Loan Recovery System - CreditNexus Documentation

Overview

The Loan Recovery System automates the detection and management of loan defaults with integrated Twilio SMS and voice communication capabilities. It provides a comprehensive workflow for managing borrower contacts, recovery actions, and CDM event tracking. Code Reference: app/services/loan_recovery_service.py, app/services/twilio_service.py, app/api/recovery_routes.py, client/src/components/LoanRecoverySidebar.tsx

Key Features

Automatic Default Detection

The system automatically detects two types of defaults:

Payment Defaults

Detection Method: Monitors PaymentEvent records with payment_status == "pending"
Calculation: Compares payment due date (created_at + 30 days) with current date
Severity Levels:
- Low: 1-7 days past due
- Medium: 8-30 days past due
- High: 31-60 days past due
- Critical: 60+ days past due

Code Reference: app/services/loan_recovery_service.py (detect_payment_defaults method)

Covenant Breaches

Detection Method: Monitors LoanAsset records with risk_status == "BREACH"
Trigger: Satellite verification detects compliance breach (e.g., NDVI below threshold)
Severity: Typically “high” for all breaches

Code Reference: app/services/loan_recovery_service.py (detect_covenant_breaches method)

Twilio Integration

SMS Notifications

E.164 Format Validation: Phone numbers validated before sending
Status Callbacks: Real-time delivery status updates via webhooks
Message Tracking: Twilio message SID stored for status tracking
Error Handling: Comprehensive error handling with detailed error messages

Code Reference: app/services/twilio_service.py (send_sms method)

Voice Calls

TwiML Generation: Automatic TwiML response generation
Interactive Calls: Support for digit gathering and interactive responses
Status Tracking: Call SID tracking and status monitoring
Multi-Language: Support for different language codes

Code Reference: app/services/twilio_service.py (make_voice_call, generate_twiml_response methods)

Webhook Support

Signature Verification: Secure webhook signature validation
Status Updates: Automatic status updates for SMS and voice calls
Delivery Tracking: Real-time delivery and read receipts

Code Reference: app/api/twilio_routes.py (webhook handlers)

Recovery Actions

The system supports multiple recovery action types with automatic escalation:

Action Types

sms_reminder: SMS notification (days 1-3)
voice_call: Voice call notification (days 4-7)
email: Email notification (days 8-30)
escalation: Escalated communication (30+ days)

Code Reference: app/services/loan_recovery_service.py (trigger_recovery_actions method)

Action Status

pending: Action created but not executed
sent: Action executed successfully
delivered: Message delivered (SMS only)
failed: Action failed with error
responded: Borrower responded to communication

Code Reference: app/db/models.py (RecoveryAction model)

Message Templates

Jinja2 Templating: Dynamic message generation with template variables
Severity-Based Templates: Different templates for low/medium/high/critical
Default Type Templates: Separate templates for payment defaults vs covenant breaches
Fallback Templates: Default templates if custom templates not found

Code Reference: app/services/recovery_template_service.py

Borrower Contact Management

Contact Information: Phone numbers, email addresses, preferred contact methods
Primary Contacts: Designate primary contact for each deal
Contact Preferences: Timezone, preferred hours, communication preferences
Active/Inactive: Manage contact status

Code Reference: app/db/models.py (BorrowerContact model)

CDM Event Integration

All recovery operations generate CDM-compliant events:

Loan Default Events

{
  "eventType": "Observation",
  "eventDate": "2026-01-15T10:00:00Z",
  "observation": {
    "observationType": "LoanDefault",
    "observationDate": {"date": "2026-01-15"},
    "observedValue": {
      "value": "PAYMENT_DEFAULT",
      "unit": "LOAN_DEFAULT_TYPE",
      "numericValue": 15,
      "context": {
        "severity": "medium",
        "daysPastDue": 15,
        "amountOverdue": 100000.00,
        "reason": "Payment overdue: principal"
      }
    },
    "informationSource": {
      "sourceProvider": "CreditNexus_RecoveryService",
      "sourceType": "LoanMonitoring",
      "reference": {
        "defaultId": "123",
        "detectionMethod": "automated"
      }
    }
  },
  "relatedEventIdentifier": [
    {
      "eventIdentifier": {
        "issuer": "CreditNexus_LoanService",
        "assignedIdentifier": [{"identifier": {"value": "LOAN_001"}}]
      }
    }
  ],
  "meta": {
    "globalKey": "uuid-here",
    "sourceSystem": "CreditNexus_RecoveryService_v1",
    "version": 1
  }
}

