EP NC4 2 – Shante Duffy From Madison Management On The Benefits Of Loan Servicing

NC4 2 | Loan Servicing

 

NC4 2 | Loan Servicing

Investing is not a meager task to undertake, and so you must have a trusted servicer to share the burden. Scott Carson talks with Shante Duffy from Madison Management about what loan servicing is and what note investors should expect when working with a service. She returns to the Note Camp to answer questions about licensing requirements, how investors should handle phone calls, and the changes brought upon the industry by the COVID-19 pandemic. Shante also explains the importance of an accessible online record to keep track of every transaction by sharing their company’s very own portal.

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Shante Duffy From Madison Management On The Benefits Of Loan Servicing

We are honored to kick off our first expert at Note CAMP 2020 here, the beautiful and lovely Shante Duffy. This lady is the person that gets stuff done or get shit done in a lot of cases at Madison Management. If you guys are boarding loans and you’re looking to get started with a servicer, this is the lady you’re going to be talking to, and then she’s going to hand over to your asset manager once you get everything rock and rolling. This is the lady who is highly underpaid. This is the lady that is well-known throughout the industry, has a huge heart. She loves working with other note investors but she is the workhorse who gets a lot of stuff done. She’s helped Madison Management grow into the business that they are many years. You’ve probably seen her out at a few trade shows here and there in the past both fields here in the future different trade shows. We’re honored to have you join us here. Is this is the 3rd or 4th time you have spoken at Note CAMP, Shante?

It’s probably the fourth and I love it. I wouldn’t have missed it.

What you got plans for everybody?

Let’s have a conversation and then I’m going to see if I can switch and walk you guys through the website, the portal, and basic stuff that lenders would need to know if you chose to go with Madison as your servicer.

For those that are brand new people, why is a loan servicer needed? Why should somebody hire Madison Management? We know why you should be hired because your service is great, but let’s talk about what is loan servicing and why is it so important in the industry?

As a loan servicer, we are the company that keeps your loan and compliance. We follow state and federal regulations, but the most important thing is when your borrowers are making payments, you need to keep a record of that. Who are they paying? How much are they paying? What was it applied to like principal, interest, escrow, unpaid charges, or late fees? We keep track of all that. We process every and all payment that your borrowers will ever make while you maintain servicing with Madison. You as a leader should always have a record of that. Borrowers dispute things all the time, “I already paid you for those four months.” “No, you didn’t. No payment was ever received.” You need to track and to make sure that your unpaid principal balance is correct.

If you accept payments on your own and you don’t have servicing software yourself, it’s hard to track that. The software itself that we use that most other services use to keep track of that for you to make sure the right charges are being added. If the borrower is late, whatever their penalty charges, that’s updated. If you guys as lenders pay out taxes or insurance, the advances that you pay, you deserve to get that back. It’s written out in your contracts and your notes. You need to track all that. All the numbers in regards to your notes, that’s what we keep track of for you as the main part of servicing.

Also, a lot of states want you to have a debt collector license or mortgage broker license of some sort. Let’s talk about licensing requirements. Having your service or licensed in the state solves those issues, not in all the cases, but in a lot of the cases.

As a service, we were obligated. At this point, these states do things on their own. It would make life easy if they were universal across the board, but they’re not. Each state has its own licensing requirements. As a service, we need to be licensed as a service. We’re the company that’s processing payments, sending out statements, late notices, and things like that. With a servicing license though, it does not necessarily protect any of you guys as lenders. There are some states that require you guys as the note investors or as the lenders to be licensed as a lender or debt buyer. You don’t necessarily need the servicing license because you’re not servicing the loan, but for you to own that note, there are states that do require that. That is something that I highly recommend for everyone to double-check with the NMLS. I’ve been trying to put together a list but these things are forever changing.

The NMLS is where you can see the entire country drilled down to each state and what each state requires of you being a lender. If you have to be licensed if you’re exempt, what do you have to be licensed as? Is it the registration? You can contact each state’s department of financial and banking team. You can pick up the phone and call or send them an email and say, “I’m thinking about purchasing notes in the State of Georgia. What do I need to do as a lender?” Georgia is one of those states that requires you to be licensed as a lender and North Carolina, as well. Some states have exemptions and you don’t have to be licensed as a lender at all, but they have a servicing license that we have to follow. In some states like Illinois requires you to be registered as a debt buyer.

They also have the applications and the process as to what it would take. These processes are not as simple as I may be making them sound. They’re a nightmare and tough. That is one thing that I don’t handle here at Madison. Most servicers contact each state individually, especially if you’re going to buy bulk in one state. I have a lot of lenders who specifically like to buy in the State of Georgia because they went through the hoops of getting licensed there. That’s their forte and where they want to be but it’s best to double-check. Contact the state if you’re not sure. In some states, if you have more than five loans, you have to be licensed while in some states or if you only have one loan in this state, it doesn’t require it.

NC4 2 | Loan Servicing

Loan Servicing: Ohio is one of the messier states that isn’t very clear and fairly new regarding the licensing requirements as of the last two years.

 

There are exemptions, but it is costly and licenses do require renewals and most of them are annual. Check and if you’re genuinely not sure, give them a call. The application is available online as well, but it’s per state. Once you do one, it doesn’t cover you for all 50 states. Be mindful of that. I know some lenders who purchase who will not buy in certain states just because of the licensing. Check the NMLS and look under State Licensing. It’s one of the options up there. It’s free to look. You don’t have to pay for anything. Do your research, ask some questions and things like that.

I’ve seen in the past years that I’ve been in this industry that lenders who are not licensed and have some savvy borrowers who have enough money to pay for an attorney but not enough money to pay their mortgage. They ended up fighting through the fact that their lender is not licensed and lenders end up getting sued. It becomes a big mess and financially, you guys lose out on money. Always cover your back. If you’re not sure, ask me and I’ll at least I point you in the right direction. I don’t have all the answers for the NMLS. It’s not who I work for but I can at least guide you, walk you through and tell you what to do if you’re not sure.

A lot of states you’re covered in but that you should always check like Georgia, they do want you to be that licensed mortgage broker even if you’re buying one. The only exception if you’re buying a state your self-directed IRA. Somebody asked the in the WCN Facebook group about getting the bond. You need to get a surety bond there.

Most licenses require surety bonds. Registrations usually don’t but licenses do.

Kentucky wants you to have $1 million bonds. That was one of the states I don’t buy in because it’s strict that way. New York and New Jersey, you got to get along foreclosure timeframes and a lot of legislation in that neck of the woods too, for you. Ohio has a weird licensing thing that’s popped up. A lot of people weren’t clear. Are you familiar enough with that to talk about what it was?

