Help!! How do I input a loan that was refinanced, then sold to another company while in deferment?

Cateye112

We refinanced our home loan in May of last year for a better rate. A month later, my husband got laid off and we went into a deferment program where we paid what we could until the end of the period and now are in the repayment period. Well, a few months ago, they sold our loan to another company. I have no idea how to transition all of this in Quicken. I thought I had a system but I don't think it was the proper way to do it, now it is kind of a mess and I need help please!

We are trying to pay back what we can (above our monthly payment) to catch up so the itemization is challenging... I had to create a category for the excess payment because they won't apply it until we have a full payment.

Also, do I create a new asset account each time or adjust the one I have? I am so confused. I don't normally have difficulty with this type of stuff but can't seem to wrap my head around this one.

Any help is appreciated.

Tom Young

I don't have experience here with deferment and repayment, but let me ask you... was this a "manual" loan where you control the entries into the loan register, or was this a downloading loan where the lender/servicer "pushes" entries into the loan register, a loan register that you don't have access to (in the sense of being able to make entries) in Quicken?

If it was and is a manual loan then I wouldn't see any need to "move" the loan to another Account in Quicken, everything else being equal.  Did you try and transfer the loan balance to a new Account?

You say "I had to create a category for the excess payment because they won't apply it until we have a full payment", and maybe you can explain this some more?  As well as the "Also, do I create a new asset account each time or adjust the one I have?"

It sorta sounds to me from what you've said here, that the servicer is happy to take your "extra" money over an above the stipulated loan payment but doesn't actually apply those dollars to the loan principal until the "extra" money amounts to a "normal" loan payment, or something along those lines??

If the servicer is sending you montly statements showing each month's transactions - amount remitted, amount applied to principal, change in escrow balance (if you have to make escrow payments), interest charged to the period, maybe interest added to the loan principal(?), maybe cash "in suspense" (going back to my requests for clarification), etc. - can you "back in" to the needed accounting by forcing the loan balance to match the statement, recognizing the interest expense, adjusting the escrow asset (if any), and then placing the difference between all these items and the money you've sent them into some sort of "balancing" asset/liability/category as appropriate?

Without being able to completely understand the deferment/repayment program and exactly what information is available to you from the loan servicer this could be a tough question to answer definitely.

Tom Young

I don't have experience here with deferment and repayment, but let me ask you... was this a "manual" loan where you control the entries into the loan register, or was this a downloading loan where the lender/servicer "pushes" entries into the loan register, a loan register that you don't have access to (in the sense of being able to make entries) in Quicken?

If it was and is a manual loan then I wouldn't see any need to "move" the loan to another Account in Quicken, everything else being equal.  Did you try and transfer the loan balance to a new Account?

You say "I had to create a category for the excess payment because they won't apply it until we have a full payment", and maybe you can explain this some more?  As well as the "Also, do I create a new asset account each time or adjust the one I have?"

It sorta sounds to me from what you've said here, that the servicer is happy to take your "extra" money over an above the stipulated loan payment but doesn't actually apply those dollars to the loan principal until the "extra" money amounts to a "normal" loan payment, or something along those lines??

If the servicer is sending you montly statements showing each month's transactions - amount remitted, amount applied to principal, change in escrow balance (if you have to make escrow payments), interest charged to the period, maybe interest added to the loan principal(?), maybe cash "in suspense" (going back to my requests for clarification), etc. - can you "back in" to the needed accounting by forcing the loan balance to match the statement, recognizing the interest expense, adjusting the escrow asset (if any), and then placing the difference between all these items and the money you've sent them into some sort of "balancing" asset/liability/category as appropriate?

Without being able to completely understand the deferment/repayment program and exactly what information is available to you from the loan servicer this could be a tough question to answer definitely.

Cateye112

First, thank you so very much for your response Tom. Sorry it took so long for me to see it. I wasn't checking my email.

@Tom Young said:

I don't have experience here with deferment and repayment, but let me ask you... was this a "manual" loan where you control the entries into the loan register, or was this a downloading loan where the lender/servicer "pushes" entries into the loan register, a loan register that you don't have access to (in the sense of being able to make entries) in Quicken?

**For our first two servicers, everything was manual. They didn't have anything I could download. However, the new company that they sold our mortgage loan to, does have that capability. I would like for all of the accounts to be an accurate representation though.

Did you try and transfer the loan balance to a new Account?

**I didn't "transfer" the balance because there was an overage and some finagling done it seems.**

You say "I had to create a category for the excess payment because they won't apply it until we have a full payment", and maybe you can explain this some more?  "It sorta sounds to me from what you've said here, that the servicer is happy to take your "extra" money over an above the stipulated loan payment but doesn't actually apply those dollars to the loan principal until the "extra" money amounts to a "normal" loan payment, or something along those lines??

**Yes, that is exactly what was happening. If we owed $1,500 but paid $2,000, the extra $500 just sat in a holding account of some sort until we paid enough for a full mortgage payment.**

As well as the "Also, do I create a new asset account each time or adjust the one I have?

**I don't necessarily have all this accounting stuff down, so correct me if I am wrong but I have an asset account tied to my mortgage. Do you keep the same one and just adjust it, when necessary, or do you create a new asset account for the home each time? I make adjustments occasionally on it's value that is determined by Zestimate.

