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Process financial activity related to loans, including disbursements to the borrower, repayments from the borrower, and escrow payouts.
Process adjusting entries to correct loan histories.
From the GMS-RLSS Main Menu, select Loan Activity.
The purpose of an “Activity Period” is to allow activity that happens within an accounting period, usually a month, to be “batched” together. The Activity Period is identified by the month and year in which the activity being recorded took place. An example would be activity occurring within April, 2009, which should go into Activity Period 04/09. The screen will default to the current month and year based on the computer’s calendar, and can be overridden if desired. Entry is made in the format of MMYY, with the slash being automatic.
Select the loan number from the combo box, enter manually, or click on the “?” to receive a sortable listing of loan numbers, companies, last and first names. Click on column headings to sort ascending or descending order. Once located, double click on the row which will cause the sortable listing to disappear and the Loan # field to be populated with your selection.
An automatic field displaying the borrower related to the loan number entered. This field cannot be edited. If the display is incorrect, verify the accuracy of the loan number.
Change Loan Status
After entering a valid loan number, this button will appear. Clicking on it will allow you to immediately change the Loan Status and Status Date in the Loan Master file. If you do not wish to utilize the Status Date, be sure to remove the checkmark from the box next to the date, otherwise the current calendar date will be saved.
Select the Activity Date from the calendar.
Select from the combo box or enter D, R, or E as desired.
D = Disbursement: used to record disbursements of loan funds.
R = Repayment: used to record repayments from the borrower
E = Escrow: used to record escrow payouts on behalf of the loan
An automatic calculation of days that have passed since the Activity Date as it was recorded in the most recent activity. The calculation is derived by using the activity date as entered and comparing it to the activity date on the most recently recorded transaction. This field cannot be edited. If Days Elapsed seems inaccurate, verify the activity date is entered correctly. The field just below Days Elapsed is Last Activity, and will show the date of the most recently recorded transaction.
A field that cannot be edited, reflecting the activity date of the most recently recorded transaction.
Last Pd-Thru Date
A field that cannot be edited, reflecting the Paid-Thru Date as it was recorded on the most recently recorded transaction.
A field that cannot be edited, reflecting the Loan Balance as of the most recently recorded transaction.
Last Acc’d Int
A field that cannot be edited, reflecting the total outstanding Accrued Interest as of the most recently recorded transaction.
A field that cannot be edited, reflecting the method of interest calculation entered in the Loan Master file for the selected loan. Should the client make multiple payments at one time, reviewing this field will help you determine if they can be entered in one activity (daily interest) or if they need to be entered as multiple activities (amortized interest).
A field that cannot be edited, reflecting the loan payment including escrows and service fees as it was recorded in the Loan Master file.
Enter the total amount of the disbursement, repayment, or escrow payout. Unless an adjusting entry is being made, Disbursements and Repayments are entered as positive numbers. (Please refer to Things You Should Know for information regarding adjusting entries.) Escrow payouts are entered as negative numbers under both Activity Total and the appropriate escrow field, and should have no impact on the loan balance.
An automatic calculation made in one of the following two ways:
Daily Interest Loans: If the loan has been established as Daily Interest within the Loan Master file, Current Interest is determined by multiplying the loan balance by the annual interest rate, dividing that amount by either 360 or 365 days (as documented in Loan Master) to determine a daily interest rate. The daily interest rate is multiplied by the Days Elapsed to determine the amount of Current Interest to be withheld from the repayment.
Amortized Loans: If the loan has been established as Amortized within the Loan Master file, Current Interest is determined by multiplying the loan balance by the annual interest rate, and dividing that amount by one payment cycle, usually one month. The payment cycle is determined by the entry made into “Payment Frequency” within the Loan Master.
An automatic calculation made by the program to account for interest due and uncollected as of the activity date.
Positive Accrued Interest usually results from one of the following situations:
Loans with multiple disbursements: When a subsequent disbursement is recorded, the program will calculate interest due on the loan balance (as it is prior to this disbursement) as of the activity date. That interest due, or “accrued”, becomes part of the loan history. From the activity date forward, interest will calculate on the new, higher balance.
