No portfolio is too big or too small. That’s Madison Management’s company statement. Office Manager Shante Duffy talks about the services their company offers. They primarily handle loan servicing and asset management. They understand that as a note investor, you have to start with one note, test the waters, see how it goes, and move up from there. What separates them from other servicers is that they want to sit and take the time to help you out with your loans as much as they possibly can to get you familiar with how to deal with it and understand what you’re doing.
Listen to the podcast here:
Loan Servicing And Asset Management with Shante Duffy of Madison Management
This is officially the last session of Note Camp. We’re here to answer some questions. We are here because you need help. For those investors that are out there struggling, I will tell you a lot of it comes from people trying to do everything themselves. We’ll get to how you only need a one-stop shop to get there. We have these as part of our coaching calls. They’re open to anybody. We have a variety of people that are on these, but before we get into that, part of the reason we do this is we have a five-year goal to help educate and create over 10,000 note investors.
We want to help take people to the whole next level. Help them find deals. We truly believe that the note space is the final frontier of real estate investments out there where the REO refugees can’t find anything; the lazy landlords are beat up. The note space is where it all begins and ends as far as deals. Who’s on these conference calls? We have a variety of people. Real estate investors, note investors, people who are looking to get in to notes, people looking to find note deals like, “What the heck am I doing? How is this different than the paper side?” These are recorded. The replays are available at WeCloseNotes.TV and we’re excited that they are also available on iTunes and Stitcher as its own particular podcast.
We made the change and now they are on iTunes and Stitcher. We’re pretty stoked about that. We got a thousand views as we launched. Speaking of podcasts, our The Note Closers Show Podcast went over the 90,000-download mark. I’m excited about that. I haven’t done much because we’ve been a little Note Camped-out but you’ll see a new episode kickoff on there as well. As far as upcoming events, Laughlin Associates’ Magnify Your Wealth Summit in San Diego. We had an amazing Note Camp 5.0. We’re wrapping up with the last session. 34 speakers, 4 days of content, 39 spots, lots of great stuff we shared, 550 plus attended. We kicked some ass. Over 12,000 Facebook views and counting of all the live stream speakers that we did. The replays are available online on Basecamp for those that attended. If you want to sign up for Note CAMP 6.0, you can go to NoteCAMP.Live and sign up for the extra early bird special price of $149. Anyway, we’re not here for Note CAMP.
We’re here for Madison Management. We’re here because our number one servicing vendor. We are excited to talk about your servicing, your asset management and your loan sales, and servicing industry. Why don’t you tell people a little bit about who you are and what you do and then we’ll go from there.
Shante Duffy, I am the office manager at Madison Management Services. I have been here for over five years now. I absolutely love what I do. We handle loan servicing. I specifically get to deal with you as investors to get you set up, get your loans boarded and then pass you off to asset managers. Madison was started by Kevin Cordell, our President and CEO about ten years ago. He started out like you. He was an investor that was tuning into webinars and phone calls out there looking for notes and things like that. He started to service on his own and was looking into regulation and laws and following the rules, and had happened to go to a conference I believe and met with some other like-minded investors who wanted some servicing help and that’s how Madison was born.
We have a good starting point when we all started at Madison. Kevin was an investor like you. I think that gives us a leg up in working with you and understanding some of the pitfalls and frustrations that do come with servicing. We completely understand it is an investment, we do understand that it is money that is spent, and you always want a win-win outcome. We try our hardest to do that for you. That’s how Madison got started and where I come into play.
You did a great job and Kevin’s a great guy. Started off seconds, been in the first side, blown up Madison in the last couple years being a great dedicated servicing company, not only for the seasoned investor, but also for somebody who’s getting started and who’s got their first few note deals going. We see more and more across country, vendors or the servicers, a lot of people don’t want to deal with you if you have only a couple of notes.
I’ve been getting a lot of enquiries about Madison. Our statement is that no portfolio is too big or too small. We understand that you have to start somewhere. We don’t expect you to buy 100 notes at one time, that’s ridiculous. You have to get your feet right, you have to learn, you have to deal with positives and negatives, so we completely understand one investor with one note to start, test the waters, see how that goes, and then move up from there. That’s what separates us a little bit from other servicers. We want to sit and take the time and help you out with your loans as much as we possibly can to get you familiar with how to deal with it and understand what you’re doing. It’s not just, “Buy note and you make some money.”
What does somebody who’s going to be working with you need to do?
First thing is first, whether you have notes or not, we need you to sign up. We need you to get whatever entity that you are purchasing your notes under. You start with Madison. It doesn’t cost you anything, it is free of charge, and you can do it at any point in time, whether you’re not buying notes today, maybe a few weeks from now, it’s always best to have yourself signed up. If you go to Investor Forms, that will bring you to a page that has all the set of documents that we need. If you know that you’re going to be purchasing performing loans, you’ll fill up the Performing Loan Servicing Agreement. If you are going to be purchasing non-performing loans, you would fill out the Full Collection Servicing Agreement.
You can complete those online, you can electronically sign, and once you hit submit, it sends an email to me and you get a copy as well. That’s how I know, “Scott Carson signed up with Madison Management. He completed the Full Collection Servicing Agreement.” The next thing that we need is a Servicing Power of Attorney. That is required in order for us to work on behalf of you, especially under the full collection servicing section of loans. If ever you need to take legal action, need Madison to sign off on any affidavits and things like that, that power of attorney allows us to do it. If we don’t have that on file, we need to sign for it.
