How to handle servicing fees and/or sold rate interest differential distributions on deferred payments?

• If you have a loan setup with Servicing Fees and then enter $0.00 for the loan Regular Payment amount to defer the payment, it will still create a distribution to the Broker for the fees. This setup will subsequently create a negative entry in the to the Lender(s) in the Pending Checks Queue. 
  • If you were to use the Cancel Servicing Fees option in the Edit Payment Distribution area, those missed Servicing Fees would not be automatically recovered at payoff.
• As an alternative to using Servicing Fees when the Company is also a lender in the file, it might be a better option to still use the Sold Rate and then in the Company funding record in the Funding screen, use the Fixed Rate option to set the Company's rate back to the Note Rate.
• If all Lender(s) are set up using the Sold Rate or Fixed Rate settings (no Servicing Fees), when you enter $0.00 to defer the Regular Payment it will not create any interest spread to the Broker.  When the Unpaid Interest is paid, the Company should get its spread at that time.
• If you negatively amortize the interest due to principal, the system will create the spread as a check to the Broker, and a negative remittance to the Lender(s) in the Pending Checks Queue.
  • This could be thought of as a Payment in Kind (PIK) loan, such that the interest due was paid by increasing the debt/note and that the lenders are funding that increase by a reduction to "other" "Pending Lender Checks" remittances that are processed for loans that actually receive payments. 

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