All Forum Posts by: Steve K.

I’ve had several investor clients go with a new (to me)/ unproven lender because of a slightly lower rate promise only to get burned by that lender (closing costs were higher, appraisal costs much higher and appraisal was a nightmare, main point of contact gave us the clear to close as we passed our financing contingency then just before closing someone from the underwriting department we previously didn’t know existed said we need a few more days and seller didn’t agree because they had a higher backup offer, jeopardizing the earnest money and losing the property, etc). There is a lot more to it than the rate. Look at all the differences in both rate and terms but most important in my opinion is their track record in customer service and meeting deadlines and closing. The worst lenders I have dealt with are the ones with underwriters in one time zone and origination department in another, branch manager in another that don’t communicate well with each other and end up over-promising while not being able to deliver. If you have a good relationship with a lender who has a track record of great customer service and hitting all deadlines, even better if they have a good local reputation with the listing agents in the market that you do business in, then that’s worth more than the promise of a slightly lower rate from an untested lender IMO. 

Quote from @Timothy Franklin:

This thread makes me wonder if this is a big enough problem that it would be worthwhile addressing? I could easily train virtual assistants to handle these payments and have an app created for encrypting sensitive data for facilitating the transactions through financial service partners from my main line of business. The question is would you or other investors be interested in paying for a service that facilitates all of these payments on your behalf so you don't have to worry about the hits to the credit or the change of servicer?

 Possibly but the problems I’m having stem from having too many cooks in the kitchen already so to speak, and failures of what is supposed to be seamless transitions among different payment systems, so I’d be worried that adding another layer of complication, more entities and more software could lead to more potential failure points. Personally I’d prefer having all my loans with one entity like my local credit union who doesn’t sell them and just have the payments come out of my account that I already have with them, keeping it as simple as possible. 

Quote from @Timothy Franklin:

This thread makes me wonder if this is a big enough problem that it would be worthwhile addressing? I could easily train virtual assistants to handle these payments and have an app created for encrypting sensitive data for facilitating the transactions through financial service partners from my main line of business. The question is would you or other investors be interested in paying for a service that facilitates all of these payments on your behalf so you don't have to worry about the hits to the credit or the change of servicer?

Possibly but I'd be worried about adding another layer of complication / potential point of failure. I'd prefer less outsourcing on behalf of the banks and fewer web portals/ apps/ servicing companies because in my experience the more entities involved the more glitches, so adding a VA and another layer of software to the mix doesn't sound inviting. The idea of my credit union where I bank holding these loans and servicing them and never selling them, keeping it as simple as possible is what sounds the most appealing to me after these experiences.

Sounds like seller financing or partnering with someone are your best options. Maybe you can use your duplex as collateral seeing as you don’t have a big down payment? If I were the seller I would want to  see a big down payment or collateral…

Quote from @V.G Jason:

Quote from @Steve K.:

I would only buy single family homes in the best locations I could afford rather than messing with multifamily and less great locations, and I would use my local credit union for loans because they keep them in-house and service them in-house, so that I wouldn’t have to deal with loans being passed around among all the sketchy loan servicing companies.  

If you develop a great relationship with local credit unions, you'll be surprised by what all they're capable of. 

 I know, I wish I had figured that our earlier. I've had commercial loans with my CU but all others through brokers, and they've all been sold within a few months then had issues with the loan servicing companies/ the banks they sold my loans to. My local CU keeps all of their loans in their own portfolio. They offer interest-only loans, don't charge for appraisals unless the deal actually closes, and have great customer service (they actually close on time unlike some of the lenders my clients have chosen against my advice over the years who ask for my time for underwriting the day before closing). If it didn't mean sacrificing a few points and higher payments, I'd refinance all of my properties with my local CU right now. 

Quote from @Patrick Roberts:

Quote from @Steve K.:

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.

Super helpful thanks. 

 Hopefully this saves you some time:
https://www.consumerfinance.gov/ask-cfpb/what-happens-if-the...

 You're the man. 

Quote from @Mark F.:

That’s interesting since I have 3 loans with 3 of the servicers you just mentioned. Not many complaints from all 3 luckily but I’ve never had my loan sold that many times. Usually just once or twice within the first year. 

Prior to this year that was the case for us too, but this year has been relentless. Hopefully just coincidental timing or something and things will stabilize because I’m getting sick of dealing with these companies. At one time all of our loans were with SLS and it was a lot easier that way: just log into the one portal and everything is there, rather than having various companies and their “subservicers” to deal with. Next we’re going to have sub-subservicers servicing the subservicers. 

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.

Super helpful thanks. 

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? 

I would only buy single family homes in the best locations I could afford rather than messing with multifamily and less great locations, and I would use my local credit union for loans because they keep them in-house and service them in-house, so that I wouldn’t have to deal with loans being passed around among all the sketchy loan servicing companies.