Notes Servicing (Sierra Crest Capital)

[Varinder Kumar]

 A friend of mine has purchased a 1st lien position performing note from https://sierracrestcapital.com. Has anyone heard of this company? and also what is their incentive to service notes. Basically my friend said Sierra will find the asset for you and they collect 5% of the monthly as a fee. Sierra does a contract for a one year or a few years and after the term is over you get your initial investment back (principal) and that's it. I am trying to figure out what the angle here is. and what is Sierra Crest Capitals incentive. Any feedback I would appreciate thanks.

[Jay Hinrichs]

Originally posted by @Bob E.:

Personally I would NEVER trust someone else to select a note for me, that tells me they don't know what they are looking at.  

Also, what is their monthly servicing charge?  I have Allied Servicing handle my notes and they charge $18.50 a month.  I think FCI charges @ $25 plus a little more if they escrow for Taxes and Insurance.  A small change in servicing fees can result in a big change in profitability.  Do they charge more to handle non performing notes?

To me this sounds like a heads they win tails they lose proposition.  Does the seller have a relationship with the note originator or current note holder?  Are they marking it up?  Lots of ways this can go wrong.

@Jay Hinrichs any thoughts?

sounds like they make loans to new clients  flippers etc.. then investors buy the notes  ( probably a lot of fractionlized notes) and therefor you need a servicing company.. they are DRE licensed according to the website and the CA DRE has pretty substantial guidances on the brokers doing these loans..  5% for that type of servicing just probably covers the cost to actually do fractionalized loan servicing.