Anyone Else Fed Up With Loan Servicing Companies?

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Anyone Else Fed Up With Loan Servicing Companies?

Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

There must be a lot of trading going on in the secondary mortgage markets, because so many of our loans have changed hands recently and it has been super annoying.

For example one of them has switched several times just in the past few months, from the originator to SLS to PennyMac to Lakeview (subserviced by Flagstar but then a month later switched subservicer to Mr. Cooper), and now to Newrez (if I got that right, I may have lost track honestly). One of them dinged our credit and sent a late notice before I even had time to set up ACH payments with them. I had just gotten done setting up the new ACH info with the last servicer, and had not gotten anything from the new one yet. I think they may have tried to call because I got a call with caller ID "Newrez" but when I answered, nobody there. Another time the ACH info should have transferred automatically. I got a notice saying "Don't worry, your payments will automatically be transferred to us", however my bank didn't recognize the new servicer's info and the payment didn't go through, making us late and again dinging our credit and triggering late fees. My credit is still just over 800 but I was proud of that 840 score. It's just annoying trying to keep track of payments when they keep switching companies and having to pay these fees. Not to mention scams are so prevalent these days, it's stressful vetting all these companies and making sure my financial info isn't getting into the wrong hands. I'm just annoyed. 

I wish I could go back and have all my loans with my local credit union who keeps them in-house to avoid all this. It's not so bad when you only have one property but with a portfolio of properties, it can take up a lot of time if they keep switching all. They are also not easy to deal with. It's frustrating to finally have it all sorted out then get a notice that the mortgage has been sold again and there is a new servicing company taking over and the mess starts all over. I've been talking to a lot of folks in the Philippines. On the plus side they are super friendly there and I'm learning some Tagalog, but I'd rather be doing something more remunerative with my time obviously. Plus it makes bookkeeping and doing taxes etc. more complicated and annoying/ expensive. It almost feels like they make it difficult on purpose so they get extra revenue on late fees. Maybe they are trying to annoy people with low rate mortgages on purpose to get them to refinance (conspiracy theory alert)? If somebody out there has a bunch of sub to deals, this could create big problems for them I imagine. 

If it didn't mean trading 3-5% rates for today's rates, I'd refinance and have all these loans with my local credit union who doesn't sell them. Basically just venting with this post, but if anyone has any advice that would help, I'm all ears. 

Anyone else dealing with this lately as well, or just me?

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y

@Steve K.

As an investor who buys loans I can share your frustration with servicing companies.

I would tell you to file to fight any late payments as if a loan is transferred there is a period between transfers where they should not mark you late or charge late fee

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  • Steve K.
    OP
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    1y
    Quote from @Chris Seveney:
    Quote from @Steve K.:

    Update: got to the bottom of the most recent issue which turned out to be a miscommunication between Newrez, our bank, and the new loan servicer for Newrez which is Shellpoint. Finally got it straightened out and Newrez did waive the late fees because it should have been a seamless transition and was not. My credit did take a ding and Newrez/Shellpoint supposedly can't reverse that now. I don't have the time or energy to file a complaint with the credit bureaus and my score is still over 800 so I'm moving on. Hopefully I get a break from loans transferring to new banks/ servicers for awhile, I'm over it.  


     Thats good to hear it is resolved and sorry about the credit. I would say I disagree as the servicer can request information be removed from credit. I as a lender as part of settlement had our servicer unwind some negative reporting.

    As a sidenote I saw a post online somewhere else where someone who had an owner occupied home for several years relocated for work and teh servicer sent a letter telling them they are not in compliance with their loan because it must be owner occupied for the entirety of the loan even though the loan docs say one year....

