Transparent communication is one of the main pitfalls most investors fall into. You want to be able to invest in a note with a servicer so that you will be in good hands. The loan servicing industry exists so that they can help and guide investors, so communication is key. This week, your host Dan Deppen is joined by Shante Duffy from BIFI Loan Servicing. Shante has years of experience in the loan servicing industry. Listen in as Shante provides helpful tips for new note investors who are just getting started. She also talks about some of the challenges involved with getting a new loan servicer up and running.
—
Watch the episode here
Listen to the podcast here
Why Transparent Communication Is Important Between Investors And Loan Servicing Professionals With Shante Duffy
I’m joined by Shante Duffy from BIFI Loan Servicing. Shante, how are you doing?
I’m great. How are you?
I’m good. It’s great to see you. We haven’t caught up. I’ve got to know you several years ago from a past life. Maybe you can jump right in. Tell us a little bit about what you’ve got going on.
I partnered up with a few people and decided that we should start our own servicing company. I have been working very hard to make sure that this kicks off from the ground up. The whole point of this was, being in this space, I understand a lot of the pitfalls, frustrations, and confusions that investors have when it comes to dealing with servicers. As I always say and this has become my motto, “Servicers are the bad guys in this space. Nobody likes us but you need us.” I live by that.
There’s still a General Law to everybody who follows as a servicer but every servicer does things a little bit differently. As an investor, there are lots of frustrations when we have loans to several different servicers. You like one thing about this servicer versus another thing. From what I had gathered in years of being in this industry was, why can’t we create one that appeals to every investor?
Being in a space that I was in and speaking to investors all the time, I always heard about the issues they were having. Some of them were very valid. Some of them were a little unrealistic but taking all that information in and realizing, “Where are the pitfalls? Why are people unhappy? How do I create something that works for the masses of investors?” It works for both sides with a servicer that keeps you in compliance versus the investor.
We want you to focus on your investing. I don’t want you to do my job. That’s my job. I have spent a lot of time talking to a few different vendors and realizing, where some of the pitfalls are such as escrow, REO management, and property preservation, things like that for space insurance. I spent a lot of time working with different vendors where that’s their specialty, so why not have them help us, which in turn helps you? Therefore, you are not putting in so much legwork. You can focus more on taking out some more notes. We can make sure that everything else is covered on the day-to-day servicing side. That’s how I came up.
For me, one of the big frustrations was I have used several different servicers. They all have different rules and expectations as far as how FPI works, what things I need to do and what they are going to do. I have experimented with some that are supposed to be all-inclusive, full service. They always ended up dropping the ball, so I ended up following up.
Loan servicers are the bad guys in note investing. Nobody likes them, but you need them. Click To TweetThat’s because of stuff like that. That’s exactly why. I’m not a voice-based insurance expert but there are companies that that’s all they do. To partner up and be able to join some forces to make sure that the ball doesn’t get dropped on the service inside, not every investor is proactive either. There are signs where people are finding out ahead of the game, but then there are times where months and months go by you have an investor that’s a little upset. You have a lender that’s like, “I expected this to be getting done. No one said anything.” It so happens that you might have heard something, made a bunch of conferences, you are having a look like, “This doesn’t make sense,” or an issue comes up.
A lot are disconnected. Communication is important for me. I know how important that is for investors as well. Making sure that that’s open and out there, the honesty and transparency are there, that’s what I’m here for. That’s what I want to make sure that investors were getting and receiving. I want them to be comfortable talking. I love feedback. The perks of starting this from the ground up are that there was nothing. Everything we have, we are building and it has been so much fun to do. A lot of hard work but we couldn’t be great without the hard work.
I’m curious what that process is like. As a guy who went to business school and an entrepreneur, that thought has crossed my mind in the past like, “I have problems with all these servicers. I should create my own.” I’ve got about five minutes into thinking about it. I was like, “No way. That’s way too challenging. I’m not going to touch that.”
I’m not going to lie to you. This is probably the hardest thing I have ever done but it also is going to be the most rewarding. I love this space and this industry. It’s different. I knew nothing about the space until I decided to go like, “I need to go back to work after having my child.” I started as an admin assistant and worked my way up. I get to meet and talk to everybody. I thought about it and there’s that hesitation and fear. It’s challenging but I personally think it is totally worth it.
