What Services Do A Specialty Loan Servicer Offer?

Michael Soliz

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
Prime
Sub-Prime
Fixed
ARM
HELOC
2nd Mortgage
Commercial Real Estate
Prime
Fixed
ARM
Construction
Land
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
Negotiations
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
Evictions
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
Assignments
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.