AT LAST – Solutions for the distribution of cash flow for the Limited Liability Company Loan Pool Manager. Mortgage Funds, sometimes called “Mortgage Pools” are becoming popular once again as institutional lenders tighten their belts and purse strings. However, there is no stopping the entrepreneurial spirit of the real estate and finance investors who welcome an opportunity not only to survive in tough times, but actually thrive.
The Note Servicing Center has been taking care of the servicing, reporting and record keeping requirements of loan pool partnerships since 2006. Currently, the servicing portfolio of Limited Liability Company we service consists of over twenty four Partnerships with over 300 members. Our primary claim to fame over the last 25 years has been in the servicing and sub-servicing of fractionated notes, contracts of sale and Title Holding Trusts. However, considering the ever changing landscape of the real estate lending industry today, we are enhancing our marketing plan to once again become a formidable competitor in mortgage pool servicing.
Considering the chill wind of recession sweeping the country along with the credit crunch and lack of cash, we believe that not since the 1980’s has there been an opportunity like this time, to establish and operate a private mortgage fund. Earlier in our career and before the Limited Liability Company Statute was enacted in CA, we established several Limited Partnerships, which propelled us into financial independence. Now, recognizing a similar economic situation, we have elected to enter the fray once again – this time by doing what we now do best – by providing the operating and/or fund manager confidential control of all partnership files and related transactions.
Mortgage Pools typically offer Investors higher yields on real estate loans while at the same time diversify the investments acquired so that delinquencies have less of an impact on any one investor in the pool. Like a Corporation or a Limited Partnership, the investors in an LLC have only limited liability. They cannot lose more than the amount that they invested in the LLC, and they are shielded from personal liability. Unlike a limited partnership, everyone is shielded from personal liability, including the general partner – who is called the managing member.The profits or losses are passed directly through to the members. The owners are called members and not shareholders. An LLC can have an unlimited number of members, including other business entities, like corporations and other LLC’s.
The software used by the Note Servicing Center, proprietary in design and on the cutting edge of technology, has the ability to manage monthly cash flows to the investors, handle delinquencies, and allow investors the option to receive monthly cash flow distributions based on members percentage of interest, depending upon current performance of the Partnership and available cash. Until now, this conundrum has been a stumbling block to the seamless performance of the real estate and finance entrepreneur creating mortgage pools created using a Limited Liability Company.
The primary objective of most LLC’s we currently service is to acquire commercial real estate, where partners are not guaranteed a predictable cash flow or specific rate of return. Instead of interest payments, each partner receives a cash distribution that depends on the current performance of the partnership and on available cash. This type of LLC servicing barely scrapes the surface of the capabilities of either our loan servicing software or the ability of our staff. So, we are excited about the possibility of once again being involved in the challenging art and science of servicing a Mortgage Fund Pool.
We have the capability, and experienced personnel to offer complete and comprehensive Mortgage Fund Servicing for your LLC including the option to receive monthly cash distributions, automatic reinvestment, or a combination of both. Unlike many others, our specialized and proprietary software is an “all inclusive” