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How to enter a payoff payment in a loan?

This article discusses how to enter a payoff payment in a loan.

TIPS:

  • For lines of credit, commercial, and construction loans you must first generate and apply an Account Closing Statement. Click the links below to learn how to generate the Account Closing Statement for each loan type:

Use the Payoff Payment window to enter the final payment on a loan, and completely pay all outstanding balances, unpaid charges, accrued interest and late charges. You are able to enter a payoff payment from the Loans grid or from Tasks & Reports.

To enter a Payoff Payment from the Loans Grid:

  • Click on running Loan Servicing in the left panel of The Mortgage Office®.
  • Click the Loans drop-down.
  • Click the specific loan type (Conventional, Commercial, Construction, Lines of Credit, or Other) to open that grid or click All Loans to open a grid containing all the loan types. 
  • From the grid, select the loan enter a payment for. 

TIP: If the record you want to edit is not visible, use the grid's vertical scroll bar to scroll the contents of the grid up or down, or click FindSearch icon box Find to search for the record by entering your own search criteria. For additional information see How to use find and How to use the data grids.

  • Click the lightning bolt with downward arrow, with button border Actions drop-down and select wallet Payoff Payment from the list.

NOTE: The system may display a message and prevent you from entering a payoff payment. Below are some of the most common reasons:

  • Principal balance is less than or equal to zero.
  • The loan has been placed on hold.
  • Missing next payment due date
  • Loan is not funded, or the funding is in error.
  • Missing loan's closing date (lines of credit and construction loans)

The system may display one or more warning messages. Below are some of the most common reasons:

  • The loan is assigned one of the following critical categories: Bankruptcy or Foreclosure
  • The loan is not active (missing the Active category)
  • One or more NSF payments within the last six months
  • There are one or more reminders for this payment.
  • Enter and review the following information in the specific sections below: 
  • Loan Information section:

Field:

Description:
Account

Enter the loan account number. The primary borrower's full name will display in the field below.

TIP: Click browse two dots to open a lookup window that allows you to select a record from a list of existing records. For more details see How to use lookup windows.

Principal Balance

The loan's principal balance. This field is read-only.

Reserve Balance

The loan's reserve (trust) account balance. This field is read-only.

Impound Balance

The loan's impound (trust) account balance. This field is read-only.
Unpaid Interest

The loan's unpaid interest balance. This field is read-only.

TIP: The system displays an alert (caution triangle blue background warning cone) next to this field if the loan has a non-zero unpaid interest balance.
Unpaid Late Charges The total amount of unpaid late charges. This field is read-only.
Unpaid Charges The total amount of unpaid charges plus any accrued interest. This field is read-only.
Regular Payment

The amount of the scheduled regular payment. This field is read-only.

TIP: This amount is the sum of P&I, Trust/Escrow and Other Payments.
Paid to Date

The date interest is paid to. This field is read-only.  

TIP: This date is always in arrears, and generally a period earlier than the Next Payment Due date.

Next Payment Due

The loan's next payment due date. This is the default value used as Due Date in the Payment Information section of this window. This field is read-only.
Next Revision

The loan's next scheduled revision. This field is read-only.

TIP: The system displays an alert (caution triangle blue background warning cone) next to this field if the revision date has expired.
Maturity Date

The loan's maturity date. This field is read-only.

TIP: The system displays an alert (caution triangle blue background warning cone) next to this field if the maturity date has passed.

TIP: The system won't prevent you from posting a payment to a loan with a past due maturity date.
Note Rate

The loan's interest rate. This field is read-only.

    • Payment Information section:

    Field:

    Description:
    Method

     Select a payment method from the list. The available choices are:

    • Cash
    • Check
    • Cashier's Check
    • Credit Card
    • EFT 
    • Electronic Payment
    • Money Order
    • MoneyGram
    • Other
    Reference Enter the reference number of the payment being entered; in most cases, this is the borrower's check number. (Maximum 10 characters)
    Date Received

    Enter the date the payment was received. The system defaults to today's date.