    Again, servicer overstepping their bounds

    I am going to dig deeper on undoing the credit damage. The person who told me that they couldn’t do anything about it on the phone didn’t sound like they were the authority on the subject, but rather just that they didn’t know how to. If this keeps happening and I keep letting it go, my credit won’t be good for long. I don’t trust these servicing companies and their sub-servicing companies to get anything straight anymore unfortunately. I wish there was a way to control which bank my loans were owned and serviced by. Definitely regret not having them all with my local credit union but too late for that now unless I refinance anll these loans and that would mean sacrificing a few points, closing costs, higher payments, less cashflow etc. 
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  • Steve K.
    OP
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    1y
    Quote from @Karolina Powell:

    Having the same problems.  It feels like the first week of the month, I spend chasing down payments to make sure all of my loans are paid, even though I have everything on autopay.  Way too much time spent on phone calls and on chats etc

    Yeah it’s especially frustrating when you get the autopay all set up and then they transfer the loan to a new bank or a new servicing company takes over and it’s back to square one again. 
    0Reply
  • Steve K.
    OP
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    1y
    Quote from @Caroline Gerardo:
    Quote from @Don Konipol:
    Quote from @Patrick Roberts:
    Quote from @Steve K.:
    Quote from @Patrick Roberts:

    For the late payments, contact the servicer that reported them late and ask them to remove the late payments from their reporting (after explaining, etc). At the same time, dispute the late payments with the bureaus and provide the payment records showing the payments were made on time if asked. You should have 60 days from the transfer where a payment made to either servicer is still deemed to be a payment rendered. Do not let this slide, even if the score impact is negligible. Lates on a mortgage trade can impact your ability to get loans in the future. 

    One of them told me they only have to provide 15 days notice, which doesn’t help if I am on vacation for a few weeks or haven’t checked my PO Box in a few weeks. I’ve been investing for many years and had a few loans transfer previously but this year I’ve seen a huge uptick, any idea why? Uptick in action in the secondary mortgage markets I suppose? 

     This is a highly regulated activity by the CFPB. The servicers have to send notices 15 days prior to the transfer, but the new servicer is required by law to honor any payments made to the old servicer for 60 days. This is straight from the CFPB website: 

    "Additionally, for 60 days from the date your loan servicing transfers, your new servicer cannot charge you a late fee or treat the payment as late if you sent it to your previous servicer on time or within the applicable grace period."

    If your new servicer wants to play games, file a complaint with the CFPB and dispute with the credit bureaus. Burn em. I have no mercy and no tolerance for poor ops when it comes to stuff like this. This is literally the entire reason these companies exists - to get this stuff right.

    As for why, I have no idea why there has been an uptick. Could be that the funds that bought the loans are liquidating, or it could be repositioning in preparation for future business. Big lenders like Flagstar that have a servicing component are currently using their servicing business insight to go after refinance business internally. It would not surprise me if they were acquiring the paper and servicing rights to take an inside line on refi's for these customers if rates decline.

    Actually CFPB regs may NOT apply if the subject loans are investment or commercial property loans and not SFR owner occupied or consumer loans.

    Correct. Investors don't have teeth, the loans that are GSE/FHA/USDA.. are supported by Federal funds intended to help owner occupants.

    The likely reason why the servicing is selling/flipping so often is your account is flagged.  

    Why do you think an account would get flagged and do you have any idea on how to solve the issue other than refinancing with a credit union or bank that doesn’t sell their loans? 
    0Reply
  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    1y

    Are these GSE loans (Fannie or Freddie or USDA)? If was originated as owner occupied in the past and no longer is owner, if you have change of name on deed or insurance, if impound had a dispute, claims - are a couple reasons why the servicing changes. Some servicers label your loan as troubled and they sell it off ASAP. Servicers have merged and operate on thin margins.

    Refinancing with a credit union or bank doesn't solve the problem. Most lenders do not service their own loans and reserve the right in the future to sell it- even credit unions and 99.9% of banks. 

    How to avoid BEFORE this happens: pay a day early, don't raise issues, get loans that aren't backed by US Government that the note states they don't sell the servicing.

    How to avoid the late payment- pay all accounts from the same bank account on the same day of the month. Monitor the account that all x number of payments went out. Keep one mailing address and opt to receive digital notice to one same email account that you monitor. IF you made payment to old servicer new one cannot show you late they have to transfer the funds along- there is a 60 day grace period. Fix it before the next month.