The next thing is a W9 Form. Every entity has to have that. There are a few reasons why. Number one, we do handle tax reporting at the end of the year for a 1098 which would go to the borrowers and 1099 which go to you as lenders for any of the interest that was paid or that you received from your borrower’s funds. We cannot give that to you without that W9. We also can’t release any borrower funds to you without that W9. The third part of that W9 is we have a web portal that you have to obtain access to. Part of the registration for the web portal requirements is tax ID number for your entity. You can’t set up and get too far without a W9. You won’t have access to anything.
We do try to push that Investor ACH Authorization Form. It’s not 100% mandatory, but it makes everything go way faster. We don’t pull funds willy-nilly. If we create an invoice for you, we usually generate servicing invoices in the middle of the month, but they’re not due until the fifth of the following month so you have twenty days. If you’re set up on ACH, we upload the invoice to you and then you review it. If you have any questions, you reach out to our accounting department. If there are any issues or anything like that, they will get in contact with you and clear up any questions you may have, and then on the fifth or the sixth every month, we will pull that servicing fee from the account that you set up.
A direct deposit form allows us to deposit your performing borrower’s funds into an account of your choice. Those are the main forms to get set up with Madison. That stuff maybe takes twenty minutes of your time. If you have any questions and things like that, under that get Adobe Reader, it tells you to complete the forms and return them to Servicing@MadisonManagement.net. I am part of that email chain so I get those. If there’s anything missing, I will let you know. If I received it, I will say thank you. Just so you know that somebody received it and you are set up. Then you’ll get an email from our accounting department to set you up on basically your accounting log-in information, which is where you will have your invoices uploaded, breakdown of payments from your borrowers are uploaded, if there’s any reports they’re uploaded there. That’s how you’re able to see that as well and that’s also how you know that you’re entity is setup.
Setting up is truly not hard. Just fill that stuff out. There’s other information in here such as Loss Mitigation Options and Transfer Instructions. Transfer instructions, you don’t have to pay too much attention to because most of you are buying notes from sellers who are having their loans serviced already. That pertains to the previous servicer, but it’s always good to read through so you have an idea of expectations in what we need, but most servicers that I’ve been dealing with for the past five years are definitely familiar with who we are and already know our information just to send out goodbye letters and where to send the data to and all that fun stuff.
We have a question, “If assets are purchased with a JV, do you need a W9 from both partners?”
I have received a whole bunch of those. If your assets are 50/50 splits, both entities have to be set up. If we’re sending out funds to both entities, your borrower’s funds have to be split. Basically, your setup has to read the same way that it would read on your assignments when you’re purchasing your notes, showing your ownership. If it’s between Scott Carson and Shante, then it’s how it has to read and both have to be set up.
I get these forms set up and they’ve closed on something. Before they close on something, is there anything that you can do to help them out with any services that Madison offers to help them before they close?
We can. We do offer a due diligence component. I highly suggest that you be a part of that because it is your note. I can’t tell you and no one in my office can tell you if that is a good note to buy or not. It is not my investment, it is not my money, and we don’t want to be tracked into that. It’s something that we do offer. There is a fee involved with it if you want us to do it before you close that note. We also started reaching out to some other third party companies to assist us with that, because it has been in high demand.
We’re talking about the collateral view side of things, right?
Yeah. Especially before you purchase, that’s where it’s almost being pushed out because at that point it can be, “Shante, I’m not going to buy this deal.” They spent $150 per hour for us to review that and that stuff does take time. It’s offered. A lot of people have requested it, doesn’t hurt, but I would definitely suggest you at least be a part of that process. I know I try to keep everybody in the loop when we do it, so you know what it is you’re missing. You know what an actual full collateral file should look like for each one of your assets, and then next thing you know you’ll be a pro. You don’t need us. It’s getting your feet wet and learning through the ropes and that’s why we’re here is to hold your hand and to teach you and get you familiar if you are new.
It’s not that difficult once you’ve read it through a couple, basically checking off a few things. Are all the assignments in there? Are all the allonges in there? Even if all the allonges are in there, that’s not a deal killer. It’s the assignments are what the most important aspect of things. The original loan docs in there if possible, the original mortgage, the wet ink documents basically is what I’m trying to get at. You will look at some collateral files, show them if these look good or they look bad. Will you also store those collateral files for people?
We do. We do house collateral files for loans that are being serviced by Madison. Do not send me loans that are being serviced by another servicer. I didn’t make myself clear a while back and so I had a whole bunch of files for loans that we weren’t servicing, and that causes some issue a little bit here or there. As long as we’re going to service the loan, that’s perfectly fine. There is small fee of $40 for that. With that though, your file has to be reviewed no matter what, and that’s usually after you purchase that we got that. No matter what, if you’re file’s sent to us, we have to go through it and image the entire thing.
