Hard Money Loan Servicing can determine the success of your Trust Deed Investment. Yes, the many factors involved with servicing a loan correctly can highly influence the ultimate yield. This Blog will describe 10 Best Practices for Hard Money Loan and Trust Deed Investment Servicers. Whether a Lender is a Master Servicer with an outsourced Sub-Servicer or the Lender services loans in-house, these best practices below help to ensure the security and high yield of your Trust Deed Investment:
1. Collect Payments and Distributions: Providing a variety of ways for the borrower to pay the monthly mortgage and processing the payments quickly without a long holding time before disbursement.
2. Personal Contact: The Servicer should provides a contact name and number for both the borrower and investor. Someone that knows you and your loans. Not just an 800 number call center.
3. Monitor Tax Payments: Ensure that the borrower is staying current on property taxes.
4. Monitor Insurance Coverage: Track that the Homeowners or Renters Insurance Policy has coverage limits that are equal to or greater than the property value, is up to date and has the Lender listed as loss payee.
5. Late Payment Tracking: Apply late payment penalties correctly and send compliant reminders to the borrower.
6. Prompt Demands and Payoffs: When Request for Payoff Demands arrive, a good servicer will quickly process those requests and issue correct Demand Statements.
7. Notice of Default (NOD) Filing and Foreclosure Process: New Federal and State rules and regulations make compliance, documentation and timeliness of the Foreclosure process critical to a successful loan and property resolution.
8. REO Management: If a property reverts to the lender, a Hard Money Lender should offer Asset Management services that include REO management and disposition capabilities.
9. Reporting: A servicer should provide an investor portal with a login to review loan details, portfolios, payments and payoffs.
10. Fees: Servicing fees should typically run from 50 bps to 200 bps depending on the loan type.
How does your servicer stack up? Are you happy with their service and performance? We would like to know about your Servicer experiences and best practices.