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How do I process a paydown request? 

Paydowns Playbook

Paydown Statement Overview

A paydown statement will only be prepared when a property is being discharged and lawyers are involved, as they require a formal statement. Otherwise, the paydown is considered an internal paydown and no formal statement is required.

Types of Paydowns

Discharge Paydown

Applicable Fees:

  • $350 Partial Discharge Fee

  • $350 Statement Fee

  • Usually, in these cases, the paydown amount is pre-determined by the Underwriters on the Commitment. Review the terms on Schedule B of the Commitment, and proceed with the paydown steps. If the terms are not part of the Commitment, request the Statement of Adjustments and Trust Ledger from the borrower's lawyer and send to Manager for review

Internal Paydowns

  • Internal paydowns will only be processed on the 1st of the month.

  • A statement will not be prepared for internal paydowns.

  • Instead, instructions will be emailed to Accounting.

Applicable Fees/Charges:

  • $300 Paydown Processing Fee

  • The subsequent month's mortgage payment

  • Any prepayment penalty on the amount being paid down

  • Per diem on full amount to pay down date, per diem on post-paydown amount till next payment date

Payment Instructions to Borrowers

  • Borrowers must provide the funds by approximately the 22nd of the preceding month to ensure that the file is on the DNP (Do Not Post) list for the subsequent month and that the paydown can be processed on the 1st.

  • Mortgage payment to be collected as part of the paydown funds.

  • Borrowers may be advised of outstanding charges, to be paid at the time of the paydown.

  • Paydown funds will only be applied to the principal balance and the borrowers need to provide paydown fees on top of the paydown amount.

Step 1 - Create ticket and review file

  • Generate a General Servicing ticket (Category: Paydown Requests)

  • Determine the type of paydown required from the above definitions.

Step 2 - Create ticket for Accounting to review

  • Generate an Accounting Admin ticket (Category: Paydown Requests),

    • For Internal Paydowns:

      • In the ticket description include the following:

        • Please confirm the deposit in the email below and once confirmed, apply to the file as follows:

          • $300.00 to the paydown processing fee

          • $XXX.XX to [MONTH] payment (if applicable – PAD is stopped and they deposit funds for their final payment instead)

          • $XXX.XX principal paydown as of [DATE – 1st of the month]

          Close this ticket once complete, and I will arrange for the borrower to sign a new PAD Agreement.​

    • For Discharge Paydowns:

      • Send final documents to the Lawyer, including:

        • Paydown Statement

        • Discharge Request

        • All Registered Documents

      • If PAD has processed, instruct the lawyer to apply a holdback for the $250 NSF Administrative Fee.

      • Send A&D(s), Investor Statements and Direction re Funds (if applicable) for signing via Adobe.

      • Upon receipt of Confirmation of Transfer of Funds & Registered Discharge of Charge:

        • Ensure the Registered Discharge is Receipted.

      • Calculate Payout Funds:

        • Compare the Confirmation of Transfer of Funds with the Paydown Statement.

        • If discrepancies exist, divide the remaining amount by the per diem rate to determine the number of days of additional interest.

      • Create a ticket in Accounting Admin (Category: Paydown Request):

        • Attach Confirmation of Transfer of Funds, Paydown Statement and Registered Discharge of Charge.

        • If additional investors are involved, attach their Paydown Statements.

      • Accounting confirms application of paydown funds by closing their ticket.

Step 3 - Create ticket for new PAD change

  • Once the Account Admin ticket is closed, the owner of the Servicing Ticket (Category: Paydown Request) ticket will be notified.  

  • Generate a General Servicing ticket (Category: PAD Account Change)

  • Follow the playbook process for PAD Account Change.

Step 4 - Create ticket for new PAD change

  • Once the PAD Account change process is finished, change this ticket status to closed.

Additional Notes

  • Ensure all deadlines are met to avoid processing delays.

  • Maintain accurate records of all communications and paydown instructions.

  • Any discrepancies should be resolved before finalizing the paydown process.

By following this structured process, we ensure that paydowns are handled efficiently, in compliance with company policies, and with clear communication among all involved parties.