Wrap Loan Servicing
Payment Due Date
Please consider that if the underlying mortgage and the new buyer have the same payment date, you risk a short turnaround time for the underlying mortgage payment to be made. We recommend a different due date from underlying mortgage, at least 15 days prior to underlying mortgage due date.
(funds sent to the servicer must clear before they are disbursed. Money orders, Cashier’s Check, and Cash are given immediate credit. A personal check is given a 5 day hold to ensure the funds clear before funds will be disbursed).
The Note Holder should provide servicer with copy of yearly escrow analysis from underlying mortgage.
If there is a change in payment, who will decide on the new payment plan action, the new buyer or the note holder?
In cases where there is a shortage in escrow, mortgage companies offer several options to handle the change.
Who will decide on what option to take?
Service does not hold escrow account we just “pass through” the escrows to the underlying mortgage.
Payment to Underlying Mortgage
Note Holder will provide servicer with a copy of current mortgage statement for underlying mortgage. Payment to underlying mortgage will be made by servicer electronically. Note Holder must provide electronic payment information of underlying mortgage.
Any fees for electronic payment will be paid by NEW BUYER OR NOTE HOLDER.
Past Due Payment
The servicer will contact the Note Holder once the grace period has come. The Note holder can wait until payment come in or will have make payment and get “reimbursed” for payment.
Consider the amount of late fee you will collect. In most standard servicing agreements, the late fees are split 50/50 between servicer and note holder. Ensure that the late fee covers the late fee for the underlying mortgage completely, after servicer has collected their portion.
Will the current policy be transferred to the new buyer? Will the new buyer have to obtain their own policy?
Recommend that current policy remain intact and add new borrower as additional insured.
Prepay Underlying Mortgage
We recommend that the payment to underlying mortgage be 1 month ahead. This will help in the event that payment to servicer is late or delayed.