Federal Government Guaranteed Loans Subject to Credit Reform

110.FFM.L2.02 Federal Government Guaranteed Loans Subject to Credit Reform
End-to-End Business Process: 110 Apply-to-Repay
Business Scenario(s) Covered
  • Aggregated Loan Portfolio
  • Default on Government Guaranteed Loan
Business Actor(s)
Finance Office, Federal Agency; Lender, Borrower
Synopsis
Loans made to private sector borrowers (Borrower) by a private sector lender (Lender) are guaranteed by a federal agency (Guarantor). One guaranteed loan is subsequently found to be in default. A guaranteed loan default claim is filed with the federal agency and a default claim payment is made to the Lender. The Borrower's pledged asset is foreclosed, and is purchased at the foreclosure sale and pledged as collateral for the federal agency’s guarantee of the portfolio. The difference between the value of the asset and the guarantee outlay is not collected from the Borrower after a failed attempt by the Guarantor. The debt is referred to the Treasury for collection.
Assumptions and Dependencies
  1. There may or may not be automated (near/real-time or batch) interfaces between service areas/functions/activities or between provider solutions/systems.
  2. There is no presumption as to which activities are executed by which actor, or which activities are automated, semi-automated, or manual.
  3. Supporting information for general ledger transactions includes sub-ledger entries when sub-ledgers are used.
  4. Appropriate attributes (e.g., object class and project) are included as part of the accounting string.
  5. Relationships between use cases are described in the Framework for Federal Financial Management Use Cases found in the related overview document.
  6. All predecessor activities required to trigger the Initiating Event have been completed.
  7. Funds availability checks are performed against appropriations/fund accounts for obligating funds, and against obligations for disbursing funds in accordance with OMB A-11, Section 150.2.
  8. The Lender is in good standing under the laws of its state of origination, an approved lender qualified to issue federal guaranteed loans, and is not in default under any agreements with the Federal Agency Loan Guarantor.
  9. The Lender has qualified Borrowers for guaranteed loans and has completed loan settlements and disbursements and is qualified to issue federal government guaranteed loans.
  10. The federal agency has already obligated the funds for the default claim for the guaranteed loan program.
  11. Financial information is provided to the FM system on a loan portfolio level (i.e., not on a per loan basis).
  12. The periodic re-estimation of liability and subsidy expenses is performed periodically in a different business process.
  13. On default, a loan is removed from the pool and managed individually for guaranteed loan default claims.
  14. An initial liability and subsidy expense for the guaranteed loan portfolio has already been posted in the FM system.
FFMSR ID Reference(s) 1.1.2; 1.1.3; 1.1.4; 1.1.5; 1.2.1; 2.2.1; 2.2.2, 2.2.4, 2.2.5; 2.2.6
Initiating Event

The Lender provides updated guaranteed loan portfolio information to the federal agency.


USE CASE 110.FFM.L2.02 FEDERAL GOVERNMENT GUARANTEED LOANS SUBJECT TO CREDIT REFORM
Typical Flow of Events
FFM Event Non-FFM Event Input(s) Output(s) / Outcome(s)
1
  1. Determine the government program’s loan guarantee liability for the portfolio of guaranteed loans
  2. Request processing of portfolio liability information (LNM.040.010 Loan Portfolio Management)
  • Face value of guaranteed loans outstanding and the amount guaranteed
  • Guaranteed loan portfolio liability information
  • Request for processing of loan portfolio liability information
2

Receive and process request for processing of loan portfolio liability information (FFM.020.020 Financial Asset Information Processing - Loans)

  • Guaranteed loan portfolio liability information
  • Request for processing of portfolio liability information
  • Appropriate liability adjustment entry created with reference to source information
3

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)

  • GL entries
  • Appropriate GL accounts updated
4
  1. Receive and process lender's guaranteed loan default claim
  2. Request funds availability check (LNM.030.040 Loan Insurance Claim Processing)
  • Notice of default claim from lender
  • Guaranteed loan terms and collateral information
  • Validated notice of default claim from lender
  • Request for funds availability check
5

