Introduction
Configuring the Flow of Funds settings determines how borrower interest adjustments, investor payouts, and holdback distributions are handled. Proper setup ensures accurate payments, eliminates manual adjustments, and provides a seamless payment workflow.
Navigating to Flow of Funds Settings
Click the Gear icon in the top-right corner to open Settings.
Select Company Settings.
Expand Loan Setup/Origination in the left-hand navigation menu.
Click Flow of Funds.
Tip: If you do not see the Flow of Funds section, ensure you have the correct permissions or check with your administrator.
Borrower Interest Adjustments
Determines how interest accrued between loan funding and the borrower’s first payment is handled. Options include collecting interest upfront or deferring it to future payments.
Investor Payouts
Defines how and when investor distributions occur during loan origination and discharge. Payouts can be structured as Gross (handled by the Lawyer) or Net (managed by the Lender), with additional options for Pre-Authorized Debits (PAD).
Best Practice: Offset investor payouts by one to two weeks after borrower payments to allow processing time and reduce the impact of missed payments.
Holdback and Prepaid Interest Distributions
Manages how holdbacks and prepaid interest are allocated, ensuring investors receive funds at the appropriate time.
Warning: Changes to Flow of Funds settings after funding do not automatically apply. Unfunding the loan resets all servicing details and requires re-entry.
FAQs
What happens if no option is selected for borrower interest?
The system automatically deducts the interest adjustment from the borrower's net proceeds at closing.
Which investor payout method should I choose?
Choose Gross if payouts are handled by the Lawyer, or Net if the Lender manages distributions directly.
Should investor payouts align with borrower payment dates?
No. Offset payouts by one to two weeks to allow processing time and reduce the risk of missing investor payments.
Need Further Assistance?
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📧 Email: support@mortgageautomator.com
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