence and notifications
- Consolidated tracking, documentation, and control of funds availability and disbursal
Benefits
Driving Performance
To meet new requirements for customer information, risk management, and transparency, AFS offers the industry's only fully integrated construction lending process to seamlessly manage large amounts of inter-dependent, dynamic information on construction projects, from approval to pay-off.
Single System of Record
AFS Construction Lending supports all project types, managing details that include commitments, third parties, and equity interests. The solution monitors and documents requirements and related loan and payment processing. As a single system of record, AFS Construction Lending enables servicing of any defined budget structure or repayment schedule. Users can monitor project status, oversee pricing contingencies, and track draws-all while accessing the information necessary to respond to customer inquiries and meet internal reporting requirements.
Delivering Value
AFS Construction Lending enables the bank to track every aspect of the construction loan portfolio and eliminate time consuming and error prone spreadsheets. It enhances new product delivery and processing capabilities, provides better quality information to decrease operational risk, improves control and customer support, and reduces the time and cost of construction lending administrative tasks.
Key Functionality
AFS Construction Lending provides all the functionality necessary to support both residential and commercial construction loans. The following processes are controlled via workflows, based on the organization's parameters, and share data throughout the life of the project:
- Budget Create: Identifies all the functionality needed for a specific budget, such as automated interest reserve processing. Also identifies the total dollar amount of the budget and the funding sources, including third party funding sources.
- Template Administration: Eliminates spreadsheet usage; supports any project structure; applies standardization via customer defined drop-down lists, predefined line items, and budget allocations; and streamlines budget set-up.
- Pipeline Processing: Tracks information and documentation required for disbursements; generates standardized letters and notices required for customers, contractors, inspectors, or other involved parties; and ensures that data are entered once and available to control subsequent processes and support ongoing reporting needs.
- Unit Processing: Collects the descriptive and financial information about what is being built; creates loan records and budget allocations used for funding the project; and controls retainage and any limits placed on advances and outstandings.
- Disbursement Processing: Captures inspection or approval results; controls how funds are sent to borrowers, contractors, or other entities; supports funding from multiple sources; creates the offset entries to support the General Ledger posting process and recalculate availability; and generates any required draw affidavits or letters.
- Payoff Processing: Provides for calculating, quoting, and generating related payoff letters.
Key Features
- Supports all types of budget structures, as well as control third-party equity and disbursement processing, based on customer and project needs (e.g., single building, multiple lots, mixed-use, phased development, etc.).
- Manages workflow through predetermined assignment of roles and tasks, consistent with internal bank lending policy.
- Facilitates and controls tasks and documentation required to process a loan, including the establishment and ongoing tracking of collateral and guarantors.
- Captures, tracks, and monitors information in the construction process needed to identify pending business and project financing needs and respond to inquiries from lenders, customers, vendors, and subcontractors.
- Automates processing of interest payments with funds advanced from a specific interest reserve line item to ensure loans are not inadvertently identified as past due.
- Supports the ability to transfer funds between line items and lending facilities, to reprice existing obligations and to create facilities with multiple funding options.
- Provides the ability to manage budget types and outstanding balances at the portfolio level, as well as to manage and limit exposure to different types of units (e.g., spec vs. model) within a specific budget.
- Generates reports to manage budgets and draw schedules within the portfolio. Ad-hoc capabilities support inquiries on all aspects of project budgets, units, payments, draws, and commitments.
With industry and regulatory scrutiny of construction lending intensifying, attention is focused on lenders' abilities to manage risk in their portfolios and provide transparency. AFS Construction Lending offers a fully integrated process to manage large amounts of inter-dependent, dynamic information on construction projects from approval to pay-off seamlessly.
Reduces credit and operational risk by:
- Controlling workflow
- Automating manual processes and eliminating spreadsheets
- Improving data accuracy and integrity
- Identifying exceptions to policy, required documentation, budgeted costs, and completion dates
- Using timely and comprehensive integrated reporting capabilities