    TIP: The received date of the payment is used to calculate accrued late charges.

    TIP: For loans with the Periodic Interest Accrual Method set to Actual Days (Received Date to Received Date), accrued interest is calculated on the actual number of days between the loan's paid-to date and the payment received date entered here.

    TIP: This date is used to calculate interest due on interest-bearing charges being paid.
    Release Date

    Enter the date that you want the distributions from this payment to be available for the lenders and vendors. The system defaults to Date Received plus the number of days that you hold checks.

    TIP: If you change the Date Received the Release Date is automatically recalculated, but you are able to manually enter an arbitrary value in this field. 
    Release Status

     Select one of following three choices from the list:

    • Release. Distributions from this payment will be available on or after the release date.
    • Hold. Distributions from this payment will not be available until the hold is removed.
    • Immediate. Distributions from this payment are immediately available, and checks can be printed at any time.

    • Source of Funds section:

    Field:

    Description:

    From Borrower

    Enter the amount received from the borrower. The system defaults to the loan's calculate payoff payment amount.

    From Reserve

    If all or part of the payment amount is from the borrower's reserve (trust) account, then enter the amount here.

    From Impound

    If all or part of the payment amount is from the borrower's impound (trust) account, then enter the amount here.
    Total Received

    This is the total amount of money to be applied as payment and represents the sum of the two prior fields. This is a read-only field.

    TIP: Any changes in total received amount triggers a recalculation of the payment distribution.

    • Payment Distribution section:

    Field:

    Description:
    Principal

    This is the amount of the payment to be applied to principal. This is a read-only field.

    TIP: Any undistributed portion of the payment is automatically applied to principal.
    Interest

    The amount of interest due is automatically calculated by the system. You can update this field if necessary.

    TIP: The system displays an alert (caution triangle blue background warning cone) next to this field if the interest calculation resulted from an irregular period fundings. If the alert is visible, you may click the preceding Interest hyperlink to preview and print a detail audit of the calculations.

    Late Charges

    Enter the portion of the payment that you want to apply towards late charges.
    Pay Charges Click the hyperlink to open the Pay Charges window and select which charges to pay. 
    Other Payments

    Click the hyperlink to open the Other Payments window. The system defaults to the amount entered in the Regular Payment section, Other Payments field, of the loan's General Terms. 

    TIPS:

    • You can Add new PLUS sign w border_r-PNG add, Table pencil Edit icon with border_r-PNG edit or delete with button border outline delete the items from the Other Payments window. Any changes or additions made here only apply to this payment and do not affect the recurring amounts setup for this loan.
    • Other payments to be paid by the lenders are not included in this amount.
    Prepay Penalty

    The amount of prepayment penalty (if any) is automatically calculated and entered here. 
    Lender Fees

    Enter the amount of additional lender fees you want to collect from this payment.

    TIPS:

    • The amount you enter here is distributed among the funding lenders according to their ownership.
    • The system assumes this fee is taxable income to the lenders and will be reported on the lenders 1099-INT. This is a one-time charge for this payment only.
    • You may want to document this additional fee in the Notes section of this payment for future reference.
    Broker Fees

    Enter the amount of additional broker (Company) fees you want to collect from this payment.

    TIPS:

    • The system assumes this fee is taxable income to the Company and will be reported on the 1099-MISC. This is a one-time charge for this payment only.
    • You may want to document this additional fee in the Notes section of this payment for future reference.
    Reserve

    Any excess or shortages of funds is automatically calculated and entered here. This is a read-only field.

    TIP: If needed, any funds remaining in the borrower's trust can be disbursed at a later time.

    • Tasks & Options section:

    Field:

    Description:
    Notes

    Enter text to add notes to this payment.