I want people to be comfortable. I want you to keep investing. I don’t want people to get discouraged just because they had a bad experience with a servicer. Granted, everybody makes mistakes. It’s just about righting the wrongs and making sure to have communication. That’s the most important and where we came from. The best part of this is that I have partners in this space that are investors. When they don’t necessarily have so much of the servicing knowledge, that’s where I come into play because that’s my strong suit but I’m not as big of an investor as you are. Having two minds work together, that’s how we have gotten to this point.
What is the licensing process? One of the perceptions was that you have to get individually licensed in every state that you want to operate in. If you are going out to all 50 states, are you picking an area to start having that?
We are picking. We have a few of them. We still have some pending. That has probably been the hardest part of this entire process. You do have to go state-by-state individually. There is a checklist. There is information you have to provide to them, then there is a waiting period, which is out of our hands. We are following up as much as we can without being too annoying off the strength that we do want to get approved and licensed but we understand we are not the only company out there getting licensed.
It is a state-by-state process. We went after the states that we see investors buying in a lot first and started branching out from there. We want to make sure that the investors that I know and the partners know, especially the people who provided feedback on their servicing experiences. We wanted to make sure we open the doors for them as well. They can at least try us out and provide us some feedback on what they like and don’t like. I love suggestions. I want your opinions. I want to be the best that we can be for you.
Taking down one state at a time is a process. It’s a lot of paperwork, to be honest with you and it’s submitting them. It’s not too hard but we are taking it one step at a time. We have a whole bunch of licenses pending and so many more that we still want to apply for. We started with a few and gotten approved in two states as well.
I can’t imagine what that process is like. For me, I struggled to get deeds and assignments recorded. I can’t imagine trying to get that license. What are some of the expectations that investors have when they sign up with a loan servicer?
The biggest is transparency and communication. That’s number one. I also think a lot of investors get into this space, whether they are going to a program or learned on their own however they get into this space. I do feel that they have expectations of servicer to handle everything regarding their note from start to finish. That’s not 100% true but I understand why investors think and feel that way. A big reason is a fact that as a servicer, your job is to process payments, send statements, late notices, and keep them in compliance but that’s simple on a performing loan.
We also deal with a lot of nonperforming loans investors buy nonperforming loans. The goal is to get them re-performing for the most part. A lot of the disconnect that I have heard about is on that loss mitigation side, making sure that their asset is protected where workforce-based insurance comes into play and making sure that they had somebody communicating with their borrower but then also relaying the message back to the lender.
As a servicer, we don’t have a say in what happens each loan. We can only give you options. You, as a lender, have to make that decision. I have seen lenders who boarded loans with servicers and walked away. That doesn’t work. You can’t walk away. Servicers don’t have that right to make decisions with your borrower on your investment on their own. When everyone is working as a team, that’s where a big focus is for us. Work as a team. Within the realm of what we do, we work for your instruction. I can’t just offer a borrower loan modification because I feel like it. It has to come from you and you have to approve every step of the way.
With loss mitigation, you are dealing with people when it comes to homeowners, their needs, what’s going on and their hardships. That communication is very important. As an investor, you should want to know what that is without having to do the communicating. That’s what your servicers are for. You shouldn’t be talking to your own borrower unless you are licensed and trained. That can cause you a huge mess of problems that, “I trust me, none of you guys want.” Keep yourself safe at home working with your investments.
Communication is the biggest point, and then knowing that you have a team or a company that you have hired, you are technically our client that you can rely on to help with any pitfalls, struggles dealing with the borrower, and help with if you have to take the route of foreclosure. We make sure that we can coordinate that for you. We can use any attorney that you would like of your choice. If you don’t have one, we will refer one to you. We keep everything in one spot.
If you need help with deed and assignment recording, that’s what we are here for. It is challenging and difficult. Every county and state is different when it comes to things like that. The process is all around the same but there are things that investors should be able to rely on their servicers to help them with so that they can genuinely focus on their investment and a lot of the paperwork. What a lot of people like to call grunt work should be done by your servicers. That’s what you are paying for.
Loan servicers only give the options. As the lender, you have to make the decisions. Click To TweetFor me, it’s hit or miss depending on the servicer. I find it ebbs and flows over time as people come and go like I have had. Not just servicers but other vendors I have worked with. It will be great for a while, and then it will be terrible but then they will come back.