Payments of an inadequate amount to cover “current interest”: In this situation, the program computes interest due beyond the payment amount and posts that outstanding interest as “accrued”.
Repayments with an activity total of zero: When interest rates are variable, posting a zero repayment results in interest accruing through the activity date at the rate documented in the Loan Master file.
Negative Accrued Interest indicates the program is collecting outstanding accrued interest. The program will never collect beyond the outstanding accrued interest recorded in the loan history.
This field is used to record any late fee or penalty applicable to the loan and will be calculated automatically if the Loan Master file contains information within the field titled "Late Fee" and the accompanying field titled "Days". If Collect Multiple Late Fees is checked, late fees will be withheld from repayments based upon number of payments the client is late. For example, the Next Payment Due is April 1. You've elected to collect multiple late fees of $7.00 each after the payment is 10 days late. If the payment is not received until May 11, the late fee collected will be $7.00. On June 11, the late fee would be $14.00 etc. A late fee may also be entered manually and an automatic late fee may be over ridden if desired.
This field is used to record any service fee applicable to the loan. This field will be calculated automatically if the Loan Master contains information within the field titled “Service Fee”. The service fee may also be entered manually, and an automatic service fee may be overridden if desired.
This field is used to record escrow funds applicable to the loan. If activity type is Repayment, this field will be calculated automatically if the Loan Master contains information within the field titled “Escrow #1”. An escrow may also be entered manually, and an automatic escrow may be overridden if desired. If activity type is Escrow, enter a negative amount equal to the Activity Total.
This field is used to record escrow funds applicable to the loan. If activity type is Repayment, this field will be calculated automatically if the Loan Master contains information within the field titled “Escrow #2”. An escrow may also be entered manually, and an automatic escrow may be overridden if desired. If activity type is Escrow, enter a negative amount equal to the Activity Total.
Important Note: Escrow 1 Amt and Escrow 2 Amt within the Loan Master file have accompanying fields related to the maximum to be collected. The program will allocate repayment funds to escrow until the maximum is reached. Funds will no longer be collected until there is an escrow payout resulting in a reduced escrow balance. In some situations, an escrow account may not have a limit. Leaving the “maximum” field blank within the Loan Master will result in perpetual escrow withholdings.
In the event of a repayment check being returned from the bank for non-sufficient funds, any associated fees may be recorded in NSF Fee. NSF checks result in the need for an adjusting entry to reverse the payment as it was originally recorded. It is not advised that NSF fee field be completed as part of the adjusting entry. The program is not designed to “accrue” NSF fees. When the next valid payment is made, entering the fee at that time will result in reducing the portion of the payment going to principal by the amount of the fee.
If any other types of deductions are to be withheld from the payment, it may be entered in this miscellaneous field.
This is an additional field for the convenience of documenting additional withholdings from the repayment.
This amount is calculated automatically based on the activity type and the activity amount.
Disbursements result in an increase to the loan balance, based entirely on the amount entered in Activity Total.
Repayments usually result in a decrease to the loan balance, derived by subtracting interest (both current and collected accrued) and fees from the activity total. Remaining funds are used to decrease the loan balance.
Although “principal” may not be edited, it can be altered by editing the amounts within other fields.
Important Note regarding Repayments: In rare situations, especially when fees are attached to a repayment, a negative amount may appear within principal. This negative amount will increase the loan balance. Prior to saving the entry, review all fields for accuracy. It may be necessary to adjust fees or accrued interest to avoid a negative amount in principal. Adjusting entries, especially those recording NSF checks, will often result in negative principal.
If activity type is Disbursement, the amount in principal is added to the “last balance” to create a new balance.
If activity type is Repayment, the amount in principal is subtracted from the “last balance” to create a new balance.
New Paid-thru Date
The information within this field will vary based on the type of activity.
Disbursement: new paid-thru date will default to the activity date if this is the first disbursement entered for this loan. If activity has previously been recorded, this will default to the paid-thru date of the last activity entered.
Repayment: if the activity being recorded is the first payment, the field will default to the date entered in the Loan Master file under “first due date” If the Loan Master field is blank, the new paid-thru date will default to the activity date and may be edited if desired. Subsequent repayments will result in the “new paid-thru date” automatically completed with the “next payment due” date as recorded on the most recent repayment.
