Loan Payment Reversal

Overview of IL419

To address cases in which a loan payment has been recorded in error or improperly, DDI-Connect offers Loan Payment Reversal. There are various reasons why loan-payment reversal could become necessary. Here are examples:

• The borrower’s check bounced
• The received check covered multiple loans, but the loan payment placed the entire amount under one loan;
• The payment has been applied as a regular loan payment (200) when it should have been considered an extra loan payment (210) NOTE: This distinction impacts prepaid/past due figures
• A borrower paid an application fee but the loan has been denied and the fee is to be returned to the borrower

Loan Payment Reversal enables you to select any payment logged against an existing loan and specify what portions of its principal, interest, reserves, and application fee to reverse. It also allows you to select whether the payment amount will be distributed back to the borrower or made available to apply elsewhere.

NOTE: In order to perform loan payment reversals, you will need to configure a Cash Suspense Account and add the account to Checking Account Setup.

To perform the reversal:

• From the DDI Connect main menu, double-click Financial Service
• Double-click Loans
• Double-click Transactions
• Double-click Loan Payment Reversal

You will see this screen:

In the Loan # field, you can either enter the loan number or click the list icon to display a list of all available loans in the system. You can also opt to click the binoculars to search for the loan. Once you have entered the loan number, click Find.

The system will display a list of receipts for the loan in question:

NOTE: If the reversal you are processing is for an application fee on a denied loan application, you will not receive this popup as no payments have been made on the loan.

Select the payment that you are reversing, and click Select:

NOTE: The reversal method defaults to the setting you have specified in the Client Specific Settings code set for loan reversal methods. If you leave this default as is, the system will perform the default action established by your organization.

Click the drop down arrow to the right of the Reversal method to select the option you wish to process the reversal as:

Next, verify the next payment due date for the loan.

Finally, review the reversal amounts to verify that they are correct. The system will automatically reverse the payment based on the amounts applied to interest, principal, and any fees. Make sure these amounts are correct before proceeding.

When you have verified all of the information, click Save to reverse the payment. If the transaction is successful, you will get a message stating "Transaction Successful". Click OK to proceed.

Depending on how you elected to handle the reversal, you can now either print the refund check or process the funds.

NOTE: If you elected to reprocess the funds, the resulting cash batch is created as a mailroom batch. This means that someone other than the creator (the individual performing the reversal) will have to re-process the payment in Stage 2 Processing.