Receive and process request for funds availability check (FFM.010.020 Funds Allocation and Control)

  • Request for funds availability check
  • Funds availability response
6
  1. Approve loan default claim
  2. Request for processing of approved loan default claim (LNM.030.040 Loan Insurance Claim Processing)
  • Funds availability response
  • Validated notice of default claim from lender
  • Approved loan default claim
  • Request for processing of approved loan default claim
7
  1. Receive and process approved loan default claim (FFM.030.070 Payment Processing – Commercial Payments)
  2. Liquidate obligation (FFM.030.020 Obligation Management)
  • Approved loan default claim
  • Appropriate obligation liquidation entry created with reference to source information
  • Appropriate payable entry created with reference to source information
8
  1. Request guaranteed loan default claim disbursement (LNM.030.040 Loan Insurance Claim Processing)
  • Approved loan default claim
  • Request for guaranteed loan default claim disbursement
9
  1. Receive and process request for guaranteed loan default claim disbursement (FFM.030.090 Payment Processing - Loan Payments)
  2. Initiate disbursement (FFM.030.090 Payment Processing - Loan Payments)
  3. Generate disbursement schedule (FFM.030.110 Payment Disbursement)
  4. Certify payment of disbursement schedule (FFM.030.110 Payment Disbursement)
  5. Receive confirmation of disbursement (FFM.030.120 Payment Confirmation)
  • Request for guaranteed loan default claim disbursement
  • Appropriate payable entry liquidated with reference to source information
  • Certified disbursement schedule
  • Appropriate disbursement-in-transit entry created with reference to source information
  • Disbursement confirmation information
  • Appropriate disbursement-in-transit entry liquidated with reference to source information
  • Appropriate disbursement entry created with reference to source information
  • Lender receives payment
10

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)

  • GL entries
  • Appropriate GL accounts updated
11
  1. Determine value of foreclosed asset
  2. Request invoice for balance needed to recover guarantee paid out, offset by value of foreclosed asset (LNM.030.040 Loan Insurance Claim Processing)
  • Estimated net recovery from foreclosed asset
  • Request for recording of value of foreclosed asset
  • Request for invoice for balance to recover guarantee paid out
12
  1. Receive and process request to record value of foreclosed asset (FFM.020.010 Financial Asset Information Processing-Property, Plant, and Equipment)
  2. Receive and process request for invoice to recover guarantee paid out, offset by value of foreclosed asset (FFM.060.020 Public Receivable Set-up and Invoicing)
  • Request for recording of value of foreclosed asset
  • Request for invoice for balance to recover guarantee paid out
  • Appropriate asset value entry created with reference to source information
  • Appropriate receivable entry created with reference to source information
13

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)

  • GL entries
  • Appropriate GL accounts updated
14
  1. Monitor age of receivable and determine accrued interest
  2. Request recording of accrued interest (LNM.030.040 Loan Insurance Claim Processing)
  • Receivable for balance to recover guarantee paid out
  • Request for recording of accrued interest
15

Receive and process request for recording of accrued interest (FFM.040.010 Revenue Processing)

  • Request for recording of accrued interest
  • Appropriate revenue entry created with reference to source information
16

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)

  • GL entries
  • Appropriate GL accounts updated
17
  1. Request referral of debt to Treasury for collection (LNM.030.040 Loan Insurance Claim Processing)
  • Delinquent debt for balance to recover guarantee paid out
  • Request for referral of delinquent debt to Treasury
18

Receive and process request for referral of delinquent debt to Treasury for collection (FFM.070.010 Delinquent Debt Collection)

  • Request for referral of delinquent debt to Treasury
  • Referral to Treasury for collection
  • Appropriate receivable entry created with reference to source information
  • Appropriate interest accrual entry created with reference to source information
19

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)

  • GL entries
  • Appropriate GL accounts updated
20

Report on delinquent debt (FFM.070.030 Delinquent Debt Reporting)

  • Delinquent debt for balance to recover guarantee paid out
  • Delinquent debt information

This page was last updated on September 01, 2021.