The next thing that we implemented to make sure that it happens on all loans, because we realized it’s imperative to have and everybody should know, is we fill out a checklist to make sure that whatever we receive is there. There’s times where we notice that a lot of things are missing for some people and they had no idea. Some investors never see their collateral file ever when that came in, and we definitely notify you so you know this is wrong. I had an investment, I felt bad. He brought a note and they created the assignment, but they had transferred to Madison on the assignment. Madison does not own that note.
What part of the assignment do you do?
We’ve had investors that have sold loans and stayed with Madison. As long as the loans are here, we can handle that for you, but when you’re buying it from an outside entity that’s not one of our clients, we can’t, because I have no idea who signed off on that assignment, but I felt bad since one investor did. I don’t know what they did. He told them that he wanted their servicer to be Madison, but they had put Madison on his assignment and his allonge. He wouldn’t own it, so when we went to go record it, I was like, “We can’t report that.” We finally got it fixed. It was an easy thing, just reach back to the seller. It’s up to the seller’s time, so it does definitely take time, but we will review that. It’s part of the housing process. It’s definitely part of the servicing process as well, no matter whether we have the hard copy in-house of the files or digital copies. Not everybody sends their hard copies, but we still have to go through everything to begin with and let you know what’s missing.
Let’s talk about what all goes into the actual servicing transfer? We’re doing a step by step approach based on my list on my notes here. You’ve got the setting up of the accounts, we’ve got a little collateral view that you will store the actual files there, you’ll scan them. When our Note Nation, our Note Crew closes on a note deal that’s wiring the funds, what should they do upon closing on an asset?
I always advise investors to shoot me an email and say, “Shante, I closed on another deal.” I love that because it may give me the property address and the borrower’s name because then I can keep an eye out for it number one, knowing that it’s coming and to be prepared. Number two, your seller usually asks, “Where do you want your loan service transferred to?” That’s when you put Madison Management. That’s when you would put contact name as Shante Duffy. We can provide you with my email address, my phone number, and that seller is responsible for notifying their servicer that the loan is to be transferred from servicer A to Madison Management. That servicer is then responsible for generating a RESPA goodbye letter, which transfers the loan servicing from servicer A servicing company to Madison Management. They have to send that to me for me to approve. It doesn’t happen as soon as we would like it to. We all want to close on a deal and know that the servicer’s already working on things. That stuff does take time and it is out of my hands.
I have no control as to when the servicer will get around to transfer out the goodbye letter. There are different things that go on with each servicer, including us, when it comes time to transferring a loan out that has to be taken care of before you can even think about generating that goodbye letter. There’s definitely times where investors are sitting there for two, three, four weeks waiting and he’s, “Shante, did you get this yet?” “No.” For whatever reason, I don’t ever get an explanation or do I naturally give an explanation out to other servicers but there are other things that they have to close up and tie up before they can begin to release.
Everybody needs to realize that it’s not always in your hands. You could only do so much by reaching out. There are things that drag the file. We’ve experienced it with our portfolio, where the seller had a different servicing company and they were behind on payments to their servicing company. Hence, the servicing company would not transfer everything over until the servicer has been paid on those files before they transfer it over to you.
We do the same thing. We can’t close out and start the transfer process without knowing that every investor is set up and they’ve finished paying everything off. There is the deboarding fee that goes into that and that’s from every servicer, it’s not free to transfer a loan out. There are things that your seller has to take care of before they can even think to have this servicer do anything else. It tends to hold up things a lot.
Let’s talk about what goes into that hello letter and that goodbye letter, because once you finally do get the file in, you then send out a hello letter like, “Thanks for not paying such and such servicing company, and now you got to pay me.” Is that right?
Once the goodbye letter is approved by me, the servicer will send me preliminary loan data right when I approve it. Usually it’s in the 48 hours of me approving the goodbye letter. They send me the data which includes the borrower’s name, mailing address, social security numbers, and all the loan data; UPB, next due date, last paid date, or monthly payment amount, if there’s escrow, and that information. Once I get all that set up and you have paid your boarding fees of Madison, we then board the loan and we send out a RESPA hello letter. That letter correlates the goodbye letter that was sent to the borrower. The goodbye letter outlines, “So and so is transferring your loan out to Madison Management Services effective April 20th.” We have to send out a hello letter that matches and says, “Welcome to Madison Management. Your loan service transferred effective April 20th. We’re your servicer. Here’s how you make payments. If you have any questions, comments, concerns,” things like that.
Our RESPA hello letters also include what we call a welcome letter. It also outlines the homeowner’s options as a homeowner. It’s one big giant package of eleven pages that get sent out. You have access to those copies of the hello letter on the portal. That gets sent to the borrower just letting them know who we are. It also outlines who you are as their lender. Inverse asset is your lender. We are obligated to send them that information as well. We take care of all that for you. That’s been a new topic of questions that have been asked me lately. We will handle all that in our huge hello letter, welcome letter package. That gets mailed to the borrower. That’s how they’re notified, their statements and stuff is emailed to them as well, late notices and things like that. We are responsible as your servicer to send that, which is why it’s important to have a servicer because you can’t service in your own and then expect to send that.
We have a question, “If I sell a note to another investor and would like pay history going back from before Madison, do you have access to that from the prior servicer? Assuming the answer is no, can you request it from the prior servicer?”