    TIP: These notes are attached to the payment record and can be viewed and edited in the loan history window.
    Edit Payment Distribution Click to open the Payment Distribution window and view, Add new PLUS sign w border_r-PNG add, Table pencil Edit icon with border_r-PNG edit or delete with button border outline delete this payment's distribution. 
    Clear & Start Again

    Click to clear the window and start again.
    • When finished entering and reviewing information, click APPLY button Apply to enter the payment or CANCEL Cancel to abort the transaction. 
    • When you are finished processing payoff payments, click image-png-Jul-26-2023-04-29-08-2466-PM Cancel or black X Exit to close the window and exit.

    To enter a Payoff Payment from Tasks & Reports:

      • Click on running Loan Servicing in the left panel of The Mortgage Office®.
      • Click Tasks & Reports from the menu located on the left of the window.
      • In the Loan Transactions section, click card Payoff Payment.
      • Enter and review the following information in the specific sections below: 
      • Loan Information section:

        Field:

        Description:
        Account

        Enter the loan account number. The primary borrower's full name will display in the field below.

        TIP: Click browse two dots to open a lookup window that allows you to select a record from a list of existing records. For more details see How to use lookup windows.

        NOTES:

        • The system may display a message and prevent you from entering a payoff payment. Below are some of the most common reasons:
          • Principal balance is less than or equal to zero.
          • The loan has been placed on hold.
          • Missing next payment due date
          • Loan is not funded, or the funding is in error.
          • Missing loan's closing date (lines of credit and construction loans)
        • The system may display one or more warning messages. Below are some of the most common reasons:
          • The loan is assigned one of the following critical categories: Bankruptcy or Foreclosure
          • The loan is not active (missing the Active category)
          • One or more NSF payments within the last six months
          • There are one or more reminders for this payment.

        Principal Balance

        The loan's principal balance. This field is read-only.

        Reserve Balance

        The loan's reserve (trust) account balance. This field is read-only.

        Impound Balance

        The loan's impound (trust) account balance. This field is read-only.
        Unpaid Interest

        The loan's unpaid interest balance. This field is read-only.

        TIP: The system displays an alert (caution triangle blue background warning cone) next to this field if the loan has a non-zero unpaid interest balance.
        Unpaid Late Charges The total amount of unpaid late charges. This field is read-only.
        Unpaid Charges The total amount of unpaid charges plus any accrued interest. This field is read-only.
        Regular Payment

        The amount of the scheduled regular payment. This field is read-only.

        TIP: This amount is the sum of P&I, Trust/Escrow and Other Payments.
        Paid to Date

        The date interest is paid to. This field is read-only.  

        TIP: This date is always in arrears, and generally a period earlier than the Next Payment Due date.

        Next Payment Due

        The loan's next payment due date. This is the default value used as Due Date in the Payment Information section of this window. This field is read-only.
        Next Revision

        The loan's next scheduled revision. This field is read-only.

        TIP: The system displays an alert (caution triangle blue background warning cone) next to this field if the revision date has expired.
        Maturity Date

        The loan's maturity date. This field is read-only.

        TIP: The system displays an alert (caution triangle blue background warning cone) next to this field if the maturity date has passed.

        TIP: The system won't prevent you from posting a payment to a loan with a past due maturity date.
        Note Rate

        The loan's interest rate. This field is read-only.

          • Payment Information section:

          Field:

          Description:
          Method

           Select a payment method from the list. The available choices are:

          • Cash
          • Check
          • Cashier's Check
          • Credit Card
          • EFT (credit cards or electronic fund transfers)
          • Electronic Payment
          • Money Order
          • MoneyGram
          • Other

          TIP: Select Electronic Payment to process credit cards or electronic funds transfers (EFT). 
          Reference Enter the reference number of the payment being entered; in most cases, this is the borrower's check number. (Maximum 10 characters)
          Date Received

          Enter the date the payment was received. The system defaults to today's date.

          TIP: The received date of the payment is used to calculate accrued late charges.

          TIP: For loans with the Periodic Interest Accrual Method set to Actual Days (Received Date to Received Date), accrued interest is calculated on the actual number of days between the loan's paid-to date and the payment received date entered here.