Every business is changing on its own. Everyone is trying to keep growing. The cool thing about our vendors is some of them have work programs around us. They already exist. We know they exist but when we are telling them what we need, they are like, “How? We have never done that before.” We have spent a lot of time back and forth building this program that works best for BIFI and our clients but the vendor has never done it before.
We spent months going back and forth creating something that works for our investors but also works for that vendor and makes sense across the board. Servicers are great at certain things but not great at everything. Having to admit that is a little difficult but knowing that there are people who specialize in the additional things that investors need, that’s where you reach out and lean on others for that assistance. You build this program that’s robust and it’s a win-win for everybody.
I’m especially curious about how you deal with REO management and things like that. That’s one of those things that seemed daunting because, with mine, every situation seems to be a little bit different. You’ve got different contractors in different areas. It seems like a challenge.
I have partnered up with an REO team that is amazing. I didn’t know that they existed. I know that there are companies that do but they almost do everything for you from start to finish. That’s a big challenge for a lot of investors. Even for you, it’s not your full-time job. It’s hard to manage stuff like that, which is why you can still keep it with us to help you with that. A lot of investors get a deed in lieu or foreclose and they are like, “Now what?” They are then tracking down contractors, real estate agents, and property management teams. It’s a lot of work.
If you are not familiar with the area, you don’t have a connection, and you are all on Facebook asking for recommendations all the time, it’s easier to have things in one spot, in my opinion. I would rather not have to take away, and then have to go find on my own. Our job is to help guide you and do as much as we can. A lot of investors get stuck at the end of these properties that are just sitting, don’t have it insured or can’t find an agent because people buy loans everywhere throughout the entire country. Some places are cities like Chicago. You can find a billion people to help you to work.
You have some smaller areas and more spaced out where there’s not a huge population. It’s hard to find whatever it is you need. It takes people to travel and things like that. I always felt that once a loan was foreclosed, I’m like, “What do you guys do?” You hear great stories. “I fix and flip it, sold it or rented it out,” but it’s still the process of getting to that. What I always heard is, “It was my fault. It’s between my kids, my family and my job. I couldn’t stay on top of everything.” We are trying to eliminate a lot of that so that we can get your REO managed however you actually think fit.
For me, REOs can become a massive time suck sometimes. It’s hard to explain where the time went but it’s all those little things and coordinating between different folks. It’s an amazing number of hours. I have had JV partners go, “How much do you have to do?” It’s like, “The spender does this and that.” Maybe in theory but in practice, it’s a lot of time. It’s not that straightforward.
I would rather you spend your time investing in more notes. I love watching investors grow and meeting investors who just get into the space like, “I went to this program. I partnered up with these people.” I love the questions that they asked but I love watching that in 3, 5 few years. I’m like, “I remember when you didn’t have a note, when you had one or when you’ve got upset, scared and you were like, ‘Maybe this isn’t for me.’” I like watching them grow and I want everybody to continue to grow. I want to make investing as a whole as painless as possible when it comes down to servicing.
What are some of the things that those newer investors should know that they might not know going in or some unrealistic expectations?
The number one unrealistic expectation for investors and they don’t have to be new because I feel like this happens overall is when loans get transferred. That is the biggest mess but it doesn’t have to be a mess. What I mean by that is there’s a process for every servicer that’s regulated by law. There’s no short-cutting or jumping into emergency transfer. That’s not how this works. There are rules that we still have to follow. By letting borrowers know that their loans are being transferred, there’s a process.
Every servicer has their own and they are somewhat similar. We require lenders to fill out a servicing setup form. Once they fill out that servicing setup form, they are also required to provide digital copies of the collateral file. Those are the two things that are BIFI requires for BIFI to even approve a goodbye letter coming from another servicer. Those are the two items that each investor needs to provide in order for a loan to begin being transferred to BIFI. Other servicers require a little bit more, a little bit less. That’s where investors have to put in some work. That’s probably the most work you will put in other than communicating and making a decision on your own assets.
Getting that information is always the hardest but then it also takes each servicer their own time to close out the loan to begin the transfer process on their end. Most servicers have to have their invoices all fill up-to-date so if you owe them money, they are not going to start the transfer. Without the setup form and the collateral, I will not approve the goodbye letter from another servicer. That’s out of the gate. Rule of thumb, it clears up any transfer issues.