The answer is no. As long as the borrower made the payment, we are provided with that information. As long as the borrower had made a payment to the previous servicer, we do have that. That is provided to us in the final data and the preliminary data when the loan is being transferred. The history is given to us. We don’t upload that history into our system. We can go through and say, “The borrower paid for the past three years at this servicer.” You can’t see that on the portal, but I can totally provide it to you if you ask.
Any way to see that on the portal?
No. We don’t upload previous past history. If you need it, it’s your loan; I can send you the final data, that’s not an issue. A lot of times it’s needed to take legal action. Some people are curious like, “How long has this borrower been paying or how long have they not been paying?” That definitely goes into the final data and I can completely send that to you. No questions asked.
We have a question, “How do newly originated note requirements different from a note purchased to be serviced by Madison?”
In regards to hello letters, there usually isn’t a goodbye letter that is sent out. I’ve had a whole bunch of newly originated loans being boarded. What they’ve already done, a lot of these lenders, they already know that the loan is being transferred to Madison. They already include the note paperwork that their payments are to be made to Madison Management Services and then they provided our address and stuff like that. We still send them a hello letter. We will still let them know an effective date that the loan was ordered, that their loan’s been here. We still send them the same package and they still are required to get that information. We do send that no matter what. They still get a copy, they should be able to know who we are and who their lender is even though they would naturally know, we still do send it.
We have a question, “Shante, how does Madison coordinate homeowner’s insurance?”
It’s definitely a little bit more stressful than dealing with property taxes. For homeowner insurance, most servicers, there’s this one service who does not provide us with anything, and I deal with them on a daily basis. For non-performing loans, a lot of them don’t have homeowner’s insurance because they’re not paying, therefore they don’t have a policy. They’ve let that policy lapse, it might have been a year ago, it could’ve been seven years ago. If you’re not paying, there’s not a way to track homeowners’ insurance. One of the first letters that we send out to all first liens is an escrow impound checklist. It’s a letter that goes out to the borrower letting them know that we need information on their property taxes, county taxes, whatever they had, as their insurance. They have 30 days to send that to us, especially in escrow accounts.
The next thing is we send them a reminder. Sometimes we get the tax bill but not the insurance bill. The only way that we can verify that the borrower has insurance is if it comes over with the data from the previous servicer. Some lenders do already know, but if it also says that the borrower has force-placed insurance with the previous servicer, they don’t have homeowner’s insurance. 99% of the time they do not have it, and that’s when we have to let you know like, “You’re not covered. If something happens to your investment, there’s nothing there.” As a lender, we do have a force-placed insurance policy, it’s an umbrella policy that our investors can be covered under with their loans, but insurance is definitely the hardest to try and obtain. We don’t always get those bills. Borrowers don’t always have them, especially on performing loans that we have no idea, so it’s between reaching out to the borrower and reaching out to you as the lender to find out if we have it or not.
You offer up a force-placed insurance policy that you can do across the board via Ross Diversified Insurance?
What do they need to do if they’d like to have you put that on?
Force-placed insurance cannot be added until your loan is boarded. I know a lot of people want to add it from the date that they close on their deal and effectively had owned it. We can always date it in the past. It’s usually never more than 50, 60 days, but your loan has to be boarded because in order for us to register that, it has to have a loan number. Your loans don’t get a loan number until they’re boarded. That’s one. Two, we’d have to verify that there’s no insurance at all, which we know with the data that comes over. Three, you have to let me know how much you want to insure that property for. I don’t pick that number. That’s up to you, it’s on your responsibility. The next thing is that it is invoiced to you as the lender. It’s insurance that covers you as a lender and you own it. It does not cover your homeowners.
We do let them know that when they call. I’ve seen this one borrower who doesn’t want to get her own insurance and she has no problem paying for the force-placed insurance knowing that if her house was to setup in flames today, she has no protection. We see a lot of it on vacant properties, when we arrive and no one’s there and it’s not in a condition where people can live there. You would have to let me know what you want it set up for the effective date and the insured date, and if your property is vacant or occupied. If you don’t know, you should probably go order a door knocker to verify, which we have that service too, so you could always do that through Madison. We do have a field service company that we work with. You’re going to need to know that because that’s going to tell the difference between you the insurance that you need or the coverage.
Every month we do get that invoice. The payments don’t change, it’s a monthly payment. It’s an invoice that you will receive. Once you pay it, what we do is we add it as an advance or charge on that specific loan because almost all documents, for the first liens state that the borrower is responsible for paying their insurance. You shouldn’t have to obtain a force-placed insurance policy if they’ve followed their agreement. We do add that as an advance onto the loan, as long as you had exhausted all options to make sure the borrower does not have a policy. We had an investor who didn’t want to advance funds, which basically means for the homeowner’s insurance not to lapse and according to the rules, they are not entitled to try to recoup that money from force-placed insurance because they allowed that insurance to lapse.
They’re paying out of pocket now for force-placed insurance and the borrower is now not going to be responsible for paying that back. Definitely be mindful, in that we knew they had a policy, they just didn’t have enough funds in their escrow account. That happens more often than not. When it does happen, our escrow department reaches out to you and says, “This borrower has just filled it. Would you want to advance funds?” Sometimes they say yes, sometimes they say no. We let them know what happens if they don’t. Some people don’t want to advance property taxes and that’s okay, but things can go up for a tax sale, higher investment because that’s the one thing that’ll wipe out a senior lien.
