When you service a note for an investor (the loan's Pay-To, investor payables), you usually keep a servicing fee out of what you collect. Servicing-fee netting does that arithmetic for you: configure the fee once on the loan and every payable accrues net of it — no side spreadsheet.
Configuring the fee
On the loan page's Lienholder card (asset notes only), the Servicing fee row shows the current setting — Edit (Admin/Owner) opens the editor:
- No fee (default) — the owner is owed the full principal & interest collected. Nothing changes until you opt a loan in.
- Flat $ per payment — a fixed dollar amount held back from each collected payment (e.g. $15).
- % of collected interest — a percentage of the payment's collected interest (the industry servicing-spread shape), rounded half-up to the cent (e.g. a payment collecting $210.99 interest at 1.5% nets $3.16 — the principal portion is never in the basis).
The change takes a note (optional for the account owner, required for everyone else) and is audited on the loan.
What it changes — and what it doesn't
Each payable now accrues gross principal, gross interest, the fee, and the net: net owed = P&I − fee. The ledger, the headline figures, Record remittance, and the CSV statement all use the net figure, with the gross components and the fee shown separately so both sides can reconcile honestly.
- The fee never pushes a payable below $0 — it caps at the payment's P&I (a capped fee is flagged in the audit trail).
- Escrow is untouched (held in trust, never fee'd) and a $0-P&I payment accrues nothing — the fee never manufactures an obligation.
- Not retroactive: changing the fee affects payables accruing from then on; already-accrued payables keep their figures. (Editing an old payment re-prices its still-unremitted payable at the fee configured now.)
- Edits and reversals stay symmetric: re-pricing re-computes the fee, and deleting or reversing the payment backs the whole payable out — fee included.
- This is the investor-side fee. The borrower-facing servicing fee (billed on top of the amount due) is separate and unchanged — the two can coexist: one bills the payor, the other nets your retained fee out of the owner's remittance.
Tracking your servicing-fee income
The Reports page has a Servicing-Fee Income section that totals your fee income distinctly, labeled by servicer identity — every line reads Serviced by [your organization] for [owner], which is exactly the arrangement on a continue-to-service sale. Two figures, never mixed: investor-side fees netted (actual, from collections — Σ of the ledger's Fees netted, rolled up by investor → loan and by year of the source payment) and borrower-side fees billed (the scheduled monthly borrower servicing fee on active asset notes). The QuickBooks/Xero accounting export carries the same split as reference columns — Servicing Fee (netted) and Serviced For — on each affected payment's journal.
Taxes: the 1099-INT stays gross
The owner's 1099-INT reports the gross interest collected on their notes — the servicing fee does not reduce it. That's standard practice: your fee is the investor's deductible expense (their Schedule E/C side), not a reduction of their reported interest income. NoteHarbor computes the 1099 from the payments themselves, so the netting cannot leak into it.
The fee stays with the loan's servicing arrangement, not the person — if you change the loan's Pay-To, review the fee too. And a dating note: the percent basis changed from collected P&I to collected interest on 2026-07-11 — payables accrued before then keep their original figures (fee changes are never retroactive).