Code Reference: app/models/cdm_events.py (generate_cdm_loan_default function)

Recovery Action Events

{
  "eventType": "Observation",
  "eventDate": "2026-01-15T11:00:00Z",
  "observation": {
    "observationType": "RecoveryAction",
    "observationDate": {"date": "2026-01-15"},
    "observedValue": {
      "value": "SMS_REMINDER",
      "unit": "RECOVERY_ACTION_TYPE",
      "context": {
        "communicationMethod": "sms",
        "status": "sent",
        "messageLength": 150,
        "twilioMessageSid": "SM1234567890"
      }
    },
    "informationSource": {
      "sourceProvider": "CreditNexus_RecoveryService",
      "sourceType": "RecoveryCommunication",
      "reference": {
        "actionId": "456",
        "twilioMessageSid": "SM1234567890"
      }
    }
  },
  "relatedEventIdentifier": [
    {
      "eventIdentifier": {
        "issuer": "CreditNexus_RecoveryService",
        "assignedIdentifier": [{"identifier": {"value": "LOAN_DEFAULT_123"}}]
      }
    }
  ],
  "meta": {
    "globalKey": "uuid-here",
    "sourceSystem": "CreditNexus_RecoveryService_v1",
    "version": 1
  }
}

Code Reference: app/models/cdm_events.py (generate_cdm_recovery_action function)

Workflow

1. Default Detection

Automatic Detection:

System periodically checks for overdue payments
System monitors loan assets for breach status
Defaults are created automatically when detected
CDM events are generated for each default

Manual Detection:

Navigate to Loan Recovery sidebar
Click “Detect Defaults” button
System scans for new defaults
Results displayed in default list

Code Reference: app/services/loan_recovery_service.py (detect_payment_defaults, detect_covenant_breaches methods)

2. Recovery Action Creation

Automatic Triggering:

System automatically determines action types based on days past due
Actions are created and executed immediately
Messages are sent via Twilio
Status is tracked in real-time

Manual Triggering:

Select a default from the list
Click “Trigger Actions” button
Choose action types (or let system auto-determine)
Actions are created and executed
Status updates displayed in real-time

Code Reference: app/services/loan_recovery_service.py (trigger_recovery_actions method)

3. Action Execution

SMS Execution:

Validate phone number (E.164 format)
Generate message content from template
Send SMS via Twilio API
Store Twilio message SID
Update action status to “sent”
Generate CDM event

Voice Call Execution:

Validate phone number (E.164 format)
Generate TwiML response
Initiate call via Twilio API
Store Twilio call SID
Update action status to “sent”
Generate CDM event

Code Reference: app/services/loan_recovery_service.py (execute_recovery_action method)

4. Status Updates

Webhook Processing:

Twilio sends webhook to /api/twilio/webhook/sms or /api/twilio/webhook/voice
Signature is verified for security
RecoveryAction record is updated with new status
CDM event is updated if needed
Frontend is notified of status change

Code Reference: app/api/twilio_routes.py (webhook handlers)

User Interface

Location: client/src/components/LoanRecoverySidebar.tsx Features:

Default List: View all active defaults with filtering by status, severity, deal
Default Detail View: Comprehensive default information including:
- Default type and reason
- Amount overdue (if payment default)
- Days past due
- Severity level
- Status
- Related recovery actions
Recovery Actions:
- View all actions for a default
- Trigger new actions
- Execute pending actions
- View action status and delivery information
Borrower Contacts:
- View borrower contact information
- Add new contacts
- Update contact details
Filtering: Filter defaults by status, severity, deal ID
Real-time Updates: Status updates via webhooks

Access: Navigate to “Loan Recovery” in the sidebar

API Endpoints

Default Management

List all loan defaults with optional filtering. Query Parameters:

deal_id: Filter by deal ID
status: Filter by status (open, in_recovery, resolved, written_off)
severity: Filter by severity (low, medium, high, critical)
page: Page number (default: 1)
limit: Items per page (default: 50, max: 100)

Response: Paginated list of defaults with recovery actions Detect new payment defaults and covenant breaches. Request Body:

{
  "deal_id": 123
}

Response: List of newly detected defaults Get detailed information about a specific default. Response: Complete default information with recovery actions Code Reference: app/api/recovery_routes.py (default endpoints)

