Custom Payment Application

Introduction

When you create a payment type, you choose a waterfall application, the order in which money will apply to principal, interest, fees, or any other part of the loan. But suppose you want to enter specific amounts that will apply to the different pieces of a payment. This can be done through a custom payment application.

Custom Payment

In order to enter a custom payment application, navigate to Servicing > Payments inside of a specific loan.

On this page, click 'Log Payment' to enter in specific payment information.

Select 'Custom' from the 'Type of Payment' drop-down. This will bring up some new fields underneath the amount field.

You can now enter an amount that you want to pay towards each of the payment portions. You can even choose to apply amounts to individual fees or escrow buckets. If there are outstanding fees or escrow balances, you will see a checkbox (e.g. Apply to individual fees) below the appropriate field. Check the box and you will see a listing of fees or escrow buckets on the loan.

As you enter amounts into the fields provided, you will see totals for each section and the Amount field will be updated with the total for all the sections. After you have entered the amounts that you want to apply, continue to log the payment.

Custom - User Forced

The Custom - User Forced payment type works exactly like Custom Payments with one exception: it does not place any limits on the amount you apply to interest or other fees like Custom Payments does. This means that it will allow a user to to force the allocation of the payment, even if the amount they are trying to pay is greater than the due components of the loan and causes the due component to go into the negative.

For example, let's say you have a loan with a due interest of $32.88 as of 09/28/2021, and it accrues interest at $4.11 per day. You are able to post a $100 payment and be able to specify that $100 goes toward the interest, which would bring the due interest to -$67.12. The loan would then continue accruing interest at $4.11 per day so on 10/14/2021 they should have accrued back to $2.75 of Due Interest.

This would most commonly be used on import legacy loans to match the payment application that didn't originate in LMS.


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