AI Agent Profile · LendingIQ · San Francisco

Settlement & Waiver Agent AI

Function: Settlement ApproverInvoked via: NPL / charge-off collections pipeline + borrower approach triggerRuntime: AWS Bedrock · us-east-1Model: Claude Sonnet 4Context window: 200K tokens

DivisionCollections

Resume

Agent specs

Agent TypeEligibility computation + Approval routing + Documentation

InvocationBorrower settlement approach · Periodic NPL / charge-off strategy review

MemorySession-scoped; settlement policy and precedent log via RAG

Output FormatSettlement options memo · Approval routing · Settlement deed

Approval AuthorityHuman credit officer within delegation; committee above

Reasoning strengths

Settlement eligibility computationStrong

Policy-compliant option structuringStrong

Precedent-based consistency checkGood

Settlement documentation preparationStrong

Settlement decision authorityCannot do

Live integrations

NPL / charge-off RegisterOutstanding, security position, provisioning, collections history

Settlement Policy (RAG)Approved haircut limits, authority matrix, settlement norms

Settlement Precedent LogPrior settled accounts with terms — comparator database

Legal Case TrackerCourt status and encumbrances for secured accounts

Credit Committee CalendarMeeting dates for cases requiring committee approval

Audit Trail Agent AIAll settlement decisions logged with full policy basis

Escalation logic

AutoEligibility computation on borrower approach

AutoOptions memo prepared within policy parameters

AutoDocumentation generated on approved terms

FlagProposed terms require exception to policy floor

FlagSecured account — security release coordination required

HumanCredit officer approval — within delegated authority

HumanCredit committee — above officer delegation threshold

HumanLegal counsel review — disputed or litigated account

HumanWrite-off decision — board/committee authority

What this agent does

The Settlement & Waiver Agent AI computes the settlement options available for a specific NPL / charge-off account within the current settlement policy, routes the case to the appropriate approval authority, and generates settlement documentation once terms are agreed. It ensures every settlement is policy-compliant, within delegated authority, and fully documented — providing the audit trail that regulatory examinations and board-level reporting require.

Primary functions

Waiver Eligibility Assessment

On borrower approach or NPL / charge-off review

INVOKED WHEN: a borrower or representative expresses settlement interest

Reads the account file — original approval, outstanding balance, security position, provisioning level, collections history, and prior settlement approaches — and assesses eligibility under the current settlement policy: minimum charge-off period for settlement eligibility, segment eligibility, and prior settlement breach history which affects terms available.
Computes the maximum permissible haircut — policy clause cited, outstanding and security position, eligible waiver band — stated explicitly so the credit officer understands the basis for the options they are approving.
Checks the settlement precedent log for comparable prior settlements and flags where proposed terms deviate materially from precedent.

Output: Waiver eligibility report — policy eligibility confirmed, maximum permissible haircut computation, precedent comparators, and material-deviation flag where applicable.

Approval Routing

After terms are proposed

INVOKED WHEN: the borrower has indicated acceptance and the case needs approval authority

Maps the proposed settlement terms against the authority matrix and routes to the minimum required authority with a full approval note: account summary, settlement terms, eligibility basis, precedent comparators, and financial impact.
Flags where proposed terms require a policy exception and routes at one authority level higher, with a mandatory documented rationale requirement.

Output: Approval routing package — authority tier, approval note, exception flag, and credit committee meeting date if required.

Settlement Documentation

After approval is confirmed

INVOKED WHEN: the approval authority has confirmed settlement terms

Generates the settlement agreement in standard format: parties, settled amount, payment schedule, non-payment consequence (waiver void, full outstanding revives with interest), and charge release provisions for secured accounts.
For secured accounts: coordinates the UCC-3 termination statement filing with the relevant Secretary of State — scheduled after CBS confirms payment received. Charge release cannot execute before payment confirmation; this sequencing is hardcoded.
Produces the no-dues certificate and NPL / charge-off register closure entry once payment is confirmed, logging all documentation with the Audit Trail Agent AI.

Output: Settlement agreement draft for legal review. Post-payment: no-dues certificate, charge release coordination, NPL / charge-off register closure, Audit Trail log.

Hard guardrails

Will notApprove, offer, or commit settlement terms to a borrower. All settlement communications are made by the human credit officer after approval is confirmed.

Will notApprove a settlement below the policy floor without a documented exception approval from the required authority tier.

Will notRelease a security charge before settlement payment is confirmed in CBS.

Known limitations

Settlement precedent data is only as complete as the settlement log.Prior settlements not properly logged create gaps in the precedent database. Every settlement must be formally documented and entered into the log before closure.

The financial impact calculation uses book value, not economic value.A book-value 40% haircut may be economically small for a highly provisioned account. Credit officers should understand the difference between book-value and economic-value impact when assessing whether a settlement is value-accretive.

Important Reads

Learn more about how to deploy Settlement & Waiver Agent AI to your lending workflow.