Recovery Actions

Trigger recovery actions for a loan default. Request Body:

{
  "action_types": ["sms_reminder", "voice_call"]
}

Response: List of created recovery actions List all recovery actions with optional filtering. Query Parameters:

default_id: Filter by default ID
status: Filter by status
deal_id: Filter by deal ID
page: Page number
limit: Items per page

Response: Paginated list of recovery actions Manually execute a pending recovery action. Response: Updated recovery action with execution status Process all scheduled recovery actions (background task). Response: Summary with processed/failed counts Code Reference: app/api/recovery_routes.py (action endpoints)

Borrower Contacts

List all borrower contacts. Query Parameters:

deal_id: Filter by deal ID

Response: List of borrower contacts Create a new borrower contact. Request Body:

{
  "deal_id": 123,
  "contact_name": "John Doe",
  "phone_number": "+1234567890",
  "email": "borrower@example.com",
  "preferred_contact_method": "sms",
  "is_primary": true,
  "is_active": true
}

Response: Created borrower contact Update a borrower contact. Request Body: Partial contact information Response: Updated borrower contact Code Reference: app/api/recovery_routes.py (contact endpoints)

Twilio Webhooks

SMS status callback endpoint (called by Twilio). Request: Form data from Twilio with signature verification Response: 200 OK Voice call status callback endpoint (called by Twilio). Request: Form data from Twilio with signature verification Response: TwiML response or 200 OK Generic status callback endpoint. Code Reference: app/api/twilio_routes.py (webhook endpoints)

Configuration

Environment Variables

TWILIO_ENABLED

boolean

Enable Twilio integration. Default: false

TWILIO_ACCOUNT_SID

string

Twilio Account SID (required if TWILIO_ENABLED=true)

TWILIO_AUTH_TOKEN

string

Twilio Auth Token (required if TWILIO_ENABLED=true)

TWILIO_PHONE_NUMBER

string

Twilio phone number in E.164 format (e.g., +1234567890)

TWILIO_SMS_ENABLED

boolean

Enable SMS functionality. Default: true

TWILIO_VOICE_ENABLED

boolean

Enable voice call functionality. Default: true

TWILIO_WEBHOOK_URL

string

Base URL for Twilio webhook callbacks (e.g., https://yourdomain.com/api/twilio)

Setup Guide: See Twilio Setup Guide

Database Models

LoanDefault

Table: loan_defaults Key Fields:

loan_id: Loan identifier (string)
deal_id: Deal identifier (foreign key)
default_type: Type (payment_default, covenant_breach, infraction)
default_date: Date when default occurred
default_reason: Reason for default
amount_overdue: Amount overdue (for payment defaults)
days_past_due: Number of days past due
severity: Severity level (low, medium, high, critical)
status: Status (open, in_recovery, resolved, written_off)
cdm_events: JSONB array of CDM events

Code Reference: app/db/models.py (LoanDefault class, lines 2366-2409)

RecoveryAction

Table: recovery_actions Key Fields:

loan_default_id: Foreign key to LoanDefault
action_type: Type (sms_reminder, voice_call, email, escalation, legal_notice)
communication_method: Method (sms, voice, email)
recipient_phone: Recipient phone number (E.164 format)
recipient_email: Recipient email address
message_template: Template name used
message_content: Actual message sent
twilio_message_sid: Twilio message SID (for SMS)
twilio_call_sid: Twilio call SID (for voice)
status: Status (pending, sent, delivered, failed, responded)
scheduled_at: Scheduled execution time
sent_at: Actual send time
delivered_at: Delivery time (SMS)
error_message: Error message if failed

Code Reference: app/db/models.py (RecoveryAction class, lines 2412-2465)

BorrowerContact

Table: borrower_contacts Key Fields:

deal_id: Foreign key to Deal
user_id: Foreign key to User (if borrower is a user)
contact_name: Contact name
phone_number: Phone number (E.164 format)
email: Email address
preferred_contact_method: Preferred method (sms, voice, email)
contact_preferences: JSONB preferences (timezone, hours, etc.)
is_primary: Primary contact flag
is_active: Active status flag

Code Reference: app/db/models.py (BorrowerContact class, lines 2468-2507)

Message Templates

Template Location

Templates are stored in app/templates/recovery/ directory.

