What's a Specialty Loan Servicer and what Services do they offer
It's a Loan Servicing Department that does servicing and collection. It's a high touch loan department that is designed to optimize the returns on delinquent loans, pools and troubled loan portfolios. A specialty loan servicer is highly experienced in skip trace, collection, workout, repossession and property sales.
What Type of Loans Do They Service?
- Residential Loans
- 2nd Mortgage
- Commercial Real Estate
- Manufactured Housing
Servicing begins as soon as the servicing department receives copies of the seller's RESPA ‘goodbye' letters listing the new company as the designated servicer. This quick start will also create a lead time to find and submit claims under the short warranty period for those purchasing delinquent individual loans or loan pools.
The specialty loan service department's initial focus should be on locating, contacting and understanding the borrower's situation. At that point, the servicer will develop a working and modification program to keep the payments coming in. The secondary focus should be a rapid, cost effective repossession and sale of the property to generate a maximum net return. These programs include:
Collection Features (default)
- Late Notices sent at 15 days delinquent
- Collection Letters
- Final Notice sent at 31 days delinquent
- Borrower Inquiry calls handled
- Skip Trace
- Collection calls
- Property Valuation available
- Lien Verification available
- Letters of Understanding
- Loan Modifications
- Forbearance Agreements
- Short Pay negotiations
- Bankruptcy Relief
- Foreclosure Processing
- Short Sale coordination
- Property Preservation and Securing
- Handle City Notices and Issues
- REO Property Management
- REO Property Sale
Loan Servicing Features (non default)
- Borrower Welcome Letters
- Borrower Monthly Statement with Payment Coupon
- Lender Welcome Letter
- Lender Monthly Statement of all Accounts
- Same Day Payment Posting
- Daily Disbursement of Funds (after clearing)
- Electronic deposit of Funds (ACH) into Lender's account
- Optional Escrow/Impounds Service for Insurance and Taxes
- Payoff Demands
- Subordination Agreements
- Disbursements and Draws
- Releases and Reconveyances
- IRS 1098 and 1099-INT Reporting
- Paper or EDI Communication
- 24/7 Account Access
- Downloadable Reports
Most loan servicers will charge a boarding fee which is a one time loan setup and file scrubbing fee that can range from $45 – $150 per loan. The servicing fee will depend on the status of the loan. The typical fee for a performing standard loan servicing is between $15 -$25 per month. The servicer will normally deduct that from the monthly payment collected and the net is deposited into your account.
If you have a non performing loan, the price will range between $95 -$130 per month for the hard collection and servicing of that loan. These fees are billed directly for payment. Even though the borrower isn't making his payment, you are responsible for the monthly fee on the hard collection work to put the loan performing, modified or foreclose on the property.
Now, let's say the loan has been transformed into a performing loan and has been brought current as a result of a modification. Then you would see a lower fee that would range $30 – $45 per month for high touch loan servicing. Remember, this is a highly complex service that is regulated by strict federal and state laws. It is well worth your time and money to have professionals bring your exit strategies to fruition.