The monthly close checklist for loan servicing

Why a close needs a sequence

A month-end that happens in a different order every time is a month-end you cannot trust. The value of a checklist is not ceremony — it is that the numbers are worked in a fixed order, exceptions are cleared before they compound, and the period is locked exactly once, at the end. Run the same sequence every month and the close stops being an event and becomes a habit.

The sequence

1. Post every receipt to its period. Apply each payment to the correct loan and period before you review anything else. A payment booked to the wrong month makes both months wrong and hides a real delinquency.
2. Review accruals. Confirm interest accrued on each loan's stored day-count basis. Investigate any figure that moved materially from last month — a rate change, an extension, or a balance that shifted on a paydown should each have a dated event behind it.
3. Confirm invoices and statements. Check that borrower invoices reflect interest, reserve funding, fees, and taxes, and that investor statements reflect the right shares.
4. Reconcile investor activity. For every loan, borrower interest should equal the sum of investor interest plus your servicing spread, within rounding.
5. Work the exceptions. Clear the short list: past-due loans, missing maturity dates, negative reserves, unapplied payments. Exceptions worked at close do not become next month's surprises.
6. Run consistency checks. Referential and financial checks scan the book for anything that does not foot.
7. Lock the period. Locking stops the numbers from drifting. A locked month is the entire reason the checklist exists.

A reconciliation example

Take Harbor Mixed-Use for March: borrower interest of $6,497.26 should equal the three investors' interest plus your servicing spread. If the investor interest sums to $6,157.26 and your spread is $340.00, the period reconciles to the penny. If it is off by a few dollars, the usual cause is a net-rate rounding difference or a mid-month capital change posted without a matching adjustment — find it before you lock, not after.

Preview before you lock

Preview the close packet before locking so you can see exactly what the period contains. After the period is locked, generate or archive the final packet so it reflects the closed record. Generating the "final" packet before the lock risks archiving a version that no longer matches the numbers once a last-minute correction lands.

Common failure vs. correct close

The common failure is the close that never truly closes: numbers stay editable, so a figure quietly changes in a "closed" month and the investor statement you sent no longer matches the book. The correct close locks the period, preserves the issued documents, and requires a deliberate, logged reopen to change anything — so the statement you sent is the statement the book still shows.

Where LoanConsole fits

LoanConsole runs the consistency checks, previews and produces the close packet, and locks the period so a closed month stays closed. You decide when the month is ready and review the outputs before relying on them.