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Payment Method 5 Loans

For line-of-credit loans (payment method 5, 9, or 10), using the Straight Line (code 1) amortization method will allow monthly amortization to continue when the principal balance becomes zero or fluctuates upward or downward.

 

 

Paid-off Loans

When a loan is paid off, amortization takes place on the day of regular amortization (usually at monthend) rather than on the payoff date.

 

Note: When a loan is closed, regardless of the status of the loan all funds will be amortized that month. (Non-performing, general categories, etc. do not stop the amortization.)

 

Sold Loans

When a loan is sold 100%, the remaining deferred fees, cost, discount/gain, and premium/loss can either be taken to income or expense or continue to amortize as in the past. This is controlled on a loan-by-loan basis according to whether the Take All If Sold 100% field is checked. The funds will be taken to income at the same time the deferred fees cycle (generally at monthend), not on the date you sell the loan.

 

When a loan is sold on a percentage basis, the Take All If Sold on Percentage Basis field is used to determine if the total of the percent sold in the month of the sale of the remaining deferred fees, costs, discount/gain, or premium/loss should be taken to income or expense or continue to amortize normally. The funds will be taken to income at the same time the deferred fees cycle (generally at monthend), not on the date you sell the loan.

 

Example: The Remaining Fees field is $1,000. The loan is sold 90% and the Take All If Sold on Percentage Basis field is checked. At monthend, the system will calculate 90% of the $1,000 and take $900 to income. The remaining $100 will continue to amortize monthly. TORC 40 is used with the Take All If Sold on Percentage Basis field.