Select Portfolio Servicing INC

10 Replies

Is anyone here familiar with Select Portfolio Servicing INC? I've found a home that is behind on this years taxes and last years were paid by SPS. SPS apparently purchases loans from banks when the borrower falls behind on payments.  The company has horrendous reviews almost all of them complaining about the company "forcing" the homeowner to foreclosure by raising rates and monthly payments. I'm wondering how the process would work if someone were to buy this home would this company be in any way tied to the home and thus the new buyer? 

I'm familiar.  Process is similar with all of them. I'd like to know how you are doing each step of the way. A servicer would not be tied to the loan when the loan and/property are gone unless someone really messed it up.

Most mortgage servicers have horrible reviews. SPS is one of my favorite to work with when it comes to short sales. If you got a new loan on the home you may have a different servicer. 

@Susan Vanderburgh would you mind giving me some examples of ways someone could really mess up that would cause the servicer to remain tied to it?

Granted there is very little any of us actually know about your scenario but from what you are describing, i think you have the roles of the players a little backwards. If SPS is paying last years taxes, chances are they are the servicer. That would imply they will also pay this year's taxes which would eliminate you being able to "Buy" it. You wouldn't be able to buy it regardless unless two situations exist. 1) you contact the owner and they agree to sell it to you and you purchase it or....2) the property goes into foreclosure and subsequent foreclosure sale and you show up on the courthouse steps and purchase it for cash. 

Assuming what i've said is true it implies a couple of scenarios. If SPS is advancing for taxes and they are NOT in a workout with the borrower, chances are they will foreclose eventually if they have not already.

SPS doesn't "Purchase loans from banks when they fall behind on payments". SPS is a subservicer. They are contracted to service loans on behalf of banks and other owners in exchange for a fee to do so. SPS doesn't force any homeowner to foreclosure by raising rates and monthly payments. That's just not a fact for any lender or servicer in business today. 

Homeowners today are "forced" into foreclosure when they don't make their payments or when the violate other covenants of their loan (Illegal transfer, failure to pay taxes, failure to maintain insurance, failure to maintain the home, operating a meth lab, etc..) Homeowner's "Payments are raised" or their "rates are raised" when they have an ARM loan that adjusts upward or their insurance increases or their taxes increase. Lenders don't just raise payments or rates. Some loans do have default rate provisions that kick in in the event of default but not any consumer loans that i'm aware of. based on what you wrote, there isn't any process to work here. Buy it at foreclosure sale if it goes to sale or buy it from the owner if they sell it to you. In either scenario, SPS is not a factor in the equation.

There is one final scenario - you could buy the tax lien at a tax sale but again, if the servicer is advancing taxes, there is nothing for you to buy.

@Chris Chesser   SPS is either the lender or more likely working for the lender. Normally when you buy a property all loans and debts attached to the property are paid off at settlement.

@Ron S. gave a very good explanation of what is going on here. You basically have four options. None of which are guaranteed to happen or work out for your benefit. 

  1. Buy directly from the owner
  2. Buy at a foreclosure auction.
  3. Buy the property from the bank IF they take it back at the auction
  4. Buy the tax lien. 

Regarding the last option, If the owner stops paying the mortgage, there is no money escrowed to pay taxes and the bank may stop paying taxes.  We have caught many a bank asleep at the wheel and they let a property go for taxes. But that is a lot of things that have to go your way to get a specific property. 

  1. Buy the tax lien. 

Regarding the last option, If the owner stops paying the mortgage, there is no money escrowed to pay taxes and the bank may stop paying taxes.  We have caught many a bank asleep at the wheel and they let a property go for taxes. But that is a lot of things that have to go your way to get a specific property. 

I have yet to be caught sleeping at the wheel Ned! Not gonna say it wont' happen some day but hasn't yet. Gosh I hope not. I pay a lot of money every month for a vendor to monitor every loan in my portfolio, quarterly, for tax payments. Any lender that gets caught sleeping at the wheel, deserves to lose it to tax sale.

@Ron S. for your sake I hope it doesn't happen. It is not likely it you are monitoring your portfolio.  However with very large banks sometimes one side of the bank doesn't know what the other side is doing. This is especially true when loans are sold multiple times or a bank is  sold or absorbed by another bank. Usually it is the servicer screwing up. We have taken two this year from banks that had the property under contract and ignored the tax foreclosure. .

@Chris Chesser

I cannot really say too much about that because of the court cases which my firm had worked on and some of them were high profile. But there are ways things can still get messed up along the way. I understand them because of my background as an investor and did a lot of research for my clients, otherwise, I am not privy to such information. 

Drawing from my experience with foreclosures, selling REOs and selling at auctions, the servicer and sub-servicers take orders from the trustee and the beneficiary, but it also depends on a bank's procedures and hierarchy. So, if you want to buy direct, there are daisy chains of brokers who claim to be direct to the seller to offer bundles and bulks of properties. They exist but you are looking at millions to start with good liens and you are often to buy as a hedge fund, not as an individual. A bank is not quickly going to sell; there are procedures in place and investors to answer to. I almost got into buying a bundle, but when I did the numbers, I learned that the bundle was being passed around and I might have been the 3rd in line to realize that what was offered to me was not the real thing.  I apologize if I took you to another tangent of things. Perhaps, you already know what you want, maybe you should pinpoint your acquisition and exist strategies.

@Ron S. @Ned Carey Wow. Thanks for the detailed responses. I am very new to all of this, so I apologize for the ignorance in the original question. I was not intending to make the company sound bad and I obviously should have worded the question differently. This particular property is already listed for sale. There was no mention (in the listing description on the search site at least) of a short sale or foreclosure/REO. I only noticed the current taxes and the involvement of SPS when researching numbers to plug in my analysis. If an offer were to be submitted through an agent, would they typically account for these delinquent taxes in their asking price?

@Chris Chesser yes they will account for the taxes. 99%+ of all contracts are worded with something similar to "Seller to provide free and clear Marketable title".  Marketable title implies Insurable title.

So any debts like taxes, judgements or mortgages will be cleared up at settlement.

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