Ohio was fairly new and I’m still not even 100% sure. It depends on what you’re buying. There’s a minimum. Ohio is one of the messier states that isn’t clear and fairly new in regards to the licensing requirements. It wasn’t always required and these state keeps updating. They keep changing things for whatever reason. They all have their reasons, whether we agree with them or not. I get to a point where I’ve had to call sometimes even as a service. New Jersey didn’t always have a servicing license, but we came up with our own within this past year, so we had to go get that. Before then, we weren’t required. The state sometimes required servicers or require lenders back and forth. My best word of advice is to double-check, call, ask as many questions, and annoy the living daylights out of them. Protect yourself before anything else.

Let’s talk about some of the services that you provide at Madison. Let’s talk about if they’re going to get one. If somebody is looking at buying a note and let’s talk about the first types of debt that you guys do service and the type of loans that you do take care of. Are we talking residential, commercial, or all types?

Here’s a little bit of both. The majority of what we service is residential, but we do have a few commercial notes that lenders who have residential notes transferred over into the commercial space and they choose to have Madison services as well. We don’t have many of them. Commercial notes follow a few different rules. Nothing drastic. It’s always a little bit easier in certain aspects. For the majority, we service residential notes. We service notes that are traditional note and mortgage or deed of trust. I’m sure a lot of you guys are familiar with land contracts, contracts for deeds, and agreements for deeds. We service those as well. Those have been hot these past few years. I remember a few years ago, I was like, “What is this?” I had never seen them before. Those have been popular in the past few years.

We service senior liens and junior liens whether it’s 1st, 2nd, 3rd, 4th, or whatever the case may be. We don’t touch student debt and cars. We thought about it, but our specialties are residential. We service all of that performing, which means that the borrowers are paying or non-performing, which means they’re not. We either try to get them to pay or we take the legal route if needed. We have a variety of services that we offer from start to finish and stuff that fits most of our note space investors and their needs. The most basic and easiest servicing program that we want everybody to be in is our performing loan servicing program.

Under that servicing program, that means that your borrowers are paying. That means every single month they’re making their monthly payment. No one’s got to touch it and keep accepting those payments. You guys get direct deposits or checks sent out to you and you should be smooth sailing. The loans are still assigned to an asset manager here with Madison. I assign these loans to somebody on my team and they’re in charge of making sure that the borrower continues to make payments. If they have any questions and concerns, if they’re late, if we reach out to them, try to set them up on ACH, therefore it’s mindless and payments keep coming in. They become that point of contact for your borrower as well as you guys being the lender. I will not be communicating with your borrowers ever at all.

It’s not what I do. I’d rather work with you guys and help you on the back end of stuff. Performing loans is simple. There’s a $20 monthly servicing fee per month for the loan. That does not include if there are escrow services. Escrow is where we collect additional funds for taxes and/or insurance if the borrower needs to pay on top of their regular monthly P&I payment. If it’s a special type of loan, and what I mean by a special type of loan is if it’s an adjustable-rate mortgage or a home equity line of credit. Those require a little bit more work on the back end. The borrower still can be paid but when things are based on their interest rates changing every six months or every time the prime rate adjust, that costs a little bit more each month because we have to maintain that to make sure that you’re in compliance with your actual note on that one.

That’s about an extra $5 a month for each loan. You’ll see home and equity lines of credits if you’re buying junior liens more than anything. I don’t see too many arms these days, but that’s something that you guys should know. We do report to TransUnion for every borrower unless that borrower who took out the note is not a person with a Social Security Number. If your borrower is ABC LLC, and they bought under a company and they have an EIN number, we’re not reporting that to TransUnion. That is the only credit reporting agency that we report. We also handle all the tax reporting. That’s included in services as well. For every interest payment that the borrower makes at the end of the year, they get a 1098 tax form. They take that and file their taxes with it.

You guys, as lenders for all the interests that you received from your borrower’s payments, will get a 1099 tax form. It’s at no additional cost. We are required to do this for you and therefore you don’t have to track it but it is a requirement. If you ever hear someone who’s like, “I’ll self-service it.” Be prepared that if any of your borrowers’ payment has a good interest, you better know how to break up those payments, calculate them, and make sure that’s reported correctly. We handle all of that on performing loans. We want to see borrowers pay, keep it moving smoothly, and everything like that. Not all scenarios are that beautiful and perfect as much as we want them to be. We also deal with non-performing loans.

The number one servicing program specifically for you, new guys. I don’t want to single people out, but I want to be sure that you guys understand the difference. We have a servicing program called Full Collection Servicing. This service program is a $95 monthly servicing fee. If your borrower is not paying, you should not have an escrow account set up. If they’re not paying their mortgages, there’s no way that they’re paying their taxes and/or insurance, which unfortunately means that you guys as lenders should keep an eye on that. You don’t want to lose your note to a tax sale. You don’t want to lose that property. They will wipe you out. I don’t care if you’re in the first position. They supersede everything. Keep an eye on those taxes. Unfortunately, part of the risk of buying a non-performing loan is that you may have to advance those funds. You don’t want to lose your investment.

Under this servicing program, the loan is assigned to an asset manager but they do things a little bit differently on these. The loan was boarded. They review everything that’s coming in, but they’re going to reach out to you. This is your investment, so this is important. They’re going to ask you what options you would like to make available for your borrower before we even talked to your borrower unless your borrower calls in beforehand. We want to know what your intentions are as a lender? What do you want to do? We have some lenders who are like, “I’ve sat in this loan. I’ve had it forever. I need to take legal action.” We’ll help you with that with foreclosure coordination, evictions, or whatever the case may be.

There are some lenders who were like, “I have no idea. It’s been sitting with the servicer and no one’s called this borrower in two years.” Let’s find out their intentions first and then we’ll narrow them down. We have some lenders who are strict and they’re like, “We’re not going to accept anything other than a full reinstatement or they’d better modify.” There are a few different options. You can put them on a modification, forbearance agreement, and on a trial payment plan to try to get them to be re-performing. We will handle that for you. We want to know what options you would like to make available. Your asset managers will walk you through what options you have so that you’re not flying blind.

If you’re genuinely not sure, that’s perfectly fine. We’d like to help the newer investors a little bit more, get their feet wet and help them understand but please remember, this is your investment, not mine, and not my teams. If we don’t hear from you and you do not respond, our hands are tied. This is your money or someone else’s money or JV partner, whatever the case may be. You have to stay in communication with us. We will reach out to you, but we need to hear from you as well. We need you to stay up on your emails a little bit because that’s a big way that we communicate with everybody. It’s written and documented. We have slinked back to go back and refer to. If you want us to call you, we’ll call you in.