Do you reach out to the borrowers on that aspect if we give you instructions to do that?
Yes. We reach out to the borrowers before we reach out to you. We sit down and tell you, “Borrower, it’s your responsibility.” We send them shortage letters. We let them know when the payments are due, how much is due, how short they are.
We have a question, “In inquiring an REO, should I immediately advise Madison or contact Ross Diversified myself?” You don’t manage REOs, right?
We don’t. It’s not like it’s not an option. A lot of investors don’t want it and that’s okay. A lot of them don’t want to pay every month to have us contact either property management team or a real estate agent to get your property listed. We don’t see it very often. I would definitely suggest at that point it’s an REO, you need a little bit of different insurance. If we’re not servicing it, you’re not allowed to be under our umbrella policy.
You do not handle BPO orders, correct?
We can. You can order them through us. If you go on the website, go to Additional Services. You can order internal, external BPOs. You can order a few different things up there. You can order credit reports. That’s a topic that a lot of people order.
That’s a lot of things on there. Door knocker visits. Report if you’re a second lien holder looking for credit reports per the borrower. We have a question, “Does the timing of my boarding fee mean my loan will show up in the portal soon, or was the fee charged because I told you I was boarding it, and sent you the electronic file? I know lag time between buying and boarding is out of your hands, but some sellers are horrible and some you may never know.”
It varies. You’re boarding fee does not mean that it’s going to be in the portal right away, but in that specific situation, when the county pulls it, it’s because we at least know that we have a goodbye letter and it was approved, and we’re waiting on the preliminary data. Once I get the preliminary data, we don’t want anything to hold up your loan boarding. I should be able to input everything into the system and go. It should mean that it should show up soon, but we had noticed that there was some lag time between servicers that they dropped the ball on something, but I got it. You should be ready to go by tomorrow.
We have a question, “If you receive a file that indicates that a home has insurance, do you verify that policy is current?
Yes. We will call the insurance company. We want to update that mortgagee clause to make sure that we get copies of bills as a servicer to make sure that you as a lender are listed as a mortgagee on there. We’ll say, “Inverse asset care of Madison Management,” under the mortgagee clause. That we definitely call, verify that it’s current, verify the dates, how good the policy is. That we definitely do when we know there’s insurance. We always call, we always verify.
We’ve talked about the servicing transfer. Let’s talk about the three different levels of service for servicing that Madison offers.
My personal favorite and I’m sure it’s everyone else’s personal favorite, is the performing loan service. That means your borrowers are paying and that makes everybody happy. Performing loans, how Madison classifies them is as long as your borrower is making monthly payments, whether it’s contractual, which means that they’re following the terms of their note or their agreement. Forbearance payments, child payment plans, as long as the borrower is making consecutive payments that is considered a performing loan with us. It does not have to be contractually current. What I mean by contractually current is that they can be paying for years in the past, as long as they keep paying every month, it’s okay. We consider that performing. Under that servicing program, the loan is assigned to an asset manager who is your point of contact as a lender as well as your borrower’s point of contact. They monitor and make sure that the borrower continues to make payments. We don’t want them to stop, we want to keep them performing. You still will have an asset manager there.
The next one is our full collection servicing program, and that is where your loans are non-performing. They can be delinquent 90 days and no payments, they could be delinquent six years, no payments. Under that servicing program, the loans are boarded and they are assigned to an asset manager. That asset manager becomes a middleman between you and your borrower. They will sit with you, send you an email or schedule a call with you, to run through game plan. We want to know what options you are okay with offering the borrower or what options you do not want to offer. People have some of the weirdest requests. Some people are super open and they’re like, “Whatever the borrower can do, let’s see.” We will find that out and make sure that we don’t offer to borrower anything that you’re totally opposed to.
The third and final and my absolute least favorite are no-collection servicing program, also known as client manage. This program is realistically used for people who choose to have a third party handle their borrower outreach in loss mitigation. Where you don’t want Madison’s asset managers to do but you have a third party loss mitigation team. Sometimes the most that I see are Polaris and Singer Law Group. We work with both of them, so that is an option that we do allow. We are not the biggest fans of this program because one, for newbies, I definitely feel you need some hand-holding and that’s what we do and we won’t keep you in the dark. You can track everything that we do through our web portal.
Another thing is that there have been a lot of investors that I have witnessed over the past five years getting in trouble for not following rules and regulations, which is why this is important to have a servicer. We are all trained, including myself, even when I don’t have the borrowers, on right party contact, the times you can call borrowers, what you can and can’t say to people who are not borrowers, and we don’t threaten, harass. We treat everybody with dignity and respect. Investors get into a lot of trouble, and to me it’s 100% not worth it. You already spent money on your investment, you’re trying to work something out. It’s definitely a slippery slope. It’s not something I would ever advise for someone who’s getting to the note industry. You should watch what your asset manager does. Be involved in it, but that is another option to use. It’s not my favorite.
First of all, if somebody’s a brand new note investor, they don’t need to be doing that.
I will completely advise against it.
