A Loan Servicing Software Should Have This

Types

Types

When looking at loan administration software, one thing to seek out may be the ability to take various sorts of loans. Right now, lots of people want to take a 10, 15, or 30 year fixed interest rate loan. However, it's also important to have the ability to take an ARM loan too, because the rates are often somewhat lower than the fixed rate loan.

It's especially useful to have software manage an ARM loan because the rate needs to be changed periodically. Ideally, the software will download the rates periodically and automatically update the borrower's ARM interest rate. What this means is one less reason for manual intervention for that person who is managing home mortgages.

Billing

Another significant feature to look for in software products for loan administration may be the ability to do billing. Billing is often as simple as automatically sending an argument after each and every payment. Of course, the software program will be able to calculate the interest accrued along with the level of principal paid down. When it is a past due payment, the program should detect and automatically bill for the late fee.

However, things get more complicated if you find a late payment or maybe there is a payment that's bigger than usual. The software can automatically allocate the payment to the right balances, particularly if the borrower didn't clearly state whether to pay down the principal or otherwise. In most cases, the amount of money ought to be locked in escrow until the borrower has made a decision as to how to allocate the additional payment.

Taxes

Another essential function in loan administration that individuals should look for may be the ability to handle tax forms. In the United States, the tax system is designed so that borrowers can deduct the mortgage interest paid every year. Which means borrowers expect to have the tax forms reporting interest paid by the end of every January. It is far better to have software that automate the entire process.

There are more special tax situations that software should know how to cover. For instance, it might be necessary to print Canadian tax forms. Also, there may be tax forms that have to be created if your loan goes through foreclosure in the event if the balance of the loan is written off.

Letters

Unfortunately, it has become increasingly more common for loan processors to send letters out to borrowers, particularly in times when the borrower has fallen behind on their mortgage. It is becoming common for lenders to send form letters regarding late payments along with the notification of potential foreclosure.

Typically, the letters can created from standard template for those types of situations. The potential problems requiring a letter go far beyond missing a payment. It is possible that letters have to be sent for lack of homeowners insurance and the absence of property tax payment. Automating the sending of those letters could make loan administration much easier.

by: Travis Peterson

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