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Loan Servicing Configuration Guide

This guide walks through configuring your Loan Servicing database — General and Regional settings, Email and communication modules, core Loan Servicing options, Account Numbering, Automated Payments, Checks, and Notices. 

Loan Servicing Configuration Guide

Watch: Loan Servicing Configuration (Part 1)

Table of Contents:

Part 1: General & Regional Settings

Caution: Who this is for: Internal database administrators. These are company-wide settings — a change here applies to every user in the database.

In the top right corner, click the gear icon, then click General on the left.

Company Information

  • Enter your company name, address, city, state, and zip.
  • Enter your phone number, fax, general contact email, and website.
  • Enter your federal or state TIN.

Note: Broker Information can be skipped for this setup.

Regional Settings

  • Click Regional and set the time zone to match where your company operates.

Caution: An incorrect time zone can cause payment due dates, notices, and reports to calculate against the wrong local time.

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Part 2: Email & Communication Settings

Email — General

  • Click Email, then the General tab.
  • Set the Display Name (typically your company name).
  • Enter the Email Address TMO will send from, and a Reply Address.
  • (Optional) Check BCC to receive a copy of every email TMO sends.

Caution: The Email Address must be one you can actively log into. If it can't be logged into, email sending will not function.

Email — Sending

  • Click the Sending tab and choose your provider: None, Other, Google, or Office 365.
  • For Google or Office 365, click Connect Email and log in when prompted. A green success message confirms the connection.
  • Click Test Account Settings — green means it's working; red means something needs correcting.

Tip: If email isn't needed, leave the provider set to None.

Text Messages (Optional Paid Module)

  • Click Text Messages, check the box to enable, and accept the terms of service.
  • Review pricing before confirming.

Note: Leave deselected if text messaging isn't needed for your company.

Address Services (Optional Paid Module)

  • Click Address Services, check the box to enable, and accept the terms of service.

Note: Activation typically takes 24–48 hours. Check with your account manager to confirm when it's live.

Events Journal

  • Click Events Journal and check Verbose for additional event detail.

Tip: Enabling Verbose is recommended for all customers.

Text Alert Templates (if the Text Messages module is enabled)

  • Select an alert type: Loan Payment Reminder, Loan Payment Receipt (borrower or lender), ACH Payment Reminder, Direct ACH Deposit Details, Deposit Summary, or NSF Payment/Notice.
  • Mark it Active, edit the template, and click Save Changes.

Note: Templates use merge fields (shown in carats, e.g. <CompanyName>) that auto-populate data like payment amount, account number, and due date.

Caution: Leave merge fields intact — edit only the surrounding text.

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Part 3: Loan Servicing Options

Caution: Who this is for: Internal database administrators. These are company-wide settings that affect how payments post for every loan.

Click the gear icon, then go to Loan Servicing > General on the left.

Investor Reporting

  • Two checkboxes control whether investors see the full spread between what a borrower pays and what your servicing fee retains, or only the net amount.

Note: Example: an investor due $1,000 with a $100 servicing fee nets $900. Deselect both boxes to show the full spread; select both to show only the $900 net.

Payoff Interest Accrual

  • Controls whether interest accrues through the day of payoff or only through the day prior.

Tip: Industry standard is to accrue through the day of payoff — select both checkboxes to follow this standard.

Billable Loan Charges

  • Controls whether charges on billable loans automatically accrue interest.

Tip: Most companies leave this deselected, since most fees are fixed amounts rather than interest-bearing.

Loan Servicing Trust Account

  • Select your trust account from the drop-down.

Caution: Never set this field to None. Doing so prevents TMO from posting any payments in the database.

Escrow Administration

  • Choose how insufficient escrow funds are handled: Allow payment (no warning), Warn but allow override, or Prevent payment.

Tip: "Warn, but allow override" is recommended for most companies and can be applied database-wide.

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Part 4: Account Numbering & Automated Payments

Account Numbering

  • Click Account Numbering and select the tab for Loans, Lenders, or Vendors.
  • Configure a Prefix (1 character), Auto Number, and Suffix (1 character) if you want TMO to generate account numbers for you.
  • Use Account Preview to confirm the next number before saving.

Tip: Leave numbering disabled if you'd rather assign your own unique account IDs.

Payment Consolidation

  • Controls whether ACH, lockbox, or online portal deposits are grouped into a single line item or shown itemized.

Note: Match this setting to how your bank actually reports deposits.

Short / Partial Payments

  • "Include positive reserve balance as amount received" and "Apply short payments to trust reserve" control whether partial auto-debits are allowed, and whether trust reserve funds can cover a shortfall.

Note: Example: a $1,000 payment is due and only $800 is debited. TMO holds the $800 as received but unallocated until the remaining $200 arrives.

Excess Funds (Overpayments)

  • Choose whether excess funds pay down unpaid late charges and other unpaid charges first, and whether remaining excess applies to principal or trust reserve.

Tip: Use Principal for amortizing loan portfolios; use Trust Reserve for interest-only loans.

Excess Funds at Payoff

  • Choose whether payoff overages are allocated to principal, deposited to trust reserve, or refunded same day.

Tip: "Deposit to trust reserve" is recommended, since payoff funds typically take 3–5 business days to clear before a refund can be issued.

Note: Construction Loans settings are specific to the Construction Loan module and are not covered in this guide.

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Part 5: Checks & Notices

Investor Checks / ACH Distributions

  • Click Checks and enable investor distributions if you pay a portfolio of investors.
  • Set "Hold distribution checks for [X] days" to match how quickly you pay investors once funds are available.

Caution: If your company funds all loans in-house and doesn't work with outside investors, deselect this section entirely.

Late Notice Sequence

  • Click Notices to review and edit the four late notice stages. Notices 1–2 are informational; notices 3–4 use firmer, more serious language.

Tip: Customize the wording and day thresholds for each stage to match your company's collections policy.

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Quick Tips:

  • Never set the Loan Servicing Trust Account to None — it will block all payment postings.
  • Match Payment Consolidation settings to how your bank actually reports deposits.
  • Industry standard is to accrue interest through the day of payoff.
  • Enable the Checks section only if you service a portfolio of outside investors.
  • Enabling Verbose event logging is recommended for all customers.

Copyright © Applied Business Software, Inc. All Rights Reserved.

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