I don’t advise anybody doing their own loan servicing. The way that Polaris works and Singer Law Group, they’re not going to touch you unless you’ve got multiple assets of ten or more for the most part. I own a bunch of assets that I have you manage a lot for me. We have three things, we have you manage your chunk, we manage a little bit, and then Singer manages something as well, depends on the asset and the portfolio. We have some that are being on the foreclosure field of death that you aren’t servicing, which is okay. It’s a death march. You do a variety of things and that’s the thing. If people that are brand new here, you have to realize you’re going to have Madison take care of your servicing. I don’t care if it’s first or seconds, just don’t self-service. We have a question, “Do you handle deed in lieu and foreclosure services through Madison?”
Yes. We have attorneys that we work with across the country that facilitate all the legal action inside of things, but we still end up being the middle man of that. The cool thing about us is that if you ever have an attorney that you like to use and that we naturally wouldn’t go to, just it’s not one of our preferred attorneys or we’ve never worked with before, we will work with them. If you let us know who it is, we will get that ball moving and help on your behalf with that specific attorney. If you don’t have an attorney, we have them. We do offer it, but again, there are attorneys that are required to do the majority of that work. We coordinate that whenever it’s needed.
We have a question, “Can I order a credit report for a borrower from Madison while doing pre purchased due diligence?”
Yes. I have a lot of investors who do that, who didn’t know they could. It’s a $10 fee. You order it online under that loan servicing additional fee thing, and then you have to send me an email that say, “Shante, I ordered credit report. Here’s the borrower, here’s his social and here’s her address.” I can’t pull it without that and it usually doesn’t take too long. Be mindful if you’ve put an order on a Thursday night, Friday morning, you probably won’t get it until the following Tuesday. Throughout the week, as long as you do it Monday, you’ll probably get it by Tuesday.
We have a question, “How do you monitor litigation? Do you rely on the local council or do you have a tickler system?”
We rely on the local council but we also have a system, so we do both. Everything is super well documented. There are no issues at all in regards to that, but we oversee the entire thing. We use a third party for a little while and then Kevin, he’s our IT man, so he’s building some pretty cool stuff for us as well that’s currently in the works. There’s going to be some new changes in-house for us. It doesn’t affect you as lenders, but it’ll make things clearer and then we’re trying to somewhat integrate that with the web port so you can see all of that and not have us have to do dual entry.
Go get an entity set up. Go get Laughlin Associates. Have them set you up an LLC for free when you sign up for the Corp Veil Protection. I’ll do that for you. You go to CorpVeilProtection.com but you do not want to have your loan serviced in your own name. If you haven’t bought a note, don’t be wasting time setting up an account and then just to look around. You rely on the professionals. The reason people lose money is they try to do everything themselves and then they miss something or they forget something or they don’t have enough time to do it. If you’re brand new, you should hire Madison, go get you an LLC and set up for them. Once these people open an account, they send a loan over, get servicing transferred and then have you servicing. There’s an asset manager that they’re working with, correct?
What’s the usual caseload? You try to put every investor’s loans with the same asset manager, correct?
Yes. You wouldn’t have fifteen asset managers. We try to follow that single point of contact. If you have loans all over place, you can’t be talking to one person and the next. It becomes messy. Some investors don’t mind it. They request to have different ones, have them split, perfectly fine with me. If you ask for it, I’ll give it to you. They all vary. We have one asset manager who oversees all the performing loans; the loans come in as performing. We shove them her way because they’re easier to track. Those are little less maintenance and to be honest they don’t require so much and she’s also on top of the escrow for those ones as well as being alongside with the escrow department. Part of those go her way.
We have two other asset managers. Loans are always cycling in and out for whatever reason, foreclosed, sold or borrower paid off. There’s been a lot of payoffs lately so borrowers are doing something right. They cycle through. We are always on the lookout for new asset managers knowing, I had someone call and say, “I’m thinking about paying the X amount of loan over to you.” Stuff like that, we definitely keep in mind and we can definitely gauge how many come in, how many go out, how many does everybody have, what’s their work all like. A lot of them end up being sitting ducks because investors can’t decide on what they want to do. Doesn’t end up responding, we don’t stop calling. It’s just there are only so many times you can call in a week to the same borrower who you’ve been calling for the past six months. If you aren’t ready to take legal action, they’re leading us stuck with no choice. You have to keep that in mind.
People have to stay on top of your stuff. While you do a great job, you still have to have the investor. That’s why I was trying to get at the next step. Investors got to communicate. Got to answer the phone, you got to communicate. Like us, back and forth without one bar or who said he’d never get us on the phone, look at our call log and there’s ten times he’s called and let it ring once and hung up every time. Then we called the guy up, he has no voice mail and then you’re like, “Can you call this guy? Because he said you’re not calling them,” and you’re laughing back and forth with strange laughs like, “This guy is trying to work the system basically.”
It happens but as long as you’re a part of it like you are, I don’t expect you to answer every five seconds. That’s not realistic. I understand that note investing is not everybody’s primary job so be mindful. We like to communicate a lot through email so that it’s written and we have something to refer back to. If you need to set up calls, we set up calls, but it’s always easier to see things laid out. That stuff also gets noted on each account, if you’re ever trying to sell. I know a lot of people due diligence. It’s a full servicing notes, you knew what was going on. If there’s any issues, it’s good for you too so that if you want to look at it in the middle of the night, sign up on the web portal, to see what we did or what you’re asset manager did that week or that day. You can go through at any point in time and then you can shoot an email if you have any questions. Know you can’t get us on the phone because office hours are closed and that’s a big reason why we have that web portal where you are able to see our call logs. We document everything that we do.
