The MB Funds Accounting is a package to account for borrower funds, loan proceeds and funds disbursed. Each borrower loan has a separate subsidiary funding ledger accounting for money received and how the total funds were disbursed.

Funds received from the borrower, loan proceeds and funds disbursed ORIGINATE in the Real Estate Department. Each loan funding ledger reflects exactly the data shown on the HUD Settlement Statement.

Some of the accounting activity is transferred to the accounting department to mirror in consolidated accounts what originated in the Real Estate Department and posted to individual ledger accounts.

In the MB Funds Accounting package setup (01.15.14.12.03), GL accounts and a custodial account number are assigned to inform the accounting department how to mirror or post entries originating in the MB Funding package.

SET UP (01.15.14.12.03)
Showing on the first screen are accounts 1 through 5. All other fields have the same number as shown on the HUD Settlement Statement. If no GL number is set up, checks will be written when funds are disbursed.

Number 1. Cash
Leave this account blank if cash will go through a "cash in window" (teller). Cash going through a "cash in window" (teller) is a debit posted to cash and a credit to a Custodial Checking Account.

Money is received from the borrower in the Real Estate Department and posted to the funding ledger. The cash along with a deposit slip is given to the "cash in window." The deposit reflects the accounting activity for that account.

Number 2 and 3 are self-explanatory and should be set up as GL account numbers.

Number 4 and 5
These accounts are the offsetting entries. MC recommends using a number 4. "Custodial Checking Account."

WHY USE A CUSTODIAL CHECKING ACCOUNT

1. It is the right way to go.
2. All the data is entered and stored on the MB side and no need to transfer to another department.
3. Data is stored in a Vendor file for IRS reporting, or to answer questions the Vendor may have. No need to look elsewhere.
4. The Real Estate Department becomes responsible and can be audited by the Accounting Department.
5. It is not the only way to go, it is the right way to go.

If a Custodial Checking Account is not used, the option is provided to set up a GL account in number 5. One can only set up Number 4 or 5 and not both.

DISBURSEMENTS
When funds are disbursed and only checks written, no data is passed to the Accounting Department. If any of the funds being disbursed are to be retained by the lender (in the setup a GL account number has been entered in that field), a credit to one or more GL accounts is passed to the Accounting Department.

MC passes the GL account number and dollar amount of the credit to be posted to that account. Since MC has no access to the GL accounting software MC can only pass the CREDIT side. If the software provider cannot automate this function, the Accounting Department has to generate a DEBIT entry to reduce the Custodial Checking Account to reflect the entry from the individual loan ledger.

The dollar amount to reduce (debit) the Custodial Checking Account is passed and is a one time entry by the Accounting Department for the daily transactions.

MC is passing to the Accounting Department a reflection of the activity to each individual funding loan ledger.

Cash coming from the borrower originates in the Real Estate Department, not a teller's window. It is posted to the borrowers individual funding ledger. A "cash in window" accepts the cash and passes the credit to the Custodial Checking Account.

Disbursement from the borrower's individual funding ledger is either by check of retained by the lender. If checks are written, the Accounting Department is passed no data.

If funds are retained to become a credit to the lender's GL account, the accounting department has to generate a DEBIT entry to the custodial checking account.

MC programs balance the MB Funds Accounting package. The data passed to accounting is to mirror the Funds Accounting activity and is not a balancing of debits and credits.