We like to recap everything in email so we don’t forget. We have a couple of hundred active investors. You’re not the only investor that these asset managers are also going to be working with, so you can’t bombard them too much, which is why we always say emails. They’re not going to call you every five seconds or every time they spoke to the borrower. There’s a lot of things that have to go on before we even spend time with you guys. I know for everybody, this isn’t their full-time job. You guys do have lives outside of note investing. It’s important that you stay in communication with us and we’ll work out all of the loss mitigation with that borrower. We’re the ones that end up calling. We call, “John Smith, what’s going on? You haven’t paid since 2018. What’s the reason? Are you still on the property? What are your intentions?”

We will always ask the borrower their intentions first before we offer them your options. There are some borrowers who don’t live in the property and want to walk away. Let’s get it decided back to you guys instead of going through the entire legal route, which takes more time and cost more money. We’re not out here trying to get you guys to spend too much money on these and they’re also not super cheap. We’ll help you with that. We handle all of that. You have access to a portal where you can see everything as well. All the communication we document. Every letter we send to the borrower where we document as well. You can see attachments to that. The other servicing program, which is not my favorite. People who have heard me speak before know that it’s not my favorite and I will explain to you why.

Our third option is the no-collection of servicing program. What this program is in a lot of lenders use this when their loans are non-performing, but they’re having a third party handle their loss mitigation and borrower outreach. As long as you have a reputable third party handling it, I don’t mind but I do not advise any new investors to contact their borrowers on their own. I’ve seen way too many people get sued because there are regulations and rules that you need to follow. We are all trained in Fair Debt Collection Practices. Some of it seems common sense. You should not be harassing your borrower. Don’t curse them off and stuff like that. We verify who we’re speaking to every time we talked to them and when we talked to these borrowers. We don’t want someone to pretend and say, “I’m Scott Carson,” and then give them all this information on a loan that has nothing to do with them. A lot of that’s private information, not public knowledge and things like that.

NC4 2 | Loan Servicing

Loan Servicing: Protect yourself before anything else.

 

The big thing with the buffer of a servicer in the sense of a non-performing loan is, this is your investment. There is an attachment there. It is your money. When things aren’t working out in your favor or whatever the case may be, there is emotion there. We, as a middleman, cut that emotion out. It’s easy when a borrower was like, “I’m only going to spend $100.” That would upset almost any lender. “You can’t do that.” Wear that buffer. We don’t necessarily have an emotional tie to this loan and this note to getting money from it because it’s not our investment.

With no collections, we send out statements, late notices, and process payments unless you tell us not to. If your loan is non-performing, you’re taking legal action and you are working with an attorney, you better let me know. If a payment comes in and we accept that payment specifically like Texas because this is what I see happen all the time. We processed that payment because we’re not told anything. Other than that, we completely stopped your foreclosure and it completely has to reset. You’re out, money is double the work for the attorney that you’re working with. You have to now reset your timeframe. It’s not worth it.

If you’re working with a legal counsel to handle some legal action or foreclosures, let me know so that we don’t accept anything less than the full reinstatement or less than the full payoff. As far as there’s a monthly payment, but they’re two years behind, we’re still going to apply it unless you tell us, “I need to be able to flag that account,” so that we know if the borrower won’t be able to make a payment online. If they send in a check or money order if they call in, my team knows you’re not processing this payment because it’s illegal and we’ll direct them to contact you or your attorney, whichever you tell us to do. No collection is $40 monthly servicing fee. That is higher than our performing fee. I get a lot of the question, “How’s it so much higher if you guys aren’t doing anything. You guys are the biggest liabilities to us.” We have no idea what’s going on in these loans.

I have some lenders who were like, “Shante, this is what’s going on. My attorney sent out this demand letter.” I love those. I can note all those accounts, but I don’t get that from every lender. No collections are not available from Madison in the State of North Carolina. As a licensed servicer, we get audited by the states randomly that we are licensed in. North Carolina is one of the hardest states I’ve ever had to work with. I now understand why other servicers are not licensed there. They are sticklers which granted, at the end of the day make us want to be better all-around but they’re tough.

We had a whole bunch of lenders who had North Carolina notes. They were under our note collections also known as the client manage servicing program. We were in violation of North Carolina regulations because as the servicer, we should have all communication with the borrower. We’re the servicer. That what we do. In the eyes of North Carolina, we had nothing. We had the statements we send out, late notices, and payment history. I have no idea how you got to the terms of your loan modification though. I don’t know how far in your legal process you’re in. This was new as of January 2020. This is one that we learned. We are not offering that servicing program in North Carolina. If you have a non-performing loan in the State of North Carolina and you want it serviced, it’s going to be full collections until that won’t become performing. We have to manage every side of that loan.

Let’s talk about something performing. Does a borrower have to pay twelve months on time to be considered performing on Madison’s platform?

No. What makes us a little bit different and granted, the borrower needs to be paying at least three consecutive monthly payments. I don’t want to see that they’ve made a lump sum payment in May and then they’re not going to pay again until August. That’s not three consecutive months. I need to know that they paid for April, May, and June. That’s what’s considered performing, but they do not have to be contractually current. There are borrowers who are on forbearance agreements, which do not bring their due date to be a current date, which is July 1st, 2020. Your borrower could be paying for the past twelve months, but their payment due date or contractual next due date is for 2019. I’m not going to charge you full collection servicing because the borrower, at some point in the past, they’ll off making their payments and now they’re paying monthly.

They do not have to be due for this current month, July 1st, or June 15th. As long as they are paying consistently, the loan can be boarded as a performing loan. We want to see payments coming in. We’ll ask the borrower to find a way if they can catch up to bring them contractually current because, at the end of the day, they are getting reported to credit. They are also accruing late charges. When you’re paying on a 2019 due date for 2020, there are still about twelve months of late charges sitting there. We do try to let them know and try to figure something out so that they’re not that far behind, but you as a lender, we’re going to treat it as a performing loan because they’re paying it.

You talk about conversations and phone calls. Most investors should not be talking to the borrowers themselves unless they got a lot of experience or they’ve got a team. I’m blessed to have a lot of experience and we got a great team member. The point of the matter being is we get a lot of people like, “I want to be involved in those phone calls,” and there’s no rhyme or reason. Scheduling a borrower to get out of a conversation is not easy at all. People flake, they take forever to sign an agreement, get it back, or they caught all odd hours, or especially if they’re communicating with the investor and then the servicer. We know stories will change and they’ll play the two against each other.

It’s a lovely game of telephone which is why my team, do get upset when we find out when the borrower calls us, “I spoke to my lender.” “Number one, you push us out of compliance. Number two, we have no idea what you said to that borrower. When we’re already working on something, it looks like we don’t have our act together and that you and I don’t communicate when you technically hired our company.” We all get a little bothered because we don’t know what’s going on. What happens is we start to build that relationship with that borrower. When a lender comes in and the lender might have a soft heart that day, “That’s fine. I’m going to accept this.” We don’t know that.

