Introduction
The Payments, Adjustments, and Charges Settings section allows users to tailor payment handling, irregular payment processing, and outstanding balance management. These settings enhance flexibility in loan servicing, ensuring timely and accurate repayment tracking.
Navigating to Payments, Adjustments, and Charges Settings
Click the Gear icon in the top-right corner to open Settings.
Select Company Settings.
Use the left-hand navigation menu to find and expand Loan Servicing > Repayment.
Locate and select Payment Method & Calculations > Payments, Adjustments, and Charges Settings.
Tip: If you cannot access Payments, Adjustments, and Charges Settings, ensure you have the necessary permissions or check with your administrator.
Payments, Adjustments and Charges Settings
Warning: If these settings are updated, past servicing actions and calculations will not be affected. Changes will only apply to future servicing actions.
Payment Processing / PAD
The Payment Processing / PAD setting determines how bounced payments (NSFs) are handled. Enabling this option ensures that NSF payments are automatically rescheduled and reattempted on their original due date via PAD.
Setting | Description |
Auto-Schedule Bounced Payments (NSFs) | Automatically reschedules NSF payments (interest-only, P&I, reserves, fees) to be reattempted via PAD on the original due date. |
Accrued Daily Interest Paid from Irregular Payment / Add a Payment
This setting determines how accrued interest from irregular payments is managed.
Setting | Description |
The Excess in the Upcoming Regular Payment Is Used to Partially Pay Down the Principal | Any excess from an irregular payment is applied to reduce the principal balance. |
Upcoming Regular Payment Is Paid Earlier From the Irregular Payment | Instead of applying excess funds to the principal, the next scheduled payment is covered earlier. |
Exclude the Irregular Payment Day | The system excludes the irregular payment date when calculating accrued daily interest. |
Include the Irregular Payment Day | The system includes the irregular payment date in the accrued daily interest calculation. |
Partial Paydown of Principal in 'Irregular Payment' and 'Add a Payment'
This setting applies to construction and fix & flip loans, determining how partial paydowns affect the loan balance.
Setting | Description |
Reduces Total Facility | The total loan facility is reduced when a partial paydown is applied. |
Keeps Total Facility | The total facility remains unchanged, and only the total advanced amount is reduced. |
Outstanding Interest and Outstanding Fees
These settings control how outstanding balances are managed concerning regular payments.
Setting | Description |
Outstanding Interest and Fees Are Paid Separate From Regular Payments | Unpaid interest and fees remain separate from scheduled payments. |
Auto-Pay Outstanding From Regular Payments | The system automatically deducts outstanding interest and fees from regular payments before applying funds to the principal. |
Auto-Payment
The Auto-Payment settings define how payments are processed and whether the original amortization schedule is adjusted for deferred or bounced payments.
Setting | Description |
On a Regular Basis | Payments are processed automatically based on a predefined schedule. |
On a Case-by-Case Basis | Payments require manual review and approval before processing. |
Adjust Original Amortization Schedule for Deferred Payments | When enabled, deferred payments adjust the original amortization schedule to account for unpaid interest. |
Adjust Original Amortization Schedule for NSFs | If enabled, bounced payments adjust the amortization schedule so that the principal is paid down later. |
Charge Interest on Total Balance (Principal + All Outstanding Interest, Fees, Reserves) | Interest is calculated on the combined total of principal, outstanding interest, fees, and reserves. |
Caution: Enabling Charge interest on total balance may cause interest to accrue on fees and reserves, increasing the total repayment amount.
FAQs
What happens if I disable auto-scheduling for bounced payments?
Disabling this setting means that NSF payments will not be automatically rescheduled, requiring manual intervention to reattempt collection.
How does excluding or including the irregular payment day impact interest calculations?
Excluding the irregular payment day removes it from interest accrual calculations, while including it factors the date into accrued interest.
How does "Charge interest on total balance" affect my loan calculations?
When enabled, interest accrues on the full balance, including outstanding fees and reserves, potentially leading to a higher overall repayment amount.
Need Further Assistance?
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