We have a question, “I have a friend that I’m asking for that purchased a loan that was serviced by a nationwide full service firm and that loan was an active, BK13 and a foreclosure attorney is in place with partial funding of the foreclosure action. Would you recommend a loan transfer to MMS, asking for myself?”
I wouldn’t not recommend it. It definitely puts a little bit of a hold on whatever you have going on. Depending on the chapter of bankruptcy it’s in and what is going on in that bankruptcy. If it’s a thirteen, they’re working on a plan. I had a lot of investors that say, “Shante, my borrower file bankruptcy, we’re at this point?” The next thing is to make sure that this plan has confirmed, they wait, but, “No, I can’t stand my servicer,” and they change it. It’s up to you, but I do want to let you know that it will cause a lag in time. It definitely will pull things up because we won’t have your loan set up here. If you’re a foreclosure attorney is asking for something specific, they can ask us and expect us to have that information and transfer process.
Sometimes it takes these foreclosures attorneys a little longer to notice that the loan has been transferred and they’re no longer supposed to deal with that previous servicer. A lot of times they’re not notified, a lot of times they don’t close up the loans, and then what happens is instead of the attorneys notifying, they wait a few weeks and then reach out to me like, “Shante, are we handling this?” I’m like, “I didn’t even know this was in it, in an active foreclosure. I’m playing phone tag between the attorney and the lender and what do you want to do?” It definitely puts a stall in your plans, things won’t move forward during that transfer process. We will not assume when we transfer stuff out and stop everything. I don’t know if your other servicers can do that, but it will hold things up for a little bit.
Creating a plan. Talking to the asset managers. Communication is key. The communication part I want to first of all say, you are awesome at it. I know you’re better at it via email, especially after 3:30, you’re at home with the young one there and doing other things, which is commendable and I’m never going to bother you on that. Somebody is like, “Oh no,” and you’re like, “Just call me on Saturday.” “I’ll call you on Saturday,” but I know I have a special thing for that. Not everybody gets a bad aspect, but you communicate. You can get somebody on the phone over there where a lot of other servicers they never get anybody on the phone. Once you log in to the platform, it’s pretty easy to pull information. Pulling things and pulling payment histories and quarterly updates and monthly updates.
We do that pretty often. I know Jen does it basically about everyday here because Jen is the one that you communicate with the most. I get copied the emails so I see what’s going on as well. We talked about transfer, we talked about force-placed insurance, we talked about the different types of servicing, how to communicate. Let’s talk about notes sales next. A lot of people are looking for assets. A lot of people are looking for deals and you do have a Loan Sales platform, correct?
Madison Loan Trading Platform. Let’s talk about this.
We have investors whether they’re serviced by Madison or not, we don’t discriminate or separate, they’re able to use Madison sales platform to list loans as well as to browse through and make some bids and see if they want to buy anything. Lately, this has been pretty bumping up. There’s a lot of traffic in there. I do not specifically handle the Loan Sales website. I had too much on my plate to do that, but we do have someone in the office who does, and he will tell you how. You have to register to make a bid with your information. You can also email loan sales as well. There’s information that allow you to if you want to list loans, we have you fill out a listing agreement, with the information that we require, let you know what we need. You can go in, you can order BPOs, you can hit a request for more information and you put in a text box what you’re looking for.
A lot of the loans up here though, they are serviced by us. We have a lot of the servicing notes and we have the collateral and things like that for people to review. As long as they sign their NDA, and then if you want to make an offer, you can. We will handle drafting your purchases and agreement. We will handle the drafting of a new assignment and allonge as well. We handle all that fun stuff. We also act as the escrowing agent for loans that are bought through Madison, and bought anywhere else we will not do that. That’s too much for us to track, but for loans that are here, we can handle that as well.
You basically handled the hand off on that aspect of there and if people are looking for assets, should they reach out to you as well?
You can let me know, I’ll point you in the right direction. Sometimes I get people who don’t want to list but I know that they want to sell. I keep those people written down in my special little notebook that I keep track of everything. I have some investors who are like, “I only want to buy in the state of Georgia,” and they only want senior leaders and they can only be non-performing. I get a lot of inquiries too so that when I do speak to people and they say, “Shante, I’m trying to get rid of this note, where I want to sell,” or whatever the case may be, I try to hook everybody up. Then you work that out. You can reach out to me. I’ll point you in the right direction. Either to the person who runs our loan sales and they’ll help you from there and do all that fun stuff for you.
We have a question, “Does Madison have a JV contract for us to use?”
It’s not that hard to get a JV agreement, and the JV agreement you can get is one of the most important things. You should probably have your real estate attorney work through it with you at first. We have a question, “Any way to get an alert when new ones are posted?” I’m sure he’s talking about new note sales posted.
