PAYOFFS

Please remember that mortgage payments are made at the end of the month that they apply to. So a payment received on March 5 covers the interest for February.

If the borrower wants to pay off on April 2. You need to accrue the interest for the whole of March + 2 days.

Two simple rules:

  1. If you have received a payment for the current month, ensure you have entered the received date in Column B and amount in Columns D and I.
  2. If you have NOT received a payment for the current month (or earlier months), you need to enter a suitable date in the Late Notice Date Cell Column F. For the current month, this date would be the beginning of the payment due period. Usually the 1st.For previous months the date would be AFTER the Late Due Date, if you want to accrue the late charges, or BEFORE the Late Due Date if you do NOT want to accrue earlier late charges.

Use the same Mortgage Example as before, (Mortgage Sample v1.7.6.xlsx)

STEP-BY-STEP PAYOFF SCENARIOS

SCENARIO 1: All Payments Made, Mid Month Payoff

In the first scenario, the borrower has made all their payments for September, October and November. They want a payoff commencing November 10, 2012. (We assume here that the November check was Certified or you are otherwise sure it will clear.)

Payoff scenario 1: All payments made and want a mid month payoff

Then go to the Payoff Sheet.

Enter 11/10/12 in the Payoff Start date in Cell G2. You will note the payoff increases after November 11 as the payment is then late.

Enter any additional charges in Cell G4 for such items as pre-payment penalties, legal fees and court fees for foreclosures for example, insurance paid by lender during foreclosure etc.

Payoff statement scenario 1

You can now Print Preview and print the Payoff letter.

SCENARIO 2: Last Month’s Payment Not Made, Mid Month Payoff

In the second scenario, the borrower has made all their payments for September, October but NOT for November. They want a payoff commencing November 10, 2012.

Since no payment was received for November you enter a suitable date in the late Notice Date Cell to accrue the interest due from October 1 to November 1. Any date is fine between November 1 and November 10.

Payoff Scenario 2: Mid month payoff with last month's payment not made

Then go to the Payoff Sheet.

Now enter 11/10/12 in the Payoff Start date in Cell G2. You will note the payoff increases after November 11 as the payment is then late. You will also note the payoff is greater than the first example, because you did not receive a payment for November.

Payoff statement scenario 2

Enter any additional charges in Cell G4 for such items as pre-payment penalties, legal fees and court fees for foreclosures for example, insurance paid by lender during foreclosure etc.

You can now Print Preview and print the Payoff letter.

SCENARIO 3: Last Two Payments Not Made, Mid Month Payoff

In the third scenario the borrower has made their payment for September but NOT for October and November. They want a payoff commencing November 10, 2012.

You enter a date in the Late Notice Date Cell AFTER the October “Late Payment Date” as set by you for the October non-payment. This will add on the accrued interest and late charge for October.

You enter a date in the Late Notice Date Cell BEFORE the November “Late Payment Date” to only add on the accrued interest from October 1 to November 1.

NOTE. If for some reason you do NOT want to charge a late fee for October you simply use an earlier date before the “Late payment Due Date” in this example any date from October 1 to October 10.

Payoff Scenario 3: Last two payments not made, mid month payoff

Then go to the Payoff Sheet.

Now enter 11/10/12 in the Payoff Start date in cell G2. You will note the payoff increases after November 11 as the payment is then late. You will also note the payoff is greater than the first example, because you did not receive a payment for October or November.

Enter any additional charges in Cell G4 for such items as pre-payment penalties, legal fees and court fees for foreclosures for example, insurance paid by lender during foreclosure etc.

Payoff statement scenario 3

You can now Print Preview and print the Payoff letter.

SCENARIO 4: Mortgage Originated Mid Month, Start Of Month Payoff

In the fourth scenario, the mortgage is originated on July 15, but the first payment is due August 15. They want a payoff commencing October 1.

If your first payment date is NOT overridden in Cell I35 on the Setup sheet this does not apply to you.

For this scenario, override the Payment Start Date by entering 8/15/12 in Cell I35. You will note that the first payment is shown as due August 15, 2012.

Borrower has made their payment due August 15 and September 15 but NOT for October 15. (In this example they paid their September payment early on September 8).

You will note there is no pre-paid interest collected or shown, since their October 15 payment is not yet due, you do not accrue it by entering a date in the Late Notice Date Cell.

Payoff Scenario 4: Mortgage originated mid month wanting a start of month payoff

Then go to the Payoff Sheet.

Now enter 10/1/12 in the Payoff Start date in cell G2.

Enter any additional charges in Cell G4 for such items as pre-payment penalties, legal fees and court fees for foreclosures for example, insurance paid by lender during foreclosure etc.

Payoff statement scenario 4

You can now Print Preview and print the Payoff letter.

SCENARIO 5: Mortgage Originated Mid Month, Last Month Not Paid, Mid Month Payoff

In the fifth scenario, the mortgage is still originated on July 15, but the first payment is due August 15. They want a payoff commencing October 15.

You have already overridden the Payment Start Date by entering 8/15/12 in Cell I35. You will note that the first payment is shown as due August 15, 2012.

Borrower has made their payment due August 15 and September 15 but NOT for October 15. (In fact they paid their September payment early on September 8).

You will note there is no pre-paid interest collected or shown.

Since their October 15 payment is due, you accrue it by entering a date in the Late Notice Date Cell.

Payoff Scenario 5: Create mid month Payoff for mid month originated mortgage with last not paid

Now change the Payoff Start date (Cell G2 of Payoff sheet) to October 15.

Enter any additional charges in Cell G4 for such items as pre-payment penalties, legal fees and court fees for foreclosures for example, insurance paid by lender during foreclosure etc.

Payoff statement scenario 5

You will notice that the Payoff shown for October 15 is slightly higher than before, this is because you have now accrued a whole month’s interest. There is also now a late charge added for payoff received after the late due date, in this case October 25 with the late fee starting on October 26.

You can now Print Preview and print the Payoff letter.

WHEN YOU RECEIVE THE PAYOFF

When you eventually get the wire or cashier’s check for the payoff, enter the Actual Payoff Date in the Yellow cell D255 and the amount at the bottom of the Record Payments sheet in cell D257. This will zero out the amount you are owed.

Close off loan when you receive the final payoff

If the number in cell D259 is a negative, mortgage paid off or sold at a loss. Example If principal owed is $50,000 and you received $40,000 payoff you have a CAPITAL loss of $10,000 shown in this cell.