Interest and principal payments
Happen Bank pays Notes investors principal and interest equal to their pro rata share of loan payments tied to a Note, less any fees associated with the receipt of payments.
What’s accrued interest, and when is it credited to an account?
Interest accrues on your Notes during the payment cycle before members make a loan payment. When members make their monthly payment, the accrued interest is realized and deposited in your account, and interest starts to accrue again.
Why did the interest rate change on one of my Notes?
When members enter active military duty, they may be eligible to have the interest rate on their loans reduced to 6.0% under the Servicemembers Civil Relief Act (SCRA). Under the SCRA, any interest above 6% on eligible borrowers’ loans must be permanently forgiven, and the member’s monthly payment must be reduced by the amount of interest saved during the period of active duty. The 6% interest rate cap remains in place until the member’s active-duty service tour ends. At the end of the tour, the member’s interest rate reverts back to the original contracted rate.
The 6% rate cap is available only to eligible members who received their loan before being called to active military duty, and only if their tour of duty affects their ability to pay the loan at the originally contracted interest rate.
Service charges
Investors pay Happen Bank a service fee of about 1% of all loan payments made within 15 days of the due date. If members miss a payment, investors don’t pay a service fee.
To protect investor returns without discouraging members from prepaying their loans, we limit the service fee to 1% of the borrower’s regular monthly payment in the first 12 months a Note is issued, even if the member chooses to pay more than the monthly amount due. This way, if a member pays off their loan—or makes significant progress to pay off their loan—within the first 12 months, investors aren’t burdened with a large fee and keep more of their investment.
For example, if you held a Note that had a contractual monthly payment of $300, and the member prepaid $4,000 one month in the first 12 months of issuance, you would be charged only a $3 service fee (1% of $300). After a loan has been issued for 12 months or more, you’re charged a 1% service fee on the total prepayment amount in the month the prepayment was made. If a member made a similar prepayment of $4,000 after the first 12 months, you would pay a $40 service fee.
Collection fees
When members miss payments and loans become late, we make a reasonable effort to recover the money owed to investors. When we recover a missed payment, we deduct collection fees from the recovered amount based on these criteria:
Up to 40% on collected payments on a delinquent loan involving litigation, less legal fees and other expenses for any litigation costs
Up to 30% on all collected payments on a delinquent loan not involving litigation
Other collection fees charged by Happen Bank or a third-party collection agency (for example, when a loan is charged off)
Happen Bank doesn’t charge a collection fee if we don’t recover a payment, and collection fees aren’t charged in excess of the recovered amount.
You may be charged additional fees if you invest in a Happen Bank IRA.
Fee calculation and rounding
We calculate all fees to the tenth decimal place. In your account, the fee will display rounded to the nearest whole cent. To see your fees calculated to the tenth decimal place, hover your cursor over the dotted line below the rounded number.
Because of rounding or truncation, you may see inconsistencies in your account, such as a $0.00 fee or a service fee of $0.01 with no apparent change in your account balance. Here’s an example:
In the chart above, a fee of $0.0052222222 is rounded in the Displayed Fee field to $0.01. If we consider only the displayed account balance and the displayed fee, the balance after fees would be $508.99. The actual account balance, less fees, however, would be $509.0003333333 ($509.0055555555 - $0.0052222222)—which, rounded to the nearest cent, is still $509.00.
We deduct fees when funds are deposited into your account or immediately after. If the fees are deducted after the payment is deposited, the fees will show a “pending withdrawal” status until the fees are deducted.
