Blindsided: How to Add Principal to a Loan

Best-case scenario: your lenders pay on time, and funds process smoothly. Everyone's happy. Unfortunately, it doesn't always work that way. I recently talked with a Moneylender Professional loan servicing software customer who had a stressful experience. A borrower didn't pay property taxes. By the time the lender discovered this, a tax sale was imminent.

That would have put the lender in a bad situation: holding an outstanding loan on a house that the borrower no longer had access to. The lender jumped in to pay the taxes, saving the day. But that raised two more issues. How would the lender recoup the expense? And could he keep this problem from happening again? The answer to both, happily, was "Yes." Moneylender Professional was able to help.

Actually, there are several ways Moneylender can handle this situation, depending on the borrower and lender's agreement.

·       The repayment could be accomplished with one lump sum.

·       The amount could be tacked onto the principal. Then you have two choices. Add an extra amount to each installment throughout the life of the loan OR keep installments the same and have an extra-large payment at the end.

·       The reimbursement could be classified under "Fees" and paid off over a shorter period of time.

We also used Moneylender to add escrow fees. Total taxes for the next year were spread over several months. The borrower plans to use that money to take care of property taxes. No more missed payments; no more hassle. If you run into an unusual situation and need help with Moneylender, call or email us.