When we’re trying to enforce what you guys told us to share with the borrower, it becomes messy. It becomes a nightmare and a headache because then we spend more time as we have to call the lender, “What did you tell this borrower?” You guys don’t let us know that. I understand both sides of it, but it doesn’t help us do our job correctly. We advise not to grant. Most lenders don’t want the borrowers to know who they are. If you feel like you need to be on the phone with your borrower, ask your asset manager, “Can we do a conference call?” It might take a little bit to set up that call, but at least we’re there and we can hear media and document. We have to have all that information documented. I don’t advise you to do it.

I encourage you guys all to ask questions or going through this. Alex says, “To be clear, the licensing requirements from the state of the property, not the state of the lender.” The borrower might be in a different state but it’s the state of the property. That’s why foreclosure here in Texas is fast. We do everything fast here, 21 days. In New York, it could take 2, 3 years in some cases. It’s always where the property is located and going from there. The asset class is different. These land contracts can vary on a foreclosure timeframe from state to state. In some states, that eviction process versus a foreclosure process. States like Florida, if it’s a land contract, they treat that as a normal foreclosure process. You need to know what’s going on in that state. This is why I always tell people, start off with 2 or 3 states, so you get the idea of what’s going on then at another state. Bob asked a great question here, “Do you need a servicer for owner finance notes?”

I highly suggest it. My rule of thumb is you need a servicer for any note. Don’t get yourself pushed into this wildfire of a situation. Your borrower may be paying for the next three years, perfectly fine on a seller finance note. If they fall off, it becomes messy. I’ve been dealing with a lot of seller-financed lenders. You need a service at all times. To me, I would never sit in not having a service. Let them handle the dirty stuff. You need to sit back and collect the payment. Let them handle that and take that brunt of it. If you don’t follow the seller finance note, you still need to send them statements. You’re not excluded from that. You still have to follow regulations. It’s a note at the end of the day. Let your servicer handle that.

That’s another thing too, whether it’s your own asset. If you have a third-party servicer, it adds to the value of that paper if you’re trying to sell that note at a later date. We see that a lot too. People originate and get excited about owner financing and in 6, 12 months, they are like, “I need to sell this note. I can’t hold on to it for a while.” If you’ve been self-servicing collecting and you’re not keeping track records or no documentation, it lowers the value. Because then for a note buyer like me to come in and evaluate the paper, I can’t get all my answers in one spot by calling Madison and they send me over a spreadsheet and see everything’s good and clean. “I got to take a scanned copy of this money order that you have somewhere and double-check your bank accounts?” Nobody wants to disclose their bank accounts.

Using a service will take a lot of the headache off and help you document. Some people are financing things. If it’s performing great, it’s $20. If it turns into non-performing, it’s $90. You got to make sure that you’ve got that figured in there, but we all know people like, “I’m only going to invest in performing notes.” We all know performing is going to end up at non-performing at some point. Shante, look what’s going on in the world these days. Maria asks a question. “Things are a little bit different with forbearance due to COVID-19. Would there that affect their credit or hold things a little bit on borrower’s benefit?”

With COVID-19 what we’re doing, I know that there have been laws passed that’d be better for banks or whatever the case may be. Unless you were buying a federally backed loan, which in our space, we’re not federally backed. That forbearance thing is mandatory for those loans. They’re not mandatory for the loans that you guys are all looking at right now. We are in the secondary market of this note space. I live in New Jersey. COVID is bad here. We had been talking to our lenders and they’ve been asking like, “What can we do?” A lot of our lenders have deferred. Not created brand new agreements, but deferred payments.

You guys are all seeing it. It’s nationwide. It’s not on one little cluster area where the borrowers are not working. They didn’t get employment because that’s super backed up. They can’t pay for May, June, April, and May, push two payments, push three payments at no cost to anybody because we don’t want the borrower to be penalized for not making those payments especially when you guys are deferring them. You’re not forgiving them. What you’re doing is pushing it to the end of the loan. When you say, “Defer these payments.” They’re not wiped out for life. At the day of maturity, they may have a balloon payment where it’ll be anything that’s outstanding included 2, 3 months that you deferred. It’s up to you guys and we’re not doing it automatically. I’ve had some lenders who were like, “I don’t care.” It’s your choice. We get the sob stories. We hear about it.

Some lenders have also incentivized the borrower that if you can make your payment instead of deferring it, they’ll forgive a payment or do something. It’s up to you guys to decide what you want to do. When it comes to credit, we did not report for the month of April and May 2020. We will be, but because everything was happening so quickly, we wanted to make sure these lenders had enough time to tell us what they wanted to do. We don’t want these borrowers to get danged and then we have to then go back and fight with TransUnion. We have not also, because we’re legally not supposed to at this time, sending late notices during COVID. Granted the borrowers, if they’re late, they’re late. Some borrowers are not contractually current either. No matter what, you were late before then.

It’s not hitting their credit negatively because we’re not reporting it yet. We want to make sure that all these loans get together. Some borrowers are able to pay April and then all of a sudden, they lost their job at the end or middle of April. In May and June, they can’t pay. I had a lot of lenders who deferred until June. We didn’t think it would last this long and they had to push it out another month or two because they understand. It’s up to you guys. Will your borrowers call in and say, “I can’t make the payment?” We ask them about it, “What’s going on? Is it due to COVID?” We want to hear them say that before because then we’ll turn around and say, “She can’t make this payment or she can’t make her payment this small. She’s waiting on unemployment.”

I know from friends and family, the unemployment in New Jersey, people have been planning weeks for certifying their benefits for ten weeks and still haven’t gotten paid. We understand everything is at a halt. Foreclosures aren’t being processed. Some states as of June 1st, 2020 started to finalize things like that, but not everywhere. It doesn’t necessarily negatively affect them and we’re also making sure that it doesn’t negatively affect you guys as lenders when it comes to your servicing fees. When you have a performing loan and we have to defer two payments, we don’t want you guys to be charged a non-performing servicing fee when you’re doing the borrower a favor due to what’s going on. We are flagging these loans as COVID-19-related so that would the invoicing. You guys aren’t charged.

The world works well. What I realize is we’ve got to kick the can down a little bit. We’ve all got to take a bit of a bite of the sandwich and try to make the best of it. Mike asks a question here, “Can lenders like us log into your portal review status and any comments about our notes being served by you?”

Yes, you can. That is what we push you to do. I don’t want you to have to feel like you have to call every day because if you call me every day about the loan, so is every other lender. We want you guys to be proactive in your loan and the only way for us to do that is by building you a portal to look at. You shouldn’t have to ever call us, “Did my borrower make a payment?” You can see the payment history. You can see if they called that payment in, if we called them and exactly how it was applied. We don’t want you calling us for that. You should be able to know what’s going on. If you have a question though, pick up the phone and call or send us an email, but little things like that, “Did they make their payment? What’s the balance today?” That stuff is all available for you at any given point of the day.

