Managing Your Servicer

[Chris Seveney]

Whether you are new to the note business or an experienced veteran, I would like to share with people some of my experiences and tasks needed to manage your servicer

First and foremost think of your servicer as no more than the person behind the counter when you order a Big Mac through McDonald’s drive thru. This is not an insult to either side, but the reason I say this is many people think of their servicer as a manager and that is not the case. They ask you what you want to do and follow your order and collect $. That is essentially it.

You also have to watch them like a hawk, here are some of the things I do:

1. I always double check to make sure taxes are being paid even if they are collecting escrow. Some servicers will say they never received a tax bill so the money sits in escrow while the property is paying delinquent fees.

2. Check to make sure they are adding advances to the account: if you are paying insurance through your policy this is a headache as the servicers need to add this to the loan and many “forget” or take months to add the $ which effects payoffs.

3. They are sending statements - yes I have had servicers not send them, also make sure they have correct address.

4. If you have them doing workouts, check the notes but also call the #. I had a loan saying they were leaving a VM and I called and phone disconnected.

5. Check for bankruptcies as well make sure servicer is aware if they file

6. Properly applying payments

7. They have the correct interest rate

8. They have latest / most current loan docs (especially if there was a modification)

[Chad U.]

Great list!  I'll add:

1. Charging Late Fees on re-performing loans and keeping half for themselves.   
2. Sending out Loan Mods but never following up and explaining the terms to the borrowers
3. Sending out the Loan Mods via most expensive overnight courier and charging you for it
4. Taking 2 months to get out a demand letter
5. On "Client Managed" loans, emailing you to tell the borrower to send checks to their new address, even though they are charging $55/mth
6. Charging for Payoff statements and other items on loans in Foreclosure that are Client Managed, whereby they do absolutely nothing and still charge $40/mth
7. Issuing incorrect 1099's where interest from the year before was included.  

I could go on and on......