What Happens if the Loan is "Service Released?"

By
Services for Real Estate Pros with Wilde Law Firm, PLLC

As we have discussed before there are new players coming into the loan servicing business.
Additionally, because of new rules and guidelines for banks, some are getting out of the loan
servicing business. When one bank/servicer sells its loan servicing rights to another servicer the
loan is “service released” to the new servicer.

 

When negotiating a short sale with a bank/servicer, the loan may be service released to another
servicer in the middle of the process. Most of the time this means that you will have to start over
with the new servicer from the beginning….including getting a new BPO. This may be good or this
may be bad, depending upon the initial bank/servicer and how far down the short sale road you
may have gotten.

 

Hey, that is not fair or logical! Let me just remind you again that fairness and logic have no place in a short sale so let go of those notions when venturing into a short sale. Good luck out there.

Comments (4)

Phil Hillerman
Crye-Leike Realtors® - Rogers, AR
Crye-Leike Realtors®

Hi Steve, Thanks for the information.  Sounds like another issue to make the process even longer.

Mar 25, 2013 12:36 AM
Dan Hopper
Dan Hopper - Gold Way RE - Westminster, CO
Denver Broker / Real Estate Advocate

Steve, there is no doubt that the "service release" can bring a frustrating situation for the borrower during the short sale process.  GMAC, has been doing this for a couple of years, and ONE lender in particular that is taking this on, is 21st Mortgage Corp.  They are absolutely the worse lending institution (they do manufactured housing loans) to negotiate with.

When they are a 2nd lien holder, they honestly believe that they should get the same percentage as the 1st lien holder!  It even states that on their website.  I believe they are buying the 2nd liens, since they inform the borrower, when asked by the borrower, that the owner of the note is, Knoxville Trust.  The ironic part of is the address and phone number of this Trust is the same as 21st Mortgage Corp.

We turned this poor negotiations over the one of our local Senators to Congress.  Their folks received a response from 21st Mortgage that they do not take less than 50% on any short pay-off.  Their comment was "They are not a normal home loan lender so they do not have to abide to such rules".  Oh really!!

Regardless, of that or not ... they certainly are very poor business decision makers when they force borrowers into foreclosure due to their wishes not being met, and in return receive ZERO dollars in that silly decision.

BEWARE of this company!

Mar 25, 2013 12:48 AM
Steve Wilde
Wilde Law Firm, PLLC - Asheville, NC

You're right, Phil. Thanks for reading!

Mar 29, 2013 12:51 AM
Steve Wilde
Wilde Law Firm, PLLC - Asheville, NC

Dan,

Agreed. Logic and common sense obviously have no place here.

Mar 29, 2013 12:52 AM