If you’re up in the middle of the night, “This borrower hadn’t made their payments. She said she was going to be late I looked.” We prefer that you check. We push you guys to do that and it’s easier for you to see. At the same time, you’re not waiting for us to respond to you. There is that 48-hour turnaround time that you have to allow all of us to respond to you because everyone gets bombarded with emails and things like that. Think of it, if you’re asking that question, “How many other lenders potentially could be asking that question as well?”

Your borrowers also have a portal. They see the same thing you see. Their specific loans, loan details, loan balance, next due date, and payment history. You guys have a call log section where you see all the notes that we documented. The borrower has made the payment option, so they can make their payments online. We should have no excuses as to why a borrower can’t make a payment. We give them a few different options like paying online, sending in a check or money order, calling their payment in, or signing up on ACH. There is no excuse as to why a borrower can’t make a payment. Copies of statements, late notices, and all that’s up there as well.

The collateral file is there for you to be able to take a look at too.

We’re trying to update our portal. We’re trying to make sure that it’s better and completely changing everything. We have a new portal that we use in-house that we’re looking at as well. We want you guys to see that side. Kevin’s working on that so that it is cleaner, clearer, and everything is there. At that point, you’ll be able to see those images because they will be uploaded through our system which is why we also requested it because that’s what I’m doing on the backend in our actual software here.

The most important thing is first to get a copy of the collateral file over to you so you can see what’s going on. You can see the actual details of the note, the mortgage and stuff like that, or any forbearance agreements that have been agreed either with us, identifying them, or the previous lender. Let’s talk a little bit about the boarding process because a lot of people think it happens instantaneously. I’ve had people call me like, “What’s going on?” I’m like, “Who’d you buy it from?” “I bought it for this person.” I’m like, “The reason it hasn’t shown up yet is that it’s not Madison. It’s because of blank servicer hasn’t transferred it over to it.” Let’s talk about that timeframe and timing. What people should expect? Things they can do to maybe make it easier for you and go from there.

In a perfect world, you, as a lender need to make sure first and foremost however you’re buying your notes, whether it’s an IRA or an LLC, I don’t advise you to buy anything under your first and last name, but it happens. You have that account set up with us. That is where I come into play. That is your first interaction with me. You have to email me or call me, “Shante, I’m thinking about purchasing some notes.” You don’t even have to have notes and any bids out there. You can say, “I want to set up now,” so you don’t have to worry about it down the road. You’re interested in buying notes, you’re thinking about performing and non-performing or you’re not sure what you’re thinking about, but you know that you’re going to have some notes and you know you want to be serviced by us.

NC4 2 | Loan Servicing

Loan Servicing: If you don’t communicate with your servicer, their hands are tied when it comes to your investment.

 

I’m going to make you fill out a servicing agreement at least one and a W-9 at the very least. This is what gets your accounts set up with me. This is what I set up in our system to allow us to serve you. Without those two items, forget about it. It’s not happening. It’s paperwork. It takes maybe 20, 30 minutes of your time. If you read the entire servicing agreement. My advice to you is to please read it. A lot of people don’t and I understand why. It’s lengthy, but read it so you understand what we do. Therefore, it eliminates a lot of questions down the road. Complete that, submit back to me. Let’s get you set up. Let’s get you rocking and rolling.

Let’s say you purchase a note. You bought it. You funded your deal. With funding your deal, your seller, or broker, or whoever you’re dealing with should be asking you, “Who is going to be servicing this note?” You need to have your servicer outlined to them. You would sit and say, “I’m going to have Madison Management service my note and the point of contact there is Shante Duffy. Here are her email and her phone number. Figure it out.” What happens then is you have now notified your seller or broker. What they should be doing is notifying their current servicer. The loan might not be with Madison. In some cases, it is. In a lot of cases, it’s not. They need to turn around and notify their current servicer. Whoever’s servicing for your seller and say, “I sold this loan and it needs to be transferred to Madison.” That is why you’re giving them that information. At the same time, you are there telling me, “Shante, I bought a note and it’s coming to you.”

This is fairly new. It’s mandated of us after a few audits, I am going to make you fill out a servicing intake form. That is a form that says, “I’m going to board this loan under ABC, LLC. I’m the point of contact for it. This is a borrower’s name and this is the property address.” You’re going to outline, is it performing, non-performing under full collections, or non-performing under no-collections? You’re then going to outline if it’s a conventional loan where it’s got a mortgage or your deed of trust tied to it. Is it a HELOC? Is it an adjustable rate? Is it a land contract, CFD, agreement for the deed? They have a billion different names.

You’re also going to outline if it’s a first lien or junior lien. You have to send this to me as a basis. I know it’s a pain in the butt for larger pools of notes. I send you a spreadsheet to complete instead of that form for every loan. You’re going to let me know if there’s an underlying mortgage on that note. We’ve been dealing with a lot of wrap-around notes which is fine, but there are requirements for us if it’s a wrap. We need to know that as well.

You’re going to let me know if this loan requires escrow services. Is it taxes? Is it insurance? Is it both? Are you going to need force-placed insurance? Maybe there’s force-placed insurance on it currently. You’re going to want to pick it back up. There are CFPB regulations that we have to follow if you’re going to set up with us. If the loan is in an active foreclosure already, and if the loans in bankruptcy, Chapter 7 or 13, let us know. You’re going to send me that. You’re going to send me digital copies of the collateral file. You should have a copy of that doing your due diligence before you purchase your note. Do not rely on these other servicers to send me that. Send it to me the moment you fund your deal. It might take a few weeks for the old servicer to begin the transfer process but at least I know what’s coming.

I need to know that. I cannot board a loan without the servicing intake form anymore. If your seller was timely, notified their servicer, made sure everything was closed out and that loan should begin the transfer, they would have reached out to me and said, “Shante, you have a transfer coming over for Scott Carson. Does June 25th work as a transfer date for you?” I turned around and I say, “Yes or no?” I’m will not approve a transfer date that’s not on a Monday through Friday. We’re not open on weekends. I’m going to tell them, “They’re going to then send me a goodbye letter.” I have to approve that goodbye letter. That is a letter that notifies the borrower that their loan is being service transferred from servicer A to Madison Management on the effective transfer date of June 25th.

Once I approved that goodbye letter, they mail that letter to the borrower. They also then send me the loan data. That includes the borrower’s information such as their name, mailing address, phone numbers, Social Security Numbers, as well as the loan side, which is the original loan balance, UPB, interest rate, first due date, next student, maturity date, and all of that. At that point, I have the collateral file that you provided to me, as well as the loan data. That is what I need to board a loan to make sure that we have all the information to verify that information and make sure that it’s correct. As long as all of that is there and we have everything that we need, we will then create an invoice for the boarding.

There’s always going to be a setup fee at the majority of services that I’ve crossed paths with. That is the cost of their time to sit and review everything that you provided to them and to get it in their system. Our boarding fee is $40 base per loan. If you board loans in bulk, ten or more, that number goes down and you will have some fun and stuff in a little while to see some discount for you. Once your boarding fee is paid, at that point, I am notified and then I can board your loan. It is important to make sure that you either set up an ACH or you pay attention to that email from my accounting team. I cannot board a loan without you paying for it. Once it’s paid, I get notified, and within about 24 to 48 hours that it’s been paid, your loan is in our system.

I am generating a hello letter to be mailed to the borrower, which matches the goodbye letter and that tells him, “Your loan is being transferred to Madison.” It gives them everything about who we are, what we do, and how they can make payments. It’s a six-page letter. We send them a fee schedule that borrowers could be charged for depending on certain states and things like that. It is mandated to send them that and our privacy policy gets attached as well. You then get an email from me letting you know that I ordered your loan and when the hello letter will be sent out or has been sent out. I do usually all within a day. You get that email and we assigned a loan number, each loan.

If your loan is assigned to an asset manager, it tells you who it’s assigned to. I’ve gotten this down to start to finish from a goodbye letter that I received to get the invoice out within five days. That’s if I have everything. If you’re going to piecemeal me things, you’re going to add time. Other services, we all have a closeout process, each one of us. Madison will not transfer a loan until we confirm that all of your outstanding invoices and deboarding fee are paid. There are steps that every servicer takes. I like to tell people 30 to 45 days, start to finish from when you funded loan maximum to when the loan is boarded with Madison. There are a lot of hiccups on that route and it can fall on your seller, that servicer or you for not providing me what I need.

In a perfect world, it doesn’t take that long, but there’s a lot of moving parts that are not solely on you or me. That’s the part where a lot of lenders rightfully so will get frustrated, but it’s the hardest to understand. It’s not me not doing it, it’s that I don’t have the ability and I will not reach out to another servicer and say, “This loan is supposed to transfer to Madison from you for Scott.” I will not do that. I have no authority over that loan. It’s not mine. I didn’t own it with that service. I don’t have the right to do that. If you asking me to reach out to them, that’s not going to happen.

I realized a lot of people are like, “Can you call it?” I don’t even know who the servicer is half the time until I get a goodbye letter. You have to stay on top of your sellers. That is my number one rule of advice. Everyone who calls and says, “Shante, you haven’t got it.” I feel bad. I had this with a few lenders that funded deals in March. They got me the collateral, servicing, and intake form. They only got boarded because their seller had dropped the ball or they notified their servicer to transfer to the wrong servicer. For two months, we had no idea where this loan was. I know it’s scary and intimidating. I know you might feel like you’re coming off as annoying. Stay on top of yourselves, as much as you can. Until you hear from me, “I have this. I now need to review it,” then you can calm down for a little bit. Stay on top of them. Just because you funded it yesterday, does not mean today I have a goodbye letter.

Other services aren’t going to release loans to new servicers unless all the fees have been paid on that loan too. We ran into that when I was buying a couple of portfolios. I’m like, “We got 70 loans. So-and-so hasn’t paid their servicing bills. They might have a come to Jesus meeting with the seller. Take care of your bills so that you can transfer loans over so we can get these things boarded and rock and rolling or give me a refund in some fee.” I’ve got a question from Wesley Williams, “When you do a wrap, will you send the payments to the underlying lender on a wrap-around mortgage?”

The final is the answer is no and here’s why. My relationship is with you, not the Bank of America. They are not my client. I am only sending payments to whoever is set up with Madison. With the wrap, it is your responsibility to send that payment to the underlying mortgage. We have a lot of them and I have this one lender who’s got about 30 of them. He has a reoccurring ACH out of his bank account that pays the underlying mortgage. At the same time, you can’t gauge when these borrowers are going to pay. They may be due on the 1st, but they have a tendency to wait until the 12th. By the time you get the payment from Madison, it’s past that. You get to charge a late fee. Don’t 100% depend on that borrower to pay the underlying mortgage because you never know. If they miss a payment, you’re behind a month. We will never send that payment to an underlying mortgage. We were only sending it to you.

If somebody is using their IRA to fund some deals, will you send payments directly to the IRA account?

That’s where we need to send them. I know Quest, let’s say that that’s your custodian. We are going to send the payments directly to them. You have an account there because they have to check on their own end. That stuff, we will do. They’re not the underlying mortgage. That’s the entity that you set up under. It’s got to read the same. You’ll give us the payment address for them. They’re not our point of contact. That still remains to be you, but we will send it to any IRA custodian that you’re using. We work with a lot of them. We send them and we go from there.

If somebody has an investor, will you split the payments up to half and then the other half to our investors?

We will as long as you set that loan up as a split, which would mean that both you and your investor need to be setup. I did another webinar for somebody and he didn’t realize that. We will as long as both of both lenders are setup. The reason is that we can split those payments and therefore you don’t have to worry about the 1099 tax form for your investor. We will handle it on both ends. We will do that. If it’s a 50/50 split, 75/25, or whatever the split is, that’s what we need. Therefore, you don’t have to worry about anything. If they’re getting their payment, you’re getting your payment.

Wesley also asks the question. He goes, “Even though you guys are servicers, is there a trading platform for an investor that wants to sell notes to other investors associated with your company?”

Our trade platform or sales desk, the loans listed there for people to buy are not all loans that Madison services. There are loans that are being servicers by FCI, Allied or whoever. We don’t make any seller post just their loans with us. A lot of them we are servicing, but a few of them are not. You can have it listed anywhere else as well. Any investors are able to look at that and say, “This is something I want,” and start bidding on that. You don’t even have to maintain the servicing here. Don’t feel like that’s an obligation. I do understand that a lot of lenders keep their stuff at one spot, but it’s some that you can purchase through Madison to facilitate that sale. They’re not all transferred with Madison. You’re not forced to have them serviced by us even.

Are you licensed in California for servicing and a performing loan?

We are not taking loans in the state of California. There are about thirteen states that we are not touching. There’s some stuff going on and got to double-check and things like that. Some states we never relicensed in and we don’t have lenders who are purchasing notes there. If you say, “Shante, I want to board a loan in New York.” I’m going to tell you, “We’re not touching it.” Even though we can handle the debt collection side, New York is a tough state. There are some states we’re not taking, but only 13 out of 50. I don’t think it’s that bad. We are not 50-state licensed though.

What’s the issue of California?

