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Note Servicing Companies
Lately I find myself doing clerical duties making sure that I'm escrowing enough for taxes and insurance when I should be buying and selling notes and properties. I don't see much discussion on here about servicing of notes. Are all of you guys handling that yourselves or do you have a note servicer? To me the cost of note servicing seems cheap compared to missing out on even one good deal per year.
@Jay Hinrichs I always question how many people are actually in the paper game. There are a lot of people who will buy a note here and there but how many are truly in it (outside of larger funds) - investors with less than $5M which I would consider a main st investor.
There was an influx of investors over the past few years who have come and gone because they couldn’t compete with fix and flips and thought notes was a passive way to earn huge profits. Then reality set in and it’s a lot of work and takes a lot of capital. Of course you can be passive and buy performing stuff and get nice returns but when people are having courses that show you how to make a few hundred grand a year in notes people get all excited and rush to the well only to realize it’s dry and you need to work to fill it.
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#4 All Forums Contributor
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Originally posted by @Chris Seveney:
@Jay Hinrichs I always question how many people are actually in the paper game. There are a lot of people who will buy a note here and there but how many are truly in it (outside of larger funds) - investors with less than $5M which I would consider a main st investor.
There was an influx of investors over the past few years who have come and gone because they couldn’t compete with fix and flips and thought notes was a passive way to earn huge profits. Then reality set in and it’s a lot of work and takes a lot of capital. Of course you can be passive and buy performing stuff and get nice returns but when people are having courses that show you how to make a few hundred grand a year in notes people get all excited and rush to the well only to realize it’s dry and you need to work to fill it.
YUP to support our charity I rent my time out for phone consultations. BP members make a donation to aheroshome.org and they get me for a half an hour to talk shop.. if its something I am not really up to speed on I let them know they can still donate but I may not be the best person for advice.. On the note side one person took me up and we had a nice chat.. They bought one note and of course its NPN to start cant get it performing and having to deal with the servicer and they send me the laundry list of everything they have to do and they quickly realize holly cow this is a ton of work for a small investment with little to no upside by the time they put all those hours into it and risk basically getting some house back half a country away :)… So folks jump in but then reality sets in.. This is a business NPN is NOT a passive pursuit by any stretch of the imagination. And when they are owner occ even more so given all the laws and rules one must follow.
Its all about scaling you need millions in play in my mind to make this work.. IF and that's a big IF you want to make any serious money not just little cash flow on the note.. if that's the case new originations through a top shelf broker or into a fund is far more realistic for most.
Regarding NoteWorld.com, which became Meracord LLC:
BE CAREFUL - I found this thread because I'm looking for a Note Service and came across this RICO action against them:
https://www.hbsslaw.com/cases/noteworldmeracord
05/15/15: $1.45B Default Judgment Issued
United States District Court Judge Benjamin Settle issued a $1.45 billion default judgment. Judge Settle granted plaintiffs’ motion for class certification and default final judgment against the Tacoma, WA company after Meracord ceased defending itself from plaintiffs’ claims.
Servicers can help and hurt you but are there really to protect you. Most investors either feel they can do it on their own or want the servicer to do all their work. Just like any service we always recommend continue to monitor and review. We can share stories of mistakes and timelines that have been made along with great successes with servicers over our past 10 years. Picking a servicer depends on what fits your business model and experience. One that was not named here was www.snsc.com.
David Putz
This is all great information! I researched many of the servicers that you guys mentioned however, many of them will not service properties that are in NY. Does anyone have a servicer that is licensed within the state of NY?
@Adanna Davis FCI won't do NY?
FCI and LoanCare were the only 2 I've found that is licensed in NY...I am leaning towards LoanCare. Thanks so much!
I'm working on a transaction now where LoanCare is the servicer. The Payor's have been unhappy with them overall. It's costing them $32.50/mo. For a fee that high it seems they should drive to the payor's home to pick up the check each month.
They're part of Fidelity National Financial, who owns Chicago Title, Ticor Title, and many others... https://fnf.com/Companies
Hello Mike,
I was wondering if I could connect with you on zoom to learn about your experience in note investing? Also I was wondering if you could refer any note brokers, services and loan exchange businesses?
I know this is an old thread, but it was really helpful. I just found a really good article on this topic which has a directory of servicing companies and the states they operate in.
@Dennis Hammack
Ever looking for feedback happy to provide as I have at one time used most of those on that list