Parent-Child Loan Linking
Parent-child loan linking functionality lets you designate multiple loans as the child of a single loan. When transactions are posted to the parent loan, a transaction is also posted to each child loan, in a percentage the user specifies. Transactions that get split and posted to child loans include: payments, advancements, credits, and AutoPays. This allows you to give multiple loans to the same borrower, with the ability to track them as both a single loan, and individual loans. This is a one-dimensional link. This means that if a loan is a child of a parent, it cannot be the parent loan itself.
Linking a Child Loan
Linking child loans to a parent can only be done within the parent loan. To do this, navigate to Loan Settings > Account Linking > Parent/Child Linking within the loan that will be the parent.
You can link multiple child loans. To link a loan, click Add.
The SELECT LOAN tab lets you select the loans that you want to link as children. Check the box to the right of each loan that you want to link, then select NEXT. You can also use the keyword and status filters to find the loans you want.
The CONFIGURE ENROLLMENT tab lets you define which of the child loans should get a transaction when a transaction is posted to the parent loan. To enroll a loan, click the checkbox in the "Enrolled" column. You can also define what percentage of the parent transaction should go to each child loan. These percentages should add up to 100%. If you would like the percentages to be calculated automatically based off of the total Balance of loans enrolled, select CALCULATE PERCENTAGES.
Additional Setup Tools
When setting up a parent/child link between loans, this feature is also included in the Roll Schedule tool. In both the "Full" and "Simple" setup options, a table will be displayed showing the accounts linked to the loan.
Posting a Transaction
Transactions should only be posted to the parent loan. This feature is designed to let you work with multiple loans easily through a single loan. When you post a credit or advancement, the process will be the same as it would on any loan. The credits and advancements will be divided between child loans according to the percentages specified when the parent-child link was configured. When posting a payment or an AutoPay, you can choose the allocation amounts.
Payments & AutoPays
When logging a payment or creating an AutoPay, there will be an extra step called Payment Allocation.
Here, you can specify how much of the total amount should be allocated to each child loan. By default, the total amount will be divided based on the percentages specified when the parent-child link was configured. The amounts entered should add up to the total payment amount. If they don't, you will not be able to post the payment or create the AutoPay.
NOTE: When a payment is edited on a parent loan, the associated payments on the child loans will also be edited. If a child payment is edited, it will not affect the payment on the parent loan.
Posting a Credit
You also have the ability to split a Credit between parent/child loans. When posting the credit, there will be additional options on the popup box that will allow you to have LoanPro automatically calculate the amounts allocated to the separate loans or you can choose the amount being allocated to each loan. For more information regarding how to post a credit on an account, see this article Log an Advancement/Credit.
Recommendations for Use
The typical use for this feature is that employees mostly work with parent loans, and will only change child loans under special circumstances. Because of this, we recommend some access restrictions and grouping be done to make it easier to work with parent and child loans.
Linking Feature Access
We recommend restricting access to the linking feature for most employees. This should be done at a role level. Your servicers should not be able to change parent-child loan links, and giving this access to anyone who doesn't need it may cause serious problems.
We recommend creating a portfolio for parent loans and a portfolio for child loans. All parent loans should be in the "Parent" portfolio and all child loans in the "Child" portfolio. This will make it filter your searches of the Loan Manager and reports for parent or child loans. A search restriction should be put in place so that servicers can only get parent loans from searches in the Loan Manager.
Restriction Groups or Frozen Resources
We recommend using restriction groups to disallow posting transactions on child loans. This restriction should be in place for servicers, at least, and could be a good idea for all employees.
We recommend having rules applied run on parent loans ONLY. Note that Rules applied only on a single account, and will not affect the child loans of the parent or vice versa. This means that an action on a child account or a parent account can NOT impact a child's parent or a parent's children. This may require that your rule logic includes only the rule application only applying to loans in the "Parent" or "Child" portfolio.
Reports & Searches
As mentioned, we recommend creating a portfolio for parent loans and a portfolio for child loans. All parent loans should be in the "Parent" portfolio and all child loans in the "Child" portfolio. This will make it filter your searches of the Loan Manager and reports for parent or child loans.