Note Loan Servicing Recommendations

[Michelle Fenn]

I am in Cleveland area and have turned long term rentals into notes. I was able to sell one of my notes last year when I needed to raise capital for 90% in a week.   What I learned is that I was lucky, not smart and the cost of a loan servicing company is a good investment.  

[Jamie Bateman]

You can often do without a servicer if the borrower is a landlord (property is a rental) since Dodd-Frank does not apply. But in general, I agree. As much as we note investors like to complain about servicers, it is typically worth the cost. And, when you go to sell a note, you should be able to value it a bit higher. 

[Chris Seveney]

@Michelle Fenn

I recommend a servicer as it is anywhere from $20-$40 per month for a performing loan. If it is owner occupied you must send monthly statements, yearly interest and if escrowed escrow analysis as well as other Dodd frank compliant info. To me my time is worth more than $240 per year to do all that as well as deposit checks etc. biggest component I have yet to even mention is the risk mitigation component if you have a questionable borrrower find some sleeze ball attorney.

Recommend always use a servicer if it’s on a residential note.

[Logan Hassinger]

@Michelle Fenn

Looks like Jamie and Chris have got you covered for the most part. I would add to what they have said by throwing out a few servicers that many of note investors use. 

• FCI (I currently use)
• Madison Managment (I currently use)
• Allied Servicing
• Note Servicing Company
• Evergreen Note Servicing

Check out their sites and give them a call to learn about their fees and online portal for lenders etc. 

I’ve been satisfied with both FCI and Madison. Just remember, they are there significantly reduce the risk that comes along with staying compliant with Dodd Frank (monthly statement issuance, annual interest paid, and escrow services to name the biggest). I’ve found that many note investors have unrealistic expectations of a servicer in terms of borrower outreach and loss mitigation. While they help, it’s up to the investor to provide oversight or outright loss mit on your own (or through the help of other professionals). 

[Bob Malecki]

Also be sure to check that the servicer is licensed in the state where you own the debt or plan to own debt. I know that FCI is licensed in all 50 states and some of the others on that list maybe also fully licensed. 

[Brenda Smith]

Ok Michelle, can you name a note loan servicing company of your recommendation, i will be needing one?

[Chris Seveney]

Quote from @Brenda Smith:

Ok Michelle, can you name a note loan servicing company of your recommendation, i will be needing one?

 responded in another post

[Mark F.]

Quote from @Brenda Smith:

Ok Michelle, can you name a note loan servicing company of your recommendation, i will be needing one?

 A new servicer has come on the scene lately called BIFI. I haven't used them yet.

https://bifils.com/

I've also used Madison Loan Servicing and been reasonably happy with them.