ablender
Member of DD Central
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Post by ablender on Feb 22, 2016 22:39:33 GMT
How is the interest on sold loans dealt with in AC?
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Post by chris on Feb 22, 2016 23:06:33 GMT
How is the interest on sold loans dealt with in AC? It is deferred until paid by the borrower. One of the things we felt was most unfair on other market implementations was expecting the purchaser to assume liability for that interest accrued to date. From day 1 we've had a system in place whereby the seller is paid the principal remaining amount for their loan units, stops accruing interest at that point, and is simply paid that accrued interest when the borrower makes their next repayment.
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ablender
Member of DD Central
Posts: 2,204
Likes: 555
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Post by ablender on Feb 22, 2016 23:39:49 GMT
Thanks Chris. That is what I needed to know, if the interest accrued will be paid to the seller (independently of when) or whether it will go to the buyer. So from your reply I also understand that a loan part keeps accruing interest up to the point of sale. Is this correct?
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Post by crabbyoldgit on Feb 23, 2016 4:11:43 GMT
Yes but the vital words here are until paid by the borrower, so if the loan was a development type where interest is rolled up and payed up at the end on repayment when the project is complete and sold or refinnanced wharever, that may be a long time. Well i think thats so, sorry if i am wrong
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Post by chris on Feb 23, 2016 6:25:39 GMT
Yes but the vital words here are until paid by the borrower, so if the loan was a development type where interest is rolled up and payed up at the end on repayment when the project is complete and sold or refinnanced wharever, that may be a long time. Well i think thats so, sorry if i am wrong You are correct - but it depends on the individual loan. Some of the development loans pay interest throughout their term, others have it rolled up until the repayment date. The description and repayment schedule should make it clear in each case.
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