We’re fixing some auditing and stuff like that. We’re on a halt. I have no idea how long it’s going to take. I don’t know what’s going to happen on getting update the correct license. There are a few different places in the state of California. I don’t handle the licensing with Madison. Kevin does, our president and CEO. He’s working with whoever to make sure that we have the correct one. They’re also expensive, but to make sure that we have the right one of service because our main office is in Reno, Nevada. There’s a difference in what you are required to do if you’re in the State of California versus out of state. Our office is linked to Reno, not California. He’s looking into that and making sure that they have all the right information. I know that stuff takes forever. I will update you guys once we can continue to take loans there but as of right now, I can’t touch them.

What are the other twelve states? Do you know on top of your head?

California, Idaho, Maine, Montana, Nebraska, New Hampshire, New Mexico, New York, Oregon, South Dakota, Washington, DC, and West Virginia, we are not touching as of recent.

I’m willing to bet that in the majority of those states, you don’t have a lot of loans, to begin with.

In some states, we don’t even have any. That state has come up to, we need a license. We have licensed in certain states just because we had a lender and said, “I have 100 loans in the State of Vermont.” It was worth our while, but you didn’t see people buying in Vermont and their license requirements were a little up there in price and had to be worth our while. We see people buying in Florida, Georgia, Texas, Illinois, Ohio, Indiana, Michigan, Kentucky, Kansas like those are huge popular states, which is no problem. When we have one lender with one loan, it’s not worth it to maintain that service costs. It doesn’t even balance out. Forget Madison, it doesn’t balance up the license costs, especially to renew each year as well. We have to get a surety bond for each one.

Judith asks, “Do you handle Massachusetts and Rhode Island?”

We do.

From Alison, “Is there a separate fee to split payments to partners?”

Your partner is paying that separate fee. They’re going to get charged a performing fee of $20 or maintain the loan for both of you, not just one. That’s the same thing with partials. If you guys ever sell partials. We have that partial buyer set up and you guys being the original seller. You still get to see and have eyes on that loan, but we’re maintaining it for two of you. The only thing is they only pay the $20. If there’s escrow, you guys split it. You’re not both going to get charged for escrow because it’s technically one escrow account. Let’s say it’s $15 for escrow, you guys are going to pay $7.50 each unless one of you says, “I’ll take the whole escrow.” We’ve had some lenders who do that as well.

We see a lot in New York. I don’t buy in there because it’s ridiculous. California, we’re working through that to because licensing will change there a little bit. Idaho, I hardly see a thing. Maine, we rarely see anything. Montana, there are more cows up there than people for the most part. Nebraska, I have only have seen a few others. New Hampshire, I don’t see that much. In New Mexico, I occasionally see something. West Virginia, it’s not much. Oregon, I occasionally see some stuff, but they’ve gotten strict in a variety of ways.

That’s why we stopped and I was like, “Shante, don’t take anything new.”

A way to be a licensed mortgage broker in Oregon. Don’t they?

Their requirements are crazy. I know Kevin’s trying to figure that out because that was a big thing that they have this new license requirement. It’s through the roof and they’re trying to weed out little people like us. A little people like you guys being smaller lenders at first and smaller servicers. Some of these states are a little crazy. We don’t want to take anything on and get anyone else in trouble or fine. It becomes messy.

I tell people like, “Start with a few states, add from there. Figure out the ones where there’s deal flow.” For most of the ones you rattled off there, we don’t see a lot of deal flow. You went above and beyond and brought a special bonus to Note CAMP. Do you want to talk a little about it? What do you get for our attendees?

I know how expensive being an investor can be. I know a lot of people run and hide from the fees. They get worried about it. Every servicing company has fees. The biggest fee that I always get questioned on is, “Shante, why am I paying a boarding fee?” A boarding fee is the same thing as a setup fee. What that is in the day, you’re paying for my time. I’m the only one in this company that boards loans. There are a lot of loans that I boarded on a daily or regular basis.

What I decided to do was offer you guys because I know a lot of you are either looking and spending on notes or will be in the near future, especially knowing that Note CAMP is going on. Spend this weekend and pay attention. I saw some of these speakers, they’re all amazing. Takedown some notes. I also thought that when you get to the point where you’re ready to purchase a note, if you purchase five at one time and on their transfer to Madison, I will not charge you the $40 boarding fee. It’s $40 per loan. I will take out my time to get the loans here. If there is an escrow setup, if it’s ARMs or HELOC, that’s $5 or $15. At most, that’s what you’re charged.

Secondly, if you have a loan and the borrower’s paying escrow outside and it’s contractual or a land contract, as long as you get five of them, you guys do not get charged the boarding fee. That is a $200 fee. I wanted to offer that to you guys, when you reach out and say, “I got someone who wants to board.” You’re going to fill out the servicing intake form. You want to send this to me at the same time so I can note that is you guys. This does not go to anybody else. I will also have an attendee list to make sure that it’s the Note CAMP attendees. This does not get to go to any other note investors. This is specifically for you guys because I love Scott to take that off of the front end because there’s so much going on and things like that to save you some money upfront.

This is five at a time. They can’t do one this month and one in three months. It’s got to be at one time.

They might come from five different services. It’s not your fault if the servicer takes four months to bring it. If you could prove that you have it and you’re going to board it with us, that’s fine. It has nothing to do with the servicer. I’m not going to penalize you guys for that. That’s not fair because you don’t have control over that and neither do I.

I’ll be sending a list of those that attendees to Shante and I’ll be sending that out to everybody, but it’s $200 in servicing and boarding fees waived there for you guys if you’re doing it. Even if your existing client with Madison Management, is that good?

As long as you’re attending Note CAMP 2020, you got it. I don’t care if you’ve been a client of mine for many years or brand new. That’s for all of you.

That’s worth the price of admission right there. Do you want to jump on the portal? Should we jump on Madison Management and walk people through a few things here?

I created this little dummy portal because of a question I get asked all the time. If you hover over the word Investors, a menu dropdown, click Investor Forms. This is where your entity set up forms are located. You don’t 100% have to talk to me about it. If you want to jump the gun and say, “I’m here, I can do it.” You need to fill out one of these servicing agreements. If your loan is in North Carolina, do not complete the note collection servicing agreement. I will reject it. That’s a heads up. That’s what gets you guys setup. I direct that point to that page. If you click Loan Servicing on the top right. Here are the services we offer. There are little tabs that break down the servicing descriptions. Click through that. We do not send you a PDF of our fee schedule. It is always going to be available online. Everything is there. There’s no secret PDF version.

You’ve also got the portal here. If you click on Loan Sales, this takes you over to the portal.

NC4 2 | Loan Servicing

Loan Servicing: The rule of thumb is you need a servicer for any note.

 

You click to buy and you can browse. You can put in some information. Feel free to inquire for more information about the loans that are limited. The whole point is that we need you to sign an NDA, which you should always be signing. In general, you’re looking to buy and sell notes.

