Foreclosure

Operational Use Cases

• Forced payoff after default: Collections instructs the system to accelerate the loan and settle via liquidation proceeds.
• Collateral sale managed by lender: Lender initiates foreclosure to recover funds from the collateral.
• Compliance-driven closure: Regulatory requirement to classify and close an account once legal foreclosure proceedings start.

Applies to both Fixed and Dynamic repayment schedule engines. Interest recalculation (if enabled) updates payoff amounts up to the foreclosure date.

Lifecycle Snapshot

flowchart TD
    A[Confirm foreclosure approval] --> B[Fetch optional payoff quote]
    B --> C[Collect payoff via Payments API]
    C --> D[Submit foreclosure command]
    D --> E[Loan status updated to Foreclosed]

API Playbook

1. (Optional) Quote payoff

   HTTP

   GET /v1/loans/{loanId}/transactions/template?command=prepayLoan&transactionDate=2025-08-01

   Use only as a reference; foreclosure-specific validations happen on the execution step.

2. Collect the payoff via the Payments API (when foreclosure proceeds involve funds)

   HTTP

   POST /v1/payments
   {
     "loanId": 512,
     "mode": "LOG",
     "paymentCommand": "foreclosure",
     "valueDate": "01 Aug 2025",
     "amount": 12890.11,
     "note": "Foreclosure proceeds from collateral sale",
     "externalReference": "FOREC-2025-08-01"
   }

   Embarc moves money through your configured gateway (INITIATE) or records the settlement (LOG) and automatically posts the underlying loan transaction.

   Validations to keep in mind

   • All tranches scheduled before transactionDate must be disbursed.
   • Loan must be Active and not already foreclosed.
   • transactionDate cannot be in the future or before the last user transaction.

Tips for Operations Teams

• Foreclosure immediately changes the loan sub-status; If you need to reverse a foreclosure, use the standard payment reversal process; ensure no subsequent transactions exist after the foreclosure date.

Baseline Example (Fixed Loan A)

Continuing the payoff scenario above, suppose the borrower defaults and collateral is liquidated for USD 6,300 on 01 Aug 2026. Steps:

Transactions created

Loan summary delta

Accounting snapshot

Verification checklist

1. GET /v1/loans/{id}?associations=transactions,loanSummary to confirm the new FORECLOSURE transaction and sub-status change.
2. Ensure the Payments API log shows the proceeds hitting the expected GL accounts.
3. If you reverse foreclosure, remove any downstream collateral references before undoing the transaction.

Sandbox request template

POST /v1/payments
{
  "loanId": {{baselineFixedLoanId}},
  "mode": "LOG",
  "paymentCommand": "foreclosure",
  "valueDate": "01 Aug 2026",
  "amount": 6300.00,
  "note": "Collateral sale",
  "externalReference": "FOREC-BL-A-0001"
}

POST /v1/loans/{{baselineFixedLoanId}}/transactions?command=foreclosure
{
  "locale": "en",
  "dateFormat": "dd MMM yyyy",
  "transactionDate": "01 Aug 2026",
  "note": "Forced payoff"
}