Bank Portfolio Loans
The Note Servicing Center offers a service of particular interest to the Portfolio Lender. So, if we are addressing what you do in this article, read on to the end where you will hear and read about a money and time saving service, provided by the Note Servicing Center that will cut your overhead and boost your “bottom line”.
For those in the real estate or development business who are unaware of the existence of a Portfolio Lender or the kinds of unique opportunities they provide, the following is provided as a source of information that may be of interest. It is not complete by any means, but simply articulates our experience while buying, selling, developing and brokering real estate over the last 35 years. Portfolio loans are mortgages that are held as an investment by the lender. Usually they hold on to the loan because it doesn’t fit the underwriting guidelines for investors on the secondary market.
Flexibility is the operative word a borrower looks for in applying and being approved for a Bank Portfolio Loan. The rates are usually about the same but the advantage to both the bank and the borrower is that the mortgage usually will not be sold off many times over the life of the loan and you have the rare opportunity of dealing with the decision maker or the bank operations officer if and when a problem arises.
Another advantage to obtaining a portfolio loan is the lender will have programs or guidelines not typical of loans sold on the secondary market which follow FNMA and FHLMC guidelines. Therefore you may be able to obtain a certain loan program not normally available due to your specific situation or due to the type of real estate used for security for the loan.
Portfolio loans are mortgage loans in which a lender will loan their own money and have minimal plans of selling the loan or transferring servicing to another bank or lender. For developers in suburban and rural areas a hometown portfolio lender is often the only available source to obtain loans on unimproved property, rehab property and/or real estate located in transitional zones. Also, it is not unusual that in these geographical areas, homes and commercial properties do not conform to the “cookie cutter” guidelines required for loans to be sold in the secondary mortgage market.
Portfolio lenders often are created by a well heeled group of community oriented private investors who promote and support development in these small communities. In fact, many are called “Community Banks” and often, though entrepreneurial, hold to conservative guidelines as the loans are typically held for an extended period of time.
For income producing properties, the cap rate is important to this type of lender as well as the affordability index. They also look closely at the overall General Plan of the area which will give them a clue as to the trend for economic growth and the ideology of the governing bodies. Appraisals and LTV along with other underwriting functions are typically performed “in house” and decisions are made by the Banks Board of Directors. Since they intend to keep the loan, in the event they have to foreclose they want to make sure that the property will resell, quickly, and for at least what they lent on the property. Very few actual portfolio lenders exist these days; however, there are still lenders with specific niche products particular to the local economy in which they operate.
If you are a Portfolio Lender, our experience indicates that the “in house” note and loan servicing you provide for the borrowers is typically allocated as an added value to the customer and thereby providing a competitive edge. Although typically paid for by the borrower, sometimes this is earmarked as a marketing expense.
Our company changed its’ name in 2005 to the “Note Servicing Center” to specifically serve Portfolio Lenders, Hard Money Lenders, Investor Groups and Mortgage Brokers. Obviously, this strategy involved “outsourcing” or “subservicing” which provides the lender customer service while saving overhead involved in purchasing computer hardware and software, hiring and training employees, dealing with retention and allocating office space. The Lender does not loose control, in fact can review the status of all accounts 24/7 on line with a password protected server.
The Note Servicing Center provides the Borrowers with payment coupons and envelopes, year end 1098’s, monthly statements and personal customer service. They have the ability to make their payments by check or money order, on-line, by ACH or Credit Card with the funds deposited electronically and directly into the Bank’s Account. We do the collection and processing daily, send out late notices and prepare year end 1099’s and monthly and annual statements. In addition, several bank clients negotiate an agreement which results in an additional profit center for the bank. The bank sets up their own fee schedule, outsourcing to the NSC on a bulk rate resulting in the retention of the margin of profit. Please contact us for more information or an appointment for a consultation to determine how best we can meet your needs.
The Note Servicing Center offers an extensive business support system for Investors, Brokers and Lenders holding Real Estate Notes. We feel confident we can provide the note and loan services necessary to make your business even more successful. To expedite a full transfer of your loans for servicing into our proprietary software, could take as much as 2 weeks depending upon the complexity of the process. Much depends on the fields and format of the program and software you are currently using.
As a company on the “cutting edge” of technology, we may be able to integrate your present servicing portfolio easily and quickly into our system. But you can rest assured that we will do all the work to make the conversion process as seamless as possible for Investors and Borrowers.
Here are the steps:
- When you contact the Note Servicing Center to transfer your entire portfolio of notes into our system for servicing, we will schedule a time to visit with you about your loan servicing needs, the platform you are currently using and special needs you may have.
- We prepare and submit a Loan Servicing Proposal which includes information about what the Note Servicing Center is prepared to do for you to save you money, support your objectives and help you and your company move up to the next level. The proposal will be custom made to fit your needs.
- The Note Servicing Center does not buy or sell notes. Servicing is our only business. However we understand totally the importance of not compromising the integrity of your client base. Therefore, to protect your interest, it is our standard practice to execute a non-circumvent agreement to cover that base as part and parcel of the Servicing Agreement.
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