New Funding Resources 
Hard Money Loan Servicing
What is loan servicing?
Before we dig into the specifics of hard money loan servicing, let’s talk about loan servicing in general. Loan servicing is a critical component of the lending process, especially in industries like real estate, student loans, and auto financing. It refers to the administrative tasks and processes required to manage a loan from when it is originated until it is fully paid off. Loan servicing ensures that both borrowers and lenders meet their financial obligations to each other.
Once you sign the documents borrowing the money from your lender, your loan is transferred from underwriting to servicing. For a conventional mortgage lender, the first couple of months are typically serviced in-house by a dedicated servicing department. Then, when you’ve just got acclimated to making your monthly mortgage payments to them, you start receiving those annoying letters informing you that your servicing has been transferred to another company. For conventional mortgages, it’s not unusual for servicing companies to change every couple of years or even more often.
Typically, your interaction with your servicer is limited to sending them your monthly mortgage payments. Their obligations to you include paying your taxes and insurance out of your escrow account, providing annual statements for tax purposes, and reporting your payment history to credit bureaus. Once a borrower misses a payment, the servicer starts the collection process, which includes sending late notices and initiating foreclosure if necessary.
How hard money loan servicing is different?
Hard money loan servicing is different from conventional mortgage servicing. Yes, one of its goals is to collect on the debt, but it does so by proactively working with the borrower to ensure the success of their transaction. At New Funding Resources, our philosophy is simple: the higher the profit for our borrower, the more secure our hard money loan is.
At New Funding Resources, the main objectives of servicing our hard money loans are:
Steady renovation progress: We base our loan amounts on the property’s after-repair value. That means that “repair” (aka renovation) is a key element of the transaction. Without it, no additional value is created, and the property’s market price remains the same.
How we help: To ensure progress, we release the construction funds in a series of draws. We don’t micromanage your process and don’t require you to provide us with detailed accounting. We simply release the funds once pre-determined work is completed and do it quickly and efficiently.
Adequate collateral protection: Unlike conventional lenders, hard money lenders rarely escrow for taxes and insurance, leaving management of these aspects to their borrowers. Real estate investors juggle many balls, so it’s no wonder some of these bills, like insurance invoices, get dropped, resulting in tremendous risk exposure.
How we help: As an asset-based lender, we want to make sure that our collateral – and your real estate investment – is protected against physical harm or liabilities. We’ve developed a system that includes both automated and manual follow-ups with both borrowers and insurance agents to ensure the continuity of proper insurance coverage. We also remind you to cancel your policy and collect your refund once your loan is repaid. Every bit helps!
What are the main benefits of New Funding Resources’ hard money loan servicing?
The fact that we lend you money for your real estate investment transaction means we believe in your success. When your hard money loan is outstanding, we service it to ensure that success. Thoughtful, efficient, and timely, our hard money loan servicing is at the heart of our value proposition. This is how we do it.
Servicing done by the same group: You will work with the same team that underwrote your loan. Our servicing is steeped in the same principles that our underwriting: knowledge of local real estate markets and hands-on construction experience.
Term extensions are possible: We understand that sometimes things take longer than expected. We have the flexibility to extend your loan term to give you extra time to execute your existing strategy.
Consultative approach: Whether you have questions regarding your renovation process or want to discuss the best price for your newly renovated property, we are here to share best practices.
Vendor suggestions: For our most loyal customers, we can share vendor suggestions to expedite your renovation process.
To experience our difference – both in servicing and beyond – call us today at 240-436-2340. Let our common sense approach to lending and our knowledge of the Washington, DC, real estate market become an integral part of your success.
