NetLoan - Configure Servicing Spread Accounts on a Loan Type
Overview
On a servicer loan, the borrower pays interest at the loan's rate, but the investors who own the loan may be entitled to a different rate. The difference between the two is the servicer's spread, and it must post to the general ledger.
Three account mappings on the loan type record handle that posting: an interest clearing account that the owners' portion passes through, a revenue account for spread the servicer earns, and an expense account for when an owner's rate is above the loan rate. Configure them once per servicer loan type during implementation. Until they are set, NetLoan blocks any ownership change that gives an owner a rate different from the loan's rate.
Prerequisites
- Servicer must be enabled in Module Use on the NetLoan Global Settings record. See NetLoan - Configure Global Settings and Loan Type for Servicer Loans.
- The loan type must have Entity Type set to Servicer.
- The general ledger accounts you intend to map must already exist in NetSuite. The clearing account is typically an other current asset or other current liability account; the revenue and expense accounts are income and expense accounts respectively. Confirm the account types with your accounting team before mapping.
- The user must have access to the NetLoan Type record.
Setup Options
Navigation
- Top navigation: NetLoan > NetLoan Setup > Manage Loan Types
Open the servicer loan type and locate the servicer account mappings.
NetLoan Loan Type
All three fields are required together as soon as any owner rate on a loan of this type differs from the loan's rate. Configuring only some of them will still block the ownership change.
| Field Name | Field Type | Description | Dependencies | Options / Example | Field ID |
|---|---|---|---|---|---|
| Owner Interest Clearing Account | List/Record | The account the owners' portion of interest passes through between the borrower's payment and the distribution bills that pay the owners. Isolates the pass-through so the servicer's retained spread can be identified separately. | Required when any owner rate differs from the loan rate | e.g., 1350 - Owner Interest Clearing | custrecord_da_type_ owner_int_clearing |
| Servicing Revenue Account | List/Record | The income account credited when an owner's rate is below the loan rate, so the servicer earns the difference on that owner's share. This is the most common case. | Required when any owner rate differs from the loan rate | e.g., 4210 - Servicing Revenue | custrecord_da_type_ service_margin_income |
| Servicing Expense Account | List/Record | The expense account debited when an owner's rate is above the loan rate, leaving the servicer to fund the difference on that owner's share. | Required when any owner rate differs from the loan rate | e.g., 6410 - Servicing Expense | custrecord_da_type_ service_expense_acc |
Use Case Specific Setup
Use Case: Servicer earns a spread on every loan
This is the standard arrangement. The servicer originates and services loans at one rate and sells participations to investors at a lower rate, keeping the difference as servicing revenue.
| Field | Setting | Notes |
|---|---|---|
| Owner Interest Clearing Account | Owner Interest Clearing | The owners' share of each interest payment passes through here on its way to the distribution bills |
| Servicing Revenue Account | Servicing Revenue | Credited with the retained spread each period |
| Servicing Expense Account | Servicing Expense | Still required, and will post for any individual owner whose rate is above the loan rate |
Use Case: Owners receive the full loan rate
The servicer passes the entire interest payment through to owners and is compensated separately, through servicing fees rather than a rate spread.
| Field | Setting | Notes |
|---|---|---|
| Owner Interest Clearing Account | Not required | With no rate difference, the spread validation never runs |
| Servicing Revenue Account | Not required | No spread to record |
| Servicing Expense Account | Not required | No spread to record |
Set the owner rates equal to the loan rate on each ownership record and no account mapping is needed.
Warning
If you later give any owner a different rate, all three accounts become required before the change can be submitted.
Use Case: Mixed portfolio on one loan type
Some loans on the loan type pass through at the full rate and others carry a spread. The validation is triggered by any loan with a rate difference, so the accounts are required if even one loan on the type has owner rates that differ.
| Field | Setting | Notes |
|---|---|---|
| Owner Interest Clearing Account | Owner Interest Clearing | Required because at least one loan on this type has a rate difference |
| Servicing Revenue Account | Servicing Revenue | Required for the same reason |
| Servicing Expense Account | Servicing Expense | Required for the same reason |
Warning
Map all three even if only a few loans on the type carry a spread. Loans with no rate difference never post to them.
