How to provide great service to your Borrowers and Investors and Make Money without buying software or hiring and training staff.
| YOUR MORTGAGE COMPANY | |
|---|---|
| Number of Loans Under $600k | 100 loans |
| Average Principal Balance | $200,000 |
| Total Loan Balance | $20,000,000 |
| 10 Loans Over $600k | $4,400,000 |
| Average Number of Investors per Loan | 1.5 investors per loan |
| Late Fees Received Annually | $65,000 |
FCI Standard Loan Servicing Fee
One time setup fee of $25 per loan. $15 servicing fee per month/investor, or 0.075% of UPB on loans over $600k ($37.50 @ $601k). 50% of late fee for collection work.
Simple services provided by Broker at loan origination
Send a Loss Payee notice to insurance company to cover Insurance Tracking. Pay LPS Tax Service $67 for Property Tax Tracking, or check public records annually. Record a Request for Notice of Foreclosure for any Senior Lien.
BROKER CHARGES NO SERVICING FEE: Provide professional service, give the maximum return to your investors
| COSTS: OUTSOURCING | Year 1 | Year 2+ | PAID BY |
|---|---|---|---|
| One time setup fee | $2,500 | $0 | Borrower |
| Per investor servicing fee | $16,200 | $16,200 | Investor |
| Loans over $600k fee | $3,300 | $3,300 | Investor |
| 50% of late fees for collection | $32,500 | $32,500 | Borrower |
| Broker's cost to provide loan servicing to his clients | $0 | $0 |
| COSTS: IN-HOUSE SERVICING | Year 1 | Year 2+ | PAID BY |
|---|---|---|---|
| Software, 3 modules | $20,000 | $0 | Broker |
| Software maintenance | $1,800 | $1,800 | Broker |
| LS Personnel, computers, space | $50,000 | $50,000 | Broker |
| Liability Ins, Bond and DRE Audit | $20,000 | $20,000 | Broker |
| Broker's cost to service loans In-House | $91,800 | $71,800 |
BROKER CHARGES A SERVICING FEE*: Provide service, create a monthly income stream
| INCOME: OUTSOURCING | Year 1 | Year 2+ | |
|---|---|---|---|
| 1% servicing fee charged to investor | $200,000 | $200,000 | Broker uses FCI as Sub Servicer to do most of the work |
| Other 50% of late fees | $32,300 | $32,500 | |
| Total Outsourcing servicing fees | ($19,500) | ($19,500) | |
| Broker's net income | $212,500 | $212,500 |
| INCOME: IN-HOUSE SERVICING | Year 1 | Year 2+ | |
|---|---|---|---|
| 1% servicing fee charged to investor | $200,000 | $200,000 | Broker buys software, hires personnel, spends time servicing instead of lending |
| Late fees | $65,000 | $65,000 | |
| Total In-House servicing costs | ($91,000) | ($71,000) | |
| Broker's net income | $174,000 | $194,000 |
* Brokers receive a servicing fee by either including a Servicing Addendum in the loan documents at origination stating that the Broker is charging X% servicing fee, or by Assigning the loan to an investor at a spread. For example the Note Rate is 12% and the Sold Rate (to the Investor) is 11%, creating a 1% servicing fee.
