I don't know much about loan servicing and could use some help understanding compliance with partial loan payment posting.....I hope this post makes sense....

First, our note states that the loan will be paid in x amount of payments.....prepayment is allowed...the note states that early payments will not relieve obligation to continue payments but will reduce the principal balance....but it is not clear to me in the note how the early payment should be presented to us...so that we know it is intended to be a principal payment to reduce the principal balance.....I've been told that this is a special handling type payment....should this be disclosed in the note?

Also should the handling of partial payments be disclosed in the note? The potential issue I have come across is a loan where weekly partial payments (transfers) $150 are being made online.....the payments are posting to the next payment due date(interest, principal, escrow, principal)....when one of the $150 payments completes the escrow due, the remainder goes to principal. Then the next $150 payment starts over with the next payment due date (interest, principal, escrow); rather than looking at it as an early payment and posting the $150 to principal....this particular borrower is paid up until June..I've been told this is how the online system operates...if the customer wanted the payment to be handled special, it would have to be brought to our attention by the borrower.....I just don't see where we disclose this anywhere... Should how partial payments are handled be disclosed in the note or at least for online payments...maybe the online banking agreement?

I see that this will be disclosed in the new Closing Disclosure....I guess that would cover this.....I guess we don't have disclose how the partial payment is allocated...just that we accept them and they will be credited to the account.....