7.4.1 Processing Servicer Fees

Agent collects servicer fee from borrower for the rendered syndication agent services. The UDF COMPONENT-TYPE should be maintained at the interest class level to identify the Servicer fee interest component. The option list for this UDF displays the value SERVICERFEE.

You should define a tranche basis margin component in the Margin – Definition screen and create an interest class with the value of the UDF COMPONENT-TYPE as SERVICERFEE.

The interest component should be maintained at the Borrower Drawdown product level for servicer fee and the new margin component should be attached with the interest component. The servicer fee interest component should not be maintained as main interest component.

While booking a tranche contract, margin rate (service fee rate) should be captured for the new margin component created for servicer fee processing. The margin rate for servicer fee margin component can be captured in the standalone margin maintenance screen as well, after the tranche is authorized

While booking a new drawdown, servicer fee margin component is defaulted to the new drawdown level Interest component that has this margin attached, The other interest components should not have this margin attached

If the servicer fee margin rate is changed at the tranche level, then the propagation of the servicer fee margin rate to the underlying drawdowns will happen as part of end of day batch process.

During liquidation of the new interest component associated with the servicer fee margin component, the interest amount should be credited to income GL and this should be achieved by defining appropriate accounting entries for the liquidation (LIQD) event at the Borrower Drawdown Product level.

During liquidation of the new interest component associated with the servicer fee margin component, the interest amount should not be credited to the participants, as servicer fees should be received by the agent only. To achieve this, accounting entries should not be maintained for servicer fee interest component for participant drawdown products for LIQD event.