Template Naming Convention

{communication_method}_{default_type}.txt: Base template
{communication_method}_{default_type}_{severity}.txt: Severity-specific template
{communication_method}_escalation.txt: Escalation template

Examples:

sms_payment_default.txt: Base SMS template for payment defaults
sms_payment_default_high.txt: High severity SMS template
voice_covenant_breach.txt: Voice template for covenant breaches
sms_escalation.txt: Escalation SMS template

Template Variables

Available template variables:

borrower_name: Borrower contact name
default_type: Type of default
default_reason: Reason for default
amount_overdue: Amount overdue (if payment default)
days_past_due: Days past due
severity: Severity level
loan_id: Loan identifier
deal_id: Deal identifier

Code Reference: app/services/recovery_template_service.py (render_template method)

Best Practices

Timely Detection: Configure default detection to run regularly (e.g., daily)
Multi-Channel Approach: Use SMS, voice, and email for better reach
Compliance: Ensure all communications comply with regulations (TCPA, GDPR)
Documentation: Maintain complete audit trail via CDM events
Follow-up: Track borrower responses and adjust recovery strategy
Phone Number Validation: Always validate phone numbers in E.164 format
Error Handling: Monitor failed actions and retry if appropriate
Template Customization: Customize message templates for your organization

Troubleshooting

SMS Not Delivered

Possible Causes:

Invalid phone number format (must be E.164)
Twilio account balance insufficient
Phone number not SMS-capable
Twilio account restrictions

Solutions:

Verify phone number format: +[country code][number] (e.g., +1234567890)
Check Twilio Console for delivery status
Verify Twilio account balance
Review Twilio error codes in action metadata

Voice Calls Not Working

Possible Causes:

Phone number not voice-capable
TwiML response format incorrect
Webhook URL not accessible
Twilio account restrictions

Solutions:

Verify phone number has Voice capabilities in Twilio
Check TwiML response format
Ensure webhook URL is publicly accessible
Review call logs in Twilio Console

Defaults Not Detected

Possible Causes:

PaymentEvent records not in “pending” status
LoanAsset records not in “BREACH” status
Date calculations incorrect

Solutions:

Verify PaymentEvent payment_status
Check LoanAsset risk_status
Review default detection logic in service

Additional Resources

Last Updated: 2026-01-14
Code Reference: app/services/loan_recovery_service.py, app/services/twilio_service.py, app/api/recovery_routes.py, client/src/components/LoanRecoverySidebar.tsx

Market Opportunity

Get Started

Compliance

Roadmap

Architecture

Features

API Reference

Guides

Specifications

Legal

​Overview

​Key Features

​Automatic Default Detection

​Payment Defaults

​Covenant Breaches

​Twilio Integration

​SMS Notifications

​Voice Calls

​Webhook Support

​Recovery Actions

​Action Types

​Action Status

​Message Templates

​Borrower Contact Management

​CDM Event Integration

​Loan Default Events

​Recovery Action Events

​Workflow

​1. Default Detection

​2. Recovery Action Creation

​3. Action Execution

​4. Status Updates

​User Interface

​Loan Recovery Sidebar

​API Endpoints

​Default Management

​Recovery Actions

​Borrower Contacts

​Twilio Webhooks

​Configuration

​Environment Variables

​Database Models

​LoanDefault

​RecoveryAction

​BorrowerContact

​Message Templates

​Template Location

​Template Naming Convention

​Template Variables

​Best Practices

​Troubleshooting

​SMS Not Delivered

​Voice Calls Not Working

​Defaults Not Detected

​Additional Resources

Overview

Key Features

Automatic Default Detection

Payment Defaults

Covenant Breaches

Twilio Integration

SMS Notifications

Voice Calls

Webhook Support

Recovery Actions

Action Types

Action Status

Message Templates

Borrower Contact Management

CDM Event Integration

Loan Default Events

Recovery Action Events

Workflow

1. Default Detection

2. Recovery Action Creation

3. Action Execution

4. Status Updates

User Interface

Loan Recovery Sidebar

API Endpoints

Default Management

Recovery Actions

Borrower Contacts

Twilio Webhooks

Configuration

Environment Variables

Database Models

LoanDefault

RecoveryAction

BorrowerContact

Message Templates

Template Location

Template Naming Convention

Template Variables

Best Practices

Troubleshooting

SMS Not Delivered

Voice Calls Not Working

Defaults Not Detected

Additional Resources