    0Reply
  • Steve K.
    OP
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    1y
    Quote from @Caroline Gerardo:

    Are these GSE loans (Fannie or Freddie or USDA)? If was originated as owner occupied in the past and no longer is owner, if you have change of name on deed or insurance, if impound had a dispute, claims - are a couple reasons why the servicing changes. Some servicers label your loan as troubled and they sell it off ASAP. Servicers have merged and operate on thin margins.

    Refinancing with a credit union or bank doesn't solve the problem. Most lenders do not service their own loans and reserve the right in the future to sell it- even credit unions and 99.9% of banks. 

    How to avoid BEFORE this happens: pay a day early, don't raise issues, get loans that aren't backed by US Government that the note states they don't sell the servicing.

    How to avoid the late payment- pay all accounts from the same bank account on the same day of the month. Monitor the account that all x number of payments went out. Keep one mailing address and opt to receive digital notice to one same email account that you monitor. IF you made payment to old servicer new one cannot show you late they have to transfer the funds along- there is a 60 day grace period. Fix it before the next month.

    These are mostly conventional loans. One is a former primary (we refinanced once while still owner-occupied then transferred into an LLC when we moved out and began renting it, but didn't have any issues with that one for about 5 years after we moved out). Another one was seller-financed for a few years before refinancing into a conventional loan around 2018, again no issues until this year. The rest are vanilla conventional investment property loans. I use a separate email dedicated for mortgage business and a PO Box for all investment business mail that I check weekly. Payments are all set up through ACH around the middle of the month (several weeks early).

    The issues we’ve had have all been due to ACH info not transferring seamlessly between servicers after the loans have been sold to different banks or switched to different servicing companies. They always say in the letter they send about the transfer not to worry, all the payment info will transfer automatically but then they have issues processing payments on their end and it’s always difficult getting through to anyone who knows how to resolve the issue on their end. 

    We also have several loans with our local credit union and they have not had any of these issues whatsoever due to not selling their loans and servicing them in-house. I wish we had gone with them for all of our loans and have been recommending them strongly to investor clients recently for this reason. The only catch is you have to bank with them which is fine with me as when we got our first loan with them it was time to ditch WF anyway.

    They have other nice benefits also such as not charging for appraisals if the deal doesn’t close, a great reputation amongst local listing agents with meeting deadlines/ great customer service/ getting the job done with no b.s. and they can often close in under 14 days. Our commercial loans are also with them so it would be great if all of our loans were in one place, but in order to refinance all of our loans with them now I’m guessing we’d sacrifice a few points on some of them and have higher payments impacting cash flow not to mention a lot more interest paid over the term of the loan which makes refinancing a non-starter unfortunately. I wish we could just request that Pennymac/ SLS/ Lakeview/ Shellpointe/ Flagstar/ Mr. Cooper etc. stop selling our loans or switching our servicing companies. 

    0Reply
  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    1y

    Without knowing your transaction history I stand by what I said. Your personal history with GSE's is notified across all GSE loans, they communicate. You have no control over the servicing transfers. SLS and Lakeview manage troubled loans. 

    0Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    1y

    Preaching to the choir - god please pray that servicing can be automated and improved with the emergence of AI. Fortunately - we have a good relationship with our servicers and can get frictional matters that arise rectified/resolved relatively quickly, but the frequency of said matters could certainly be reduced. Glad there is a venting board for this!

    0Reply
  • Steve K.
    OP
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    1y
    Quote from @Caroline Gerardo:

    Without knowing your transaction history I stand by what I said. Your personal history with GSE's is notified across all GSE loans, they communicate. You have no control over the servicing transfers. SLS and Lakeview manage troubled loans. 

    We definitely don’t have any troubled loans.  If these servicing companies can’t get their act together and this pain in the neck activity continues, we may just pay these loans off entirely or refinance with our local credit union.  
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