The Payment That Arrived but Never Landed: Anatomy of a Servicing Error
1. The event
A borrower sends the full monthly payment on time. The scenario models a servicing error in which the payment is received but not properly credited to the loan: the cash sits unapplied while the servicing state treats the loan as unpaid. The servicing error is the event being analyzed.
2. Starting mortgage state
$300,000 at 6%, 360 months; P&I $1,798.65; escrow deposit $400; total obligation $2,198.65; borrower current, zero fees, zero suspense.
3. What changes — three runs, identical cash in every one
| Month 3 | Correct application | Modeled misapplication |
|---|---|---|
| Cash received | $2,198.65 | $2,198.65 |
| Applied to P&I | $1,798.65 | $0.00 |
| Delinquency | CURRENT | 30 days (false) |
| Late fee | none | $89.93 |
| Servicer advance | none | $1,798.65 |
Four distinct layers, kept distinct: regulation (Reg Z §1026.36(c) governs prompt crediting and partial-payment handling), contract (the late charge is a declared note fixture — 5% after 15 days per the standard Multistate Note form, overridable, not a universal U.S. rule), the modeled servicing error (full payment not credited), and the computed EVA consequence (false delinquency keyed on P&I applied, not cash received).
4. Ledger consequences
Every transition is a posting: SUSPENSE_HOLD, LATE_FEE_ASSESSED (note fixture), SERVICER_ADVANCE. The investor is kept whole by the advance — the error is invisible from the security side while it compounds on the borrower's record.
5. The correction
An error-resolution event posts SUSPENSE_RELEASED (applied as of original receipt), LATE_FEE_REVERSED, DELINQUENCY_CORRECTED. End state: CURRENT, zero fees, zero suspense, advances recovered; cash conservation reconciles to the cent.
6. Why positions differ
Borrower record and servicer liquidity move; investor remittance does not — the advance obligation is the wedge between them, shown as data.
7. What EVA computes
Deterministic application mechanics over a declared fixture, with byte-identical replay and machine reconciliations.
8. Outside the demonstrated scope
Credit-bureau reporting pipelines; Regulation X error-resolution timelines; servicer compensatory consequences; any claim about how often such errors occur.
9. Evidence / replay coordinate
POST /api/v1/servicing/ledger/run, servicing-ledger module (commit lineage fee42a00), source commit 422ea36a; verbatim receipts and reconciliations alongside this file.