The Important Role of a Note Servicer
On our blog we are consistently discussing the importance of a strong network of vendors.
Over the last decade we have created a national vendor database that allows our clients to scale their businesses, increase profit margins, and become more passive investors (learn more here).
It is beneficial to familiarize yourself with what roll the servicer plays in managing your assets, so you can feel comfortable focusing on other aspects of your investments.
The daily calls can put a huge burden on your daily workload. A servicer can handle the day-to-day administrative tasks of your loan
They also handle all payments that come in, then remit them to whatever account you have on file. For example, if the borrower pays today, which is the 14th, and if you had 10 borrowers make a payment of $500 each (equaling $5,000), on the 15th your $5,000 will be wired into your accounts and that money would be available to you right away.
At your instruction, the servicing company will take care of the foreclosure process for you from start to finish.
Bankruptcy Oversight / Management
If you chose to foreclose, and the borrower filed bankruptcy to potentially stop a foreclosure, you would now need to navigate your way through that. If you do not have previous experience with bankruptcy this would be a good opportunity to lean on the servicer for the heavy lifting.
Maintain All Licensing Needs / Collection Needs
Unless you are educated on licensing and collection requirements, you can delegate these tasks to someone with more experience to ensure proper compliance.
The above are just a handful of services provided by a portfolio management company. By utilizing a servicer, you’re ensuring you are compliant with RESPA, compliant with the housing industry, and compliant with banking requirements. The fee is usually nominal and provides you the opportunity to focus on growing your portfolio.