At that point, the lender starts this off. You then have the servicer who begins their transfer process. That takes at least fifteen days. That’s at the very minimum. It usually takes at least twenty. It takes a few days for the old servicer to draft up the goodbye letter, send it to me for approval. They then mail it out and provide their preliminary data. There’s fifteen days minimum from the date that that goodbye letter goes out to a borrower to the transfer date. A lot of times, it is more. Most servicers don’t work on the weekends and we don’t. I won’t be able to transfer something on a Saturday.
On the transfer date, we will get the final data, update whatever we have but that process as much as you think is just sitting. There are lots of things going on behind the scenes here to make sure that your loan is set up properly with escrow if you need to force place insurance if you want us to verify your collateral, and do some due diligence on that collateral review more so. As an investor, you are like, “It’s been two weeks. What has been going on?” It’s everything to get your loan successfully forwarded in the system correctly so that when that loan is boarded and when we start talking to that borrower even if it’s just an introduction, you know everything is done.
The first thing we want to do when that loan is for you is you will be notified and get an email, “Your loan has boarded.” At that point, your asset manager is going to sit and talk to you. They are going to introduce themselves and get to know you. I am a firm believer that building rapport with our clients is very important. I need everybody to know that you can come to us with any questions, no matter how outrageous you might think they are. A lot of people are free to ask.
Loan servicers are great at certain things, but not at everything. Click To TweetIt’s not going to hurt to ask. The worst thing I could probably tell you is, “This isn’t going to work because.” I want you to build that relationship and that rapport. This is still a business relationship at the end of the day. It doesn’t work if we don’t communicate. With that transfer process, I know that a lot of people say, “It shouldn’t take this long.” There’s a valid reason as to why. I wish it didn’t take as long either but to do things correctly, you need that time.
When I started, I was used to trading stocks and options where you do something and it’s instinct. That took me a little while to get used to the fact that transfers take time. Not just within notes but everything within real estate. It’s not like buying a stock on Robinhood or buying something where it’s instantaneous. These things take time. I have had funding partners who have funded deals and then I close. The next day, they are like, “What’s going on? Where are we going? What’s happening?” It’s like, “We’ve got to get this thing transferred. There are a lot of stuff that needs to happen before we even depart.”
Patience during that transfer time is very important. It doesn’t mean don’t ask questions. Understand the process from start to finish as to what your servicer is doing to justify and make it make sense realistically as to what’s going on. Once you do a few of them, you learn and understand it. It starts to make sense a little bit more. It goes through processes and many different departments to review. Make sure everything is set up and ready to go.
One of the things I like about these deals is they are rinsed and repeat. There’s a big learning curve on the frontend but then once you get that down, that becomes easier to do another one and another one.
You would begin to trust who you are working with. The process naturally doesn’t change. There’s still the bare minimum process that has to get done across the board no matter what servicer you use. Everybody works a little bit differently. I have worked with many servicers in the past years. Every servicer has their strong points but we all genuinely process the same way.
It’s because you are all following the same laws and guidance. It’s probably a good starting point. Shante, thanks so much for coming on. It’s great to catch up with you and learn what’s going on with BIFI. How can folks get ahold of you?
They can email me at Servicing@BIFILS.com or Newsletter@BIFILS.com where you will be updated with our licensing and things like that. If you also go to www.BIFILS.com, you can set yourself up for the newsletter, and then you will get an prompt email to set your entity up with me. If you are interested in having loans being serviced by BIFI, we are opening up our doors for investors.
The best thing to do is get set up earlier. It doesn’t crush anything but your time. The paperwork is all there. You can fill it out electronically, except for the Power of Attorney because that has to get notarized but everything else you could fill out electronically will instantly come into me so that when we open our doors, you are ready to start boarding some loans.
I always tell everybody, don’t wait and delay. Even if you don’t have loans that work in October, November and if you want to wait until next March 2022, that is okay but as long as you were set up, that’s one step down. You don’t have to worry about getting your loans over. Please, go sign up, set up with us, and you will be notified that you are set up and successfully move forward from there.
Thanks again. I appreciate it.
Thank you.
Important links
- BIFI Loan Servicing
- Servicing@BIFILS.com
- Newsletter@BIFILS.com
- https://www.FusionNotes.com/
- https://www.NoteLaunchpad.com
About Shante Duffy
I 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 Business Development 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.
Love the show? Subscribe, rate, review, and share!