          TIP: This date is used to calculate interest due on interest-bearing charges being paid.
          Release Date

          Enter the date that you want the distributions from this payment to be available for the lenders and vendors. The system defaults to Date Received plus the number of days that you hold checks.

          TIP: If you change the Date Received the Release Date is automatically recalculated, but you are able to manually enter an arbitrary value in this field. 
          Release Status

           Select one of following three choices from the list:

          • Release. Distributions from this payment will be available on or after the release date.
          • Hold. Distributions from this payment will not be available until the hold is removed.
          • Immediate. Distributions from this payment are immediately available, and checks can be printed at any time.

          • Source of Funds section:

          Field:

          Description:

          From Borrower

          Enter the amount received from the borrower. The system defaults to the loan's calculate payoff payment amount.

          From Reserve

          If all or part of the payment amount is from the borrower's reserve (trust) account, then enter the amount here.

          From Impound

          If all or part of the payment amount is from the borrower's impound (trust) account, then enter the amount here.
          Total Received

          This is the total amount of money to be applied as payment and represents the sum of the two prior fields. This is a read-only field.

          TIP: Any changes in total received amount triggers a recalculation of the payment distribution.

          • Payment Distribution section:

          Field:

          Description:
          Principal

          This is the amount of the payment to be applied to principal. This is a read-only field.

          TIP: Any undistributed portion of the payment is automatically applied to principal.
          Interest

          The amount of interest due is automatically calculated by the system. You can update this field if necessary.

          TIP: The system displays an alert (caution triangle blue background warning cone) next to this field if the interest calculation resulted from an irregular period fundings. If the alert is visible, you may click the preceding Interest hyperlink to preview and print a detail audit of the calculations.

          Late Charges

          Enter the portion of the payment that you want to apply towards late charges.
          Pay Charges Click the hyperlink to open the Pay Charges window and select which charges to pay. 
          Other Payments

          Click the hyperlink to open the Other Payments window. The system defaults to the amount entered in the Regular Payment section, Other Payments field, of the loan's General Terms. 

          TIPS:

          • You can Add new PLUS sign w border_r-PNG add, Table pencil Edit icon with border_r-PNG edit or delete with button border outline delete the items from the Other Payments window. Any changes or additions made here only apply to this payment and do not affect the recurring amounts setup for this loan.
          • Other payments to be paid by the lenders are not included in this amount.
          Prepay Penalty

          The amount of prepayment penalty (if any) is automatically calculated and entered here. 
          Lender Fees

          Enter the amount of additional lender fees you want to collect from this payment.

          TIPS:

          • The amount you enter here is distributed among the funding lenders according to their ownership.
          • The system assumes this fee is taxable income to the lenders and will be reported on the lenders 1099-INT. This is a one-time charge for this payment only.
          • You may want to document this additional fee in the Notes section of this payment for future reference.
          Broker Fees

          Enter the amount of additional broker (Company) fees you want to collect from this payment.

          TIPS:

          • The system assumes this fee is taxable income to the Company and will be reported on the 1099-MISC. This is a one-time charge for this payment only.
          • You may want to document this additional fee in the Notes section of this payment for future reference.
          Reserve

          Any excess or shortages of funds is automatically calculated and entered here. This is a read-only field.

          TIP: If needed, any funds remaining in the borrower's trust can be disbursed at a later time.

          • Tasks & Options section:

          Field:

          Description:
          Notes

          Enter text to add notes to this payment.

          TIP: These notes are attached to the payment record and can be viewed and edited in the loan history window.
          Edit Payment Distribution Click to open the Payment Distribution window and view, Add new PLUS sign w border_r-PNG add, Table pencil Edit icon with border_r-PNG edit or delete with button border outline delete this payment's distribution. 
          Clear & Start Again

          Click to clear the window and start again.
          • When finished entering and reviewing information, click APPLY button Apply to enter the payment or CANCEL Cancel to abort the transaction. 
          • When you are finished processing payoff payments, click image-png-Jul-26-2023-04-29-08-2466-PM Cancel or black X Exit to close the window and exit.

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