RC_LA_CM_200.4 Types of Cash Movement

The intake of mortgage loan payments by the servicer marks the beginning of the cashiering department's role in mortgage servicing. The cash received must be divided and applied to the proper accounts in a timely manner. The how, when, and where of cash movement is dictated by the mortgage note, the mortgagor, the servicer, and the investors.

Mortgage loan payments must be applied to the proper accounts according to strict timelines. The servicer's own internal guidelines and those of the investor or insurer must be followed carefully. The manner in which a payment is applied also depends on the type of loan. For example, the way a payment is applied to a daily simple interest (DSI) loan is different from the way a payment is applied to an adjustable-rate mortgage (ARM).

Applying the normal monthly payment is not the only concern in cash management. Situations arise that require payment reversals. For example, the payment may have been made in error or applied incorrectly. In addition, various investors require that remittance of funds to them be made according to specific rules.

Types of Cash Movement looks at how mortgage payment cash is managed at a mortgage servicing company. Cash movement is described including major cashiering tasks, how to apply payments, reversing misapplications and bad checks, as well as remitting to investors.

This is a single-family/residential course.

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