Trust Disbursement - Servicing Fee

Transaction Code 22 - Trust Disbursement - Servicing Fee is used to generate a voucher for the disbursement of the servicing fee from the trust to the servicer. This transaction is run automatically for the total amount of the payment received by the borrower when the following conditions (defining trust accounting setup) are met:

  1. The loan is a member of a loan group that is configured with Servicing Options.
  2. Within the Servicing Options, the Loan Group is tied to a Disbursement Account. This represents a bank account where the money held in trust for the lender sits, and from which checks to that lender may be cut.
  3. Within the Servicing Options, the Loan Group is attached to a Vendor. This is an account on the Lender’s Contact File which holds the balances owed to or by that Lender as well as the outstanding Vouchers for that lender.
  4. A Servicing Fee is configured on the loan through Recurring transactions.
  5. The servicing fee is configured with a type of Net From Cash Total Outstanding.

The Trust Disbursement - Servicing Fee transaction includes a General Ledger posting which will create a debit to the Accounts Receivable and a credit to the Accounts Payable.

When a payment is made, on a loan for which there is a servicing fee, this transaction will be automatically run along with transaction code 10 - Trust Deposit, transaction code 20 - Trust Disbursement, transaction code 32 - Trust Receivable - Servicing Fee, and transaction code 320 - Servicing Fee.

The General Ledger accounts involved in the Principal and Interest Payment transactions: Cash, Loan Asset, and Accrued Interest, represent the GL accounts of the lender, and not the servicer, and unless the servicer is also managing the ledger of the lender, they need not necessarily be defined at all.

The net general ledger result of all of these transactions being run is illustrated by the following example.


Borrower makes a payment of $300, of which $100 is an interest payment and $200 is a principal payment. The loan is set up with a servicing fee of $15 per payment.
GL Accounts
Lender’s Cash
Lender’s Loan Asset
Lender’s Accrued Interest Receivable
Trust-Cash (Servicer’s GL)
Trust-Undisbursed Funds (Servicer’s GL)
PH Accounts Payable (Servicer’s GL)
PH Accounts Receivable (Servicer’s GL)
PH Accrued Fees 2 (Servicer’s GL)
PH Fees Income 2 (Servicer’s GL)

When the payment is made, the following transactions are run:

TransactionDebit GL/AmountCredit GL/Amount
200 - Principal PaymentLender’s Cash: $200Lender’s Loan Asset: $200
202 - Interest PaymentLender’s Cash: $100Lender’s Accrued Interest: $100
10 - Trust DepositTrust - Cash: $300Trust - Undisbursed Funds: $300
20 - Trust DisbursementTrust - Undisbursed Funds: $300PH Accounts Payable: $300
320 - Servicing FeeAccrued Fees 2: $15Fees Income 2: $15
22 - Trust Disbursement - Servicing FeeAccounts Receivable: $15Accounts Payable: $15
32 - Trust Receivable - Servicing FeeAccounts Payable: $15Accrued Fees 2: $15

From the point of view of the Lender’s GL, this leaves us with $300 cash, $200 reduced from the loan balance (Loan Asset), and $100 of interest payment received.

From the point of view of the Servicer’s GL, this leaves us with $300 of the Lender’s Cash in Trust, a $300 credit in Accounts Payable ($285 is payable from the trust to the lender and $15 is payable from the trust to the servicer), a $15 debit in Accounts Receivable, and a $15 credit in fee income.

Additionally three vouchers have been created by these transaction codes. The Trust Disbursement generated a voucher for $300 payable to the lender and the Servicing Fee Receivable generated a voucher for ($15) also payable to the lender. When the vouchers with like payables are combined, this results in a check of $285 to the lender, leaving $15 in the Trust Cash account. The Servicing Fee Disbursement transaction generated a voucher of $15 with the Servicer as the payee. This results in a check of $15 from the trust to the servicer.

For information on the other Trust transaction codes involved, see Trust Deposit, Trust Disbursement, and Trust Receivable - Servicing Fee.

For information on how to configure the automation of the Servicing Fee, see Servicing Fee - Recurring Transaction.