The financial crisis of 2008 proved that an up market hides many mistakes. From 2009 to 2013 Del Toro witnessed hundreds of / Lender disputes. Battles also erupted between Lenders themselves who, in many cases, didn’t know each other prior to the loan going bad. I believe current market conditions are setting us up for another volatile ride.
Lenders are chasing deals, taking higher risk and accepting lower interest rates just to get some of their money to work. Additionally, safety, high rate of returns, TV shows and popular podcasts are causing countless amateurs looking to strike it rich in the Hard Money industry. When any industry is ripe, like this one is, inexperienced sheep usually get taken by experienced wolves. The right Loan Management partner can help even the little guy stay clear of danger zones and achieve a passive cash flow.
Loan Servicing vs. Loan Management
A “Loan Servicer” provides basic ministerial services that generally include:
- Monthly Statements to both Borrower and Lender
- Payment tracking and processing
- Letters and calls encouraging compliance, should the Borrower fall delinquent
- Annual Transaction Report and 1099 / 1098 tax statements
- Assisting with general-in-nature customer service requests
This level of service is good for hands-on clients and lower balance, shorter-term 1st position loans. While the Del Toro team does these things exceptionally well, we provide a lot of added value when we are retained to provide “Loan Management” services.
Like Property Management is to the passive Landlord, Loan Management is to the Trust Deed Lender looking to relax with peace of mind. We emphasize that there is no such thing as “truly passive income.” A lot needs to be done, whether it’s a loan on a property or the rental of a property. The good news is that the work necessary to protect your investment doesn’t have to be done by you. Check out our video “Passive Income Doesn’t Exist” here.
So, what is loan management? And what does a loan manager do? Loan Management, taking a proactive and consultative approach, includes all the basic services listed above and more. The mission is to limit risk by watching for and investigating red flags, prevent or reduce conflict by providing experienced, unbiased, unemotional advice and increase a client’s rate of return by taking advantage of overlooked opportunities.
When we stay on top of a sale or refinance, we allow you to get your money back to work as soon as possible. Saving 4-6 weeks of downtime per year can add 1.5% to your annual return.
By visiting the property occasionally and overseeing the status of taxes and insurance, we reduce the risk of monetary loss due to disrepair and delinquent bills.
When a Borrower moves in or out of the subject property or requests copies of files, it could mean a lot of things. When we follow up, we ask the right questions to determine what’s really going on.
Rest assured, should a problem arise, our experience with managing over 10,000 loans, 500 foreclosures and hundreds of legal disputes, helps diffuse a situation and get things re-performing quickly. Should a situation require additional assistance, the relationships we have on speed dial are the best in the industry – together we will deliver the best possible results.
Simply put, a good loan management company facilitates a more transparent, compliant and profitable transaction.
We decided a long time ago that Del Toro would add more value than any other service provider in the industry. How do we do this? We Connect high quality, likeminded people so that we can Build relationships that Transform homes, businesses, communities and lives. This is the drive behind everything we do on a daily basis at Del Toro.
We Connect. Build. Transform.
6 Things to Investigate When Choosing a Loan Management Company
Whether you choose us or another loan management company, there are some important questions to ask when you do your research. Never go into a relationship with a loan management company without doing your homework.
- Does the company have a good track record with regulatory agencies and organizations like the BBB? Disputes don’t necessarily mean that they are bad guys. This is a very litigious industry where service loan providers may not have been the real target of the complaint.
- Are they licensed and insured? Believe it or not, a lot of providers are not properly licensed and are underinsured.
- Are their trust accounts maintained properly? You can request a copy of their recent quarterly audits.
- Do they have references? Call references and find out what they do and don’t like about the provider. Also, make sure you research the reference – are they really who they say they are?
- How many people are in the company and what’s the depth of experience? Experience is the core of Loan Management. You can’t possibly teach someone all that many of us here have experienced firsthand during the last 15 years in this industry and the prior 15 in the Securities Market.
- What’s their network like? What credible vendors can you call for a reference? Also, who can they get you in touch with in 24 hours or less?
Get the answers to these questions. Do your due diligence. If you are still left with questions, please give us a call. Our team will always answer questions, take a moment to listen, and understand your needs. Contact the team at Del Toro at (877)-335-8676.