Default Interest

Default Interest

Default loans calculate and accrue a default interest amount separate from the normal accrued interest amount. This default interest can be calculated on unpaid principal balance, total payment, partial payments, and unpaid principal portion of the defaulted payment. Partial payments received from the borrower must be posted before calculating the default interest. Partial payments are posted as normal partial payments and not as unapplied payments.

Servicing Director offers two options for calculating default interest, per payment or as a lump sum
  • Per payment option: will calculate default interest for each past due payment, due after grace days. For example, a payment that is past due for 90 days will have 90 days of default interest due. Each payment pas due accrues default interest.
  • Lump sum options: will calculate default interest for the loan depending on the number of days a loan is past due. There could be changes to the rate or basis (anything that changes the per diem value).
On payoffs the per diem is currently based on the investor custom needs to have the ability to change how the per diem is calculate at the payoff level. The per diem is defaulted from the investor for how it is calculated and at the loan lever this can be changed.

Add at the investor level if interest should be calculated to the date of payoff or thru the date of payoff, this should also be defaulted to payoff and then override or change at loan level.

Default Interest will be added to all areas of the system that includes total due calculation, loan modification, repayment plans, payoffs, investor remittances. loan assumptions, loan adjustments, total due.

Environment:

Servicing Director

ArticleNumber:

000055012

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