Escrow: new paid-thru date will default to the paid-thru date of the last activity entered.
Opportunity is given to edit the paid-thru date if desired.
Next Payment Due
This field should be considered an accompanying field to New Paid-thru Date. When funds are initially disbursed, this field will be completed automatically with the “first due date” from the Loan Master. If that field is blank, the next payment due should be entered manually as the date the next payment is expected.
When the first repayment is recorded, next payment due will advance to one payment cycle beyond the new paid-thru date. As subsequent repayments are entered, the field will continue to advance based on the next payment due as recorded in the previous activity and the payment frequency found within the Loan Master file.
Important Note: This field is essential to accurate calculations on delinquency and aging reports, and should be carefully reviewed prior to saving the entry, and edited as necessary.
Use this field to document any information regarding the activity being recorded. It will become a component of the loan history and will appear when histories are displayed or printed. This is limited to 255 characters.
When entering an activity that includes an amount in the Activity Total box but this activity does not impact your cash account, it is recommended the words "non-cash", "non cash" or "noncash", be entered in the Notes section. When printing your Monthly Activity Report, you may then select to "Include Non-Cash Activity" which will cause an additional Totals line for this non-cash activity to print on the Summary page to aid in reconciling and/or editing your month-end general journal entry.
Should you discover after you have saved an activity that the New Paid Thru Date, Next Payment Due, or Notes need editing, this may be done using Tools, Build History.
The major difference between routine entries and adjustments is that automatic calculations of interest and fees are handled by the program in regular entries. Adjusting entries include automatic calculations of principal only, with interest and fees being completed manually by the user.
NSF checks are the most common cause adjusting entries are required. (Please refer to NSF Checks found under Things You Should Know for details.) Another reason adjusting entries are required is data entry errors. For this reason, please carefully review on-screen calculations prior to saving the entry. It is much easier to make corrections and alter calculations prior to recording the activity than to do a subsequent adjusting entry.
In general, adjusting entries require reversing the original entry. In Loan Activity, select the loan number, tap enter, then click on Print. Print the page which includes the activity needing reversed plus any subsequent pages. If the activity to be reversed is the most recently recorded entry, you may simply reverse that entry. This means if an activity total was 100.00, the reversing entry will be –100.00. If the adjusting entry contains accrued interest, you may find it necessary to adjust current interest by this amount. If all fields are completed appropriately, the loan balance should revert to what it was prior to the incorrect entry being posted.
If the activity to be reversed is not the most recently recorded activity, it may be necessary to reverse all entries from the incorrect entry forward. This may be accomplished by entering each reversing activity as an adjustment, or one adjusting entry can be done using the totals of all the activity to be reversed. Remember, the goal is to return the loan to the balance, etc., as it was prior to the error.
Sometimes the adjustment is needed to move funds from one category of withholding to another. For example, if a late fee of 20.00 was withheld, and later the decision is made to waive that late fee, the adjusting entry can be simplified. Enter activity total as zero, negative 20.00 under penalty, which will result in 20.00 being applied to principal.
The activity date is very important when making adjusting entries, especially if the loan is set up for daily interest. Keep in mind that when a subsequent repayment is posted, current interest will be calculated from the activity date of the most recent entry to the activity date of the new entry. So if the loan is daily interest, you’ll want to be certain the last activity date in the history is the date of the last “good” activity before you begin re-entering transactions.
Prints to the screen an acknowledgment form for the activity currently on the screen.
Displays loan terms from Loan Master file for currently selected loan.
Allows access to Loan Conversations feature. See Features section for more complete information.
Documents such as Excel, Word or Pdf files may be named and attached to the loan activity by selecting the location they reside on your computer or file server. Be sure to Save after doing this. An icon will appear in the lower right corner of your Loan Activity screen once you have attached a document. Clicking on this icon will allow you to view your document(s). You may then later retrieve them by selecting from the list. To delete the attached document, select it from the list and tap the delete key on your keyboard.
Return to Loan Activity:
Exits Loan Conversations and returns to the last loan opened in Loan Activity.
Things You Should Know