Why LOAN SERVICING SOFT's Investor Fee Functionality Make It Better For Private Money/Hard Money Lenders

Private money and hard money lenders operate differently than conventional and institutional lenders. A private lender may fund loans with their own capital, use individual investors, or fractionalize the investment among multiple investors. In fact, a combination of all of the above is the norm for most private/hard money lenders these days. How the loan broker or servicer takes their fee, normally anywhere from half a point to a few points, is also the norm these days in the private money space. Charging a flat monthly fee or a servicing fee based on the principal balance x 1 or 2 percent and then divided by twelve (for twelve monthly payments), these are also popular models in private lending. LOAN SERVICING SOFT supports all of these models and this is one of the areas where LOAN SERVICING SOFT has always stood out. The system is specifically designed for these private money lending business models with an emphasis on control, streamlined procedures and reporting. And it's this servicing-fee functionality that is particularly important to most private lenders because it allows them to build their revenue model directly into the servicing process.

Flexible Servicing Fees Built Around the Investor
One of the strengths of LOAN SERVICING SOFT is that servicing fees can be established at the lender or investor level. Fees associated with payments coming in from borrowers and then going out to lenders and/or vendors. More importantly, LOAN SERVICING SOFT does not restrict the servicer to one method of calculating that fee. Fees can be established using a Servicing Fee percentage, Differential Percentage, Fixed Amount or Minimum Amount. You can even do multiple methods to achieve hybrid models. This flexibility is extremely valuable in private lending because not every investor relationship is structured the same way. Here is an example of a common bought / sold rate model with 1 point servicing fee. A borrower may be paying 10% interest on a loan while the investor receives 9%. The remaining 1% differential represents the servicing fee to the servicer. Instead of forcing the company to calculate that spread outside the servicing system, LOAN SERVICING SOFT handles everything.

Greater Control Over Late Fees and Prepayment Penalties
LOAN SERVICING SOFT's flexibility extends beyond ordinary recurring servicing fees. It also allows you to control who gets the Late Fees and Prepayment Penalties. This is particularly useful in private lending because investor agreements can differ substantially. In one transaction, a lender may be entitled to a all or a portion of a late fee. In another, the servicer may receive everything. A prepayment penalty may likewise need to be allocated according to the contractual arrangements, and these terms may differ on every loan being setup and serviced.

Fee Functionality Even More Valuable Alongside Our Private Money Functionality
Investor fee functionality becomes even more valuable when considered alongside the rest of the LOAN SERVICING SOFT platform. The a built-in CRM for borrowers, lenders and vendors, including batch reporting, emails, letters, mail merge, tasks and workflow functionality, make LOAN SERVICING SOFT like no other loan servicing system on the market for hard money; software specifically designed for private money, hard money and commercial lending and servicing.

A Major Advantage for Growing Hard Money Lenders
Growth creates complexity in private lending. A company servicing ten loans might be able to manage investor fee calculations with spreadsheets and manual procedures. At 100, 500 or 1,000 loans, those same procedures can become an operational liability. The problem becomes even greater when different investors have different economic arrangements. One investor may have an interest differential, another a percentage servicing fee, and another a fixed or minimum servicing charge. LOAN SERVICING SOFT's ability to configure these arrangements at the loan level helps the servicing system reflect the actual economics of each borrower and investor relationship.

Conclusion
For private money and hard money lenders, servicing is not simply about collecting a monthly payment. It is about correctly managing the financial relationship among the borrower, investor and servicing company. LOAN SERVICING SOFT's investor fee functionality addresses that relationship directly. With Servicing Fee percentages, Interest Differential percentages, fixed fees, minimum fees, and percentage allocations for late fees and prepayment penalties, private lenders have multiple ways to structure servicing compensation within the system itself. Combine those capabilities with trust accounting, automated payments, reporting, CRM functionality and other servicing tools, and LOAN SERVICING SOFT offers a platform like nothing else in private lending.

Ready to learn more? Let's explore how LOAN SERVICING SOFT can transform your operation.. Reach out today and Let's talk!