Mortgage Loan Pool Settlements

When purchasing or selling a residential mortgage pool between credit unions, or other financial institutions, accrued interest must be considered. One way to get around accrued interest is to settle on the 1st of the month. That is not always practical however. The first of the next month might be a weekend, or a large pool might have some loans that are behind a month or two in their payment. Also, you might have some mortgages that have prepaid interest. For example, if a borrower is going to be gone on vacation for a few months, they might prepay the loan and the next payment will not be due until a few months in the future.

In addition, the buyer might be purchasing a percentage of the pool, not the whole pool. Servicing also has to be considered, if the pool is not servicing released. The spreadsheet called “Settle” could act as a template for settlements. Be sure to check the both party’s loan agreements however, as not all loan agreements agree on settlement calculations. Residential mortgages interest in the U.S. will almost always be calculated on a 30/360 basis, however I included an Actual/365 option. Yellow cells are input cells:


Download “Settle

Don Pistulka

Retired Credit Union CFO - Finance
Background: over 40 years in investments, asset/Liability management, banking, securities trader.
Worked for: California Credit Union, WesCorp, CalFed S&L, Crocker Bank, Carroll McEntee, Federal Home Loan Bank Board (D.C.), Western Asset Management, Security Pacific National Bank.

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