Parent-Child Loan Linking


Parent-child loan linking functionality lets you designate multiple loans as the child of a single loan. This is a one-dimensional link, meaning that if a loan is a child of a parent, it cannot be the parent loan itself. 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.

In this article, we'll explain how to link loans in a parent-child relationship.

Parent-Child Loan Linking

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 receive a funds 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 on the total balance of loans enrolled, select 'Calculate Percentages'.

If there are any issues with the configuration, warnings will appear at the bottom of this window. Once you have entered the configuration information, click 'Save'.

Once loans are linked, they will be shown on this tab. The parent loan will display an 'Edit' button but child loans will not, because the link can only be changed at the parent level. All the loans in the parent-child relationship will be shown. The loan located at the top and listed in gray is the parent loan. If you look at this tab on a child loan, the child loan will also be highlighted. The Account Number links to the left are clickable, and will take you directly to the associated loan.

To unlink a child loan from the parent loan, navigate to the Account Linking page inside a loan account. Click on the 'Edit' button and then go to the 'Configure Enrollment' page. On this page, all of the children loans will have a delete icon located on the right. Use this icon to remove the child from the parent loan. After removing a child loan linked to a parent loan, you may have to change the percentage amounts so they add up to 100% again.

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.

When adding a schedule to the loan, you can click on the 'Calculate Amount' button to sum the base payment amount for the enrolled child accounts and add the summation to the "Amount" field.

Posting a Transaction

Transactions should only be posted to the parent loan. This feature is designed to let you easily work with multiple loans through a single payment. 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 for '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.

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, take a look at our Log an Advancement/Credit article.

Recommendations for Use

The typical use for this feature involves users mainly updating with parent loans and only changing child loans under special circumstances. Because of this, we recommend using access restrictions and grouping 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 access to those who don't fully understand the effect that changes can make may result in issues with your loans.

Reports and Search Restrictions

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 filtering your searches of the Loan Manager and reports for parent or child loans much easier. In addition, 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 the very least, but it could be a good idea to implement restrictions for all employees.

Rules Applied

We recommend having rules applied run on parent loans ONLY. Please note that rules apply only on a single account—they will not affect the child loans of the parent or vice versa. This means that an action on a child or parent account can NOT impact a child's the the loan's linked to it. This may require that your rule logic includes only the rule application will apply to loans in the "Parent" or "Child" portfolio.

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