If the servicer is sending you monthly statements... maybe cash "in suspense"

**To correct myself, I didn't make a new account, I made a new "Suspense" category. So every time there is enough extra in the suspense category for the new payment, they post it to our account. I then make a transaction that then pulls the money from the Suspense account (plus whatever additional money paid) and reallocate the money to the appropriate account, ie Escrow, Principal, etc. **

can you "back in" to the needed accounting by forcing the loan balance to match the statement, recognizing the interest expense, adjusting the escrow asset (if any), and then placing the difference between all these items and the money you've sent them into some sort of "balancing" asset/liability/category as appropriate?

**Not sure what you mean by "back in". Does my previous statement answer that question?**

Without being able to completely understand the deferment/repayment program and exactly what information is available to you from the loan servicer this could be a tough question to answer definitely.

**They essentially said "we will give you six months to catch up on your mortgage without sending you into foreclosure. If you need more time, let us know." We recently got all caught up but I just want everything to be accurate. It drives me crazy... sometimes it is the little things.**

Tom Young

"**For our first two servicers, everything was manual. They didn't have anything I could download. However, the new company that they sold our mortgage loan to, does have that capability. I would like for all of the accounts to be an accurate representation though."

With a downloading loan you have no access to the loan's register of transactions and can make no entries affecting the loan's balance.  You're at the mercy of whatever is sent to the loan's Quicken Account and while that sounds ideal - who knows more about the loan than the servicer? - there are many complaints in here that the loan's balance shown in Quicken is wrong, and the user can't correct it.  There are frequent posts along the lines of "my Quicken loan account says the loan's paid off, but it isn't!"  Personally I'd stick with a manual loan here but if the downloading situation is working for you you may want to leave it "as is."  (There's a Quicken FAQ that discusses how to change a downloading loan to a manual loan if you change your mind.)

"**I didn't "transfer" the balance because there was an overage and some finagling done it seems.**"

Well the "completely proper from an accounting perspective" approach (assuming you are going to create a new Account in Quicken for the transfer of the loan from one servicer to another servicer) would be to transfer the ending balance in the old loan Account to the new loan Account, as that's literally what happened, and then figure out the entries to make in the new loan balance doesn't equal the old loan balance.  But if you've created a new loan Account for the new loan and have simply accepted that new Account's opening balance per the servicer - an amount that is different than the old loan's balance, a difference you can't really explain - then to zero out the old loan you can make an entry in that loan Account's "Decrease" column for the amount of the loan outstanding and in the "Category" field enter that loan Account's name, surrounded by square brackets.

[OLD LOAN ACCOUNT NAME]

That "magically" zero's out the balance in the old Account and, hopefully, you have correct opening balance in the new Account.  What gets left out is "how you got there" but at that point the balance sheet should be correct with respect to these two loans.

"**Yes, that is exactly what was happening. If we owed $1,500 but paid $2,000, the extra $500 just sat in a holding account of some sort until we paid enough for a full mortgage payment.**

I assume the extra $500 isn't reflected anywhere in the information pushed down to your downloading loan.  If that's the case then you should have an asset Account somewhere on your balance sheet - a form of "Prepaid" - to balance out the remainder of the $2,000 paid out.  (This is the "asset" I though you were referring to in your original post when you said "do I create a new asset account each time or adjust the one I have?" but now I'm not sure that's correct.)  That is, if you had a manual loan Account your accounting entry would be along the lines of:

Debit (decrease) Loan Account                   $XXX        (Amount of $1,500 determined to be "principal.")
Debit (increase) Interest Expense               $YYY        (Amount of $1,500 determined to be "interest.")
Debit (increase) Prepaid Principal Account $500        (Amount servicer has in "suspense.")
Credit (decrease) Cash in Bank                  $2,000

If you have online access to the loan you probably could make this entry when you issue the check, knowing how "this month's payment" is going to be split between principal and interest.  Otherwise you probably have to wait for "next month's" statement to determine exactly how that $2,000 payment got allocated.   It sounds like you understand this as you say:

**To correct myself, I didn't make a new account, I made a new "Suspense" category. So every time there is enough extra in the suspense category for the new payment, they post it to our account. I then make a transaction that then pulls the money from the Suspense account (plus whatever additional money paid) and reallocate the money to the appropriate account, ie Escrow, Principal, etc. **"

I'd probably use an asset Account here instead of a Category but your use of a Category for the Suspense amount will also work out perfectly fine and is more consistent with the popular notion that "money I pay out is an expense."

"**I don't necessarily have all this accounting stuff down, so correct me if I am wrong but I have an asset account tied to my mortgage. Do you keep the same one and just adjust it, when necessary, or do you create a new asset account for the home each time? I make adjustments occasionally on it's value that is determined by Zestimate."

So the asset in question here is the house itself, an asset that's "linked" to a loan. 

I see no need to create a new asset here - it's the same house as before the loan servicing was moved.  You can edit that asset Account and link the house to the new loan.  You can also update the house's value anytime you feel like it; it's nothing more than an estimate.

"**Not sure what you mean by "back in". Does my previous statement answer that question?**"

My question there reflected the fact that I didn't completely understand what was going on (and that still might be the case) and also comes from my "completely proper from an accounting perspective" mindset. 

Sometimes when you enter a transaction you do know the "completely proper" entry to make, like the accounting entry I set out above, with dollar amounts substituted for the "$XXX" and "$YYY" amounts.  But sometimes you don't know the proper entry to make at the time of the entry and that information isn't explicitly provided by whomever you've paid, but you can figure it out by using the information that is provided.  So in the simple case above where I didn't know how to split the dollars between "$XXX" and "$YYY", I could figure it out when the servicer reported my loan balance on the next statement.  At that point I could "back into" how the sum of "$XXX" and "$YYY" gets split.