Yes. What I’ve been working with on the loan sales, I oversee it but I don’t manage it. We had to update our mailing list so that you do get notified of what’s new and what’s different, so you’ll start receiving those emails. As long as you’re set up with us, you’ll automatically get them. You can opt out to receiving them. You can always register and opt in and just say, “I want to be updated anytime a new note is listed,” but we had to fix some things to make sure everybody was getting those because we realized that they weren’t and that was a problem. At end of the month, there’s going to be a new blast out to everybody and then just keep your eye out. It’s going to come from loan sales, so may end up in your junk folder or your spam, but keep an eye out for it.
We have a question, “You mentioned the forms before. You said we should fill all of them out when you’re setting up a new account?”
Not that whole page, but definitely the servicing agreement and the W9, absolutely those are top most important that you have to do.
Got to get started that right and it only takes a little bit of time to go and fill that out, get it in over to you so you can get them set up in the system.
We need to get you set up. Even if you don’t have notes, if you’re looking and making some bids, it doesn’t matter. It does not hurt to get that out of the way because I’ve had a lot of investors who tell their seller they want their own service with Madison, and the servicing company generates the goodbye letter and they tell me who it’s for and I’m like, “I don’t know who that is,” and then I have to say that’s going to change your whole transfer process. It’s always best to notify me when you know the loan’s coming and then send me an email, “Shante, heads up, this is coming.” I get those all the time, which is helpful because I can search through the property, and make sure that I match up the right lender, and then I don’t have to play the guessing game because not all the time that they tell me. Your entity’s setup so you don’t have to stall there. As long as you have it set up, you can keep moving forward. Even if you don’t have it opened in the next two months, it’s okay.
We have a question, “When do you pay collected loan payments?”
There are two cutoff dates, which then leads to two disbursement dates. Borrowers who make a payment between the first and the fifteenth of each month, lenders usually receive their payments by the twentieth. We have to make sure that all those payments that came in on the actual fifteenth of every month settle before we release those funds deal. I know it’s a little frustrating for the borrower or borrowers who pay on the first of the month or the second, but that’s what our accounting department is able to manage right now. We have to wait for those things so that is sent. You should get it by the twentieth.
If you’re setup on ACH, you’ll definitely get it closer to the twentieth, but if you’re not, then we have to mail you out a check. The check’s got to be printed and mailed and then it’s in the hands with postal service. If any borrower makes a payment between the sixteenth and the last day of every month, you receive your disbursements by around the fifth of the following month. It depends on when your borrowers made payments or some lenders have multiple loans and they have some borrowers who pay on the fifth and some borrowers who pay on the twentieth. They end up getting two different disbursements throughout each pay period.
Shante, you got a cool little special or something like that for people too?
Yeah. What we’re going to do for all of you attending is we’re going to offer a boarding discount right now for anyone who boards alone, by the end of April 30th, your loan has to be set to transfer by April 30th. If your loan is boarded, if we know it’s coming and it’s supposed to be coming in April, there is a $10 boarding discount. You got to let me know that you were a part of this webinar though.
I will send you the full registration list.
That’s even better so I have something to compare it with. That puts you a little fire underneath you. Go out and buy if you don’t have any.
If you’re watching the replay, you missed out by not showing up. I’ll send you the whole list of everybody that went to Note Camp as well because a lot of people there too.
That was originally where this was going to be put and I know that.
Go to the website MadisonManagement.net. Check it out there. All their ala cart fees, what the charges are, are all there for you to take a look. Shante, thank you for joining us. We’re glad to have you. Go out. Have fun and I’ll talk to you.
Thank you everybody.
Thank you for offering $10 off boarding fees for any new notes they get sent over to you before the end of April.
If you have any questions, email Servicing@MadisonManagement.net. Email, ask the questions, and give me three days to answer. Give me some time, email your questions. We can set up a phone call. I’ll add it to my calendar. If there’s anything I can help you with, let me know.
Go out and make something happen. Go buy some deals. Get things serviced and transferred over there. There’s a bunch of other servicers out there, I get that, but none are going to treat you as well as Madison. The servicing industry, everybody has their flaws. Everybody has their flaws and there are things that happen. Anytime anything that has been error, Madison has stepped up the plate and taken care of it and we found a good way to win. That’s what it’s all about. Nobody’s perfect, but the best thing you can do is find people who are accountable, who will work as hard as they came for it and who want your business, and that’s the Madison Management difference. Thanks for being on. Go out and make something happen, and we’ll see you all at the top.
- Magnify Your Wealth Summit
- Madison Management
- Shante Duffy
- Kevin Cordell
- Investor Forms
- Performing Loan Servicing Agreement
- Full Collection Servicing Agreement
- Servicing Power of Attorney
- W9 Form
- Investor ACH Authorization Form
- direct deposit form
- Loss Mitigation Options
- Transfer Instructions
- Ross Diversified Insurance
- Additional Services
- Singer Law Group
- Laughlin Associates
- Madison Loan Trading Platform
About Shante Duffy
I currently serve as the Office Manager at Madison Management Services (MMS), where I oversee loan boarding and de-boarding, investor set up and inquiries, documentation compliance, etc. In my capacity as Office Manager, I also assist with the supervision of day-to-day company operations, provide lender consultation services, assist with note servicing, handling of insurance services, and promotes note servicing & investment services at national conferences.
Experienced Office Manager with a demonstrated history of working in the financial services industry. Skilled in Microsoft Excel, Management, Customer Service, Microsoft Word, and Data Entry. Strong administrative professional.