One thing that we didn’t talk about, and I know this was a question somebody asked in a survey. If they needed a foreclosure attorney, do they have to go find one in the state? Do you have a list of attorneys that you use in every state that you’re doing business with?

We have a list of attorneys that we use in each state, but I also understand that this industry is word of mouth, which we love. If there’s an attorney that you want to use that we’ve never used before, by all means, we will use your attorney. If that’s someone that you want us to use, make sure that they’re in the state of the property that you’re foreclosing on. I had one that said, “I want to use this attorney.” I’m like, “They’re located in New York and your properties in Georgia.” It’s not that they’re just location, they weren’t practicing in Georgia, which I thought was weird. Make sure that they can handle foreclosures in the state of your property. If you don’t know, we’ll put you with one. If you have one that you like to use or you’ve heard great things about and you want to use, let us know. They might be someone that we do use and maybe we didn’t select that attorney for whatever the situation is, but let us know. You have the right to ask and go from there. We’ll make sure that we create that relationship with them as well.

How often are you trying to communicate and make right party contact with the borrowers out there? What are some of the things that you guys are doing to maybe help us as investors?

When a loan is first boarded, it’s non-performing. We are supposed to be pulling every single day at different times of the day. Borrowers work things like that happen. They’re not always home. People don’t answer numbers they don’t know. We leave messages, we send letters. We try everything. We try contacting family members to make sure you have the right information. You do also have the ability to order a door knocker. There are a lot of lenders who don’t know if their property is vacant or occupied. Maybe that wasn’t given to you during your due diligence processor couldn’t be confirmed. We try to send somebody out to that property for you, but we won’t do that unless you ask us to.

We’re going to keep calling. We skip trace every borrower. Make sure if they’re not in bankruptcy because they are protected that we cannot be calling to collect the debt because they are covered or protected by the bankruptcy laws. We’ll let you know. Sometimes lenders don’t know everyone was in bankruptcy. It’s one of the first things we check once the loan is boarded so that we know before we can call. We call aggressively after a few weeks though.

After 21 days of us being aggressive, we’re going to ask you, “Do you want to send a door knocker?” For us to end up keep calling and no answer. We start to run out of options and it’s up to you guys. That’s all going to be documented. We’ll make sure that mail’s not coming back returned as well. If it does, we’ll try to find the most recent address. Not all the time we were provided with the most recent mailing address, but we will call aggressively.

We have door knockers that we can send out on that physically either can post a letter on the door. They’ll take pictures of the properties if that’s what you want as well. If they can knock on the door, talk to the homeowner and get some information from the neighbor. There are times where some doors knockers who’ve made contact and they hand over their phone as they call us. The one cool thing about Madison, which is fairly different from 2019 is that our main office is in the State of Nevada. I did not move to Nevada. I was born and raised in Jersey. I will never move out there. My whole life here. We cover a larger time zone frame thing.

My Jersey team, which we have asset managers on the East Coast and West Coast. It’s not a typical 9:00 to 5:00 Eastern Standard Time anymore. It’s 6:00 AM Pacific time through 5:00 PM Pacific time, which leads us to 8:00 PM Eastern standard time. We are covered almost every legal time zone that we can call through what we’re able to do and collect the debt. That makes us a little bit different and expand. If we have borrowers that are closer to the West Coast, I try to push those loans with a West Coast asset manager because we can’t call borrowers before 8:00, 9:00 anyway. We try to cover that span. That’s someone we should always be able to get a hold of somebody.

Marie asks the question, “Which loan portfolio would be best for a new investor?” The full collection is the answer to that.

If it’s not paying full collections only, don’t even think about anything else. You can also change them. I don’t want you to think that once you’re full collections, you’re stuck. You’re not. Once the borrowers make three consecutive payments, you’re automatically bounced to performing. When the borrower misses two months of payments, you’re also automatically bounced to full collections. The only servicing program that does not change automatically is the no-collections. We are not tracking those payments and we’re keeping a record of them. There are no eyes in there. No one’s calling this borrower from Madison. That you’d have to request. There are people who need to shelf a loan. Let’s say we haven’t had luck and you’re not ready to take legal action. That’s fine. They’ll bump it into no-collections as long as it’s not North Carolina and it’ll sit. It doesn’t always mean that you’re calling, but you still want the compliance side of it. You can change between them as long as they meet the requirements of what a performing loan should be or what a non-reforming loan should be. They’re not stuck there forever.

What’s the best way to contact you, Shante?

I say email. We can always schedule calls. You guys are for anything. My phone’s constantly ringing, so it’s hard to gauge is the person at the front, the gatekeeper. Our conversations are not five minutes. I want you to ask every question. No question’s stupid. If I don’t have the answer, I will try to tell you where to find it. If it’s not something I do, I will try to help you out that way. I don’t want you to feel like you only have five minutes to get through to me as well. I try to schedule my calls with everybody, “What time works best for you and go that route?”

It’s easier and cleaner. Sometimes it is five minutes is simple if you already have an idea, especially the newer people that have some general concerns and not every servicer friendly or have someone like, “Shante, I don’t know what I’m doing.” I liked those questions because it also teaches me. If you don’t know it, I guarantee you there are hundreds of investors that don’t know either. You guys help us at least myself share the knowledge that I don’t think about because I’m not in your shoes and that aspect, or the same thing, vice versa. This industry tells us all about sharing what you know and network like crazy. That will be your best friend and it’ll get you far.

Ask questions if you don’t know. There are no dumb questions. The only dumb question is the one you don’t ask, but also be respectful. Don’t be calling bombarding her questions on what is a note? What’s my what can I do? She’s a servicer and she does an amazing job. She works with so many great investors. They do such a great job so we have her on here. They are our preferred servicer of choice. We love the customer service there but also realize too, if Shante hasn’t returned your message in 24 hours, give her time. Don’t send her an email on Friday and then complain on Monday when she hadn’t had a chance to call. We’ve had a few of those people.

I set up an automatic away message because it got to a point where it’s hard. I don’t take it necessarily as like you’re badgering. You’re excited and you should be. You have to understand though if you’re excited and you bought a note, “How many other investors bought a note?” Think of it like that. An automatic away message thing that bounces back to instantly. If you email me directly, you need to give me 2 to 3 business days. There are times where I can respond to you within five minutes of you sending it but I can’t always promise you that either. I need you to give me time and the rest of our staff time as well.

The email is SDuffy@MadisonManagement.net. Shante, thank you again for coming and delivering. Thanks for coming to the show.

Thank you. Bye.

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About Shante Duffy:

NC4 2 | Loan ServicingShante Duffy currently serves as the Business Development Manager at Madison Management Services (MMS), where she oversees loan boarding and de-boarding, investor set up and inquiries, documentation compliance, etc. In her capacity as Business Development Manager, she also works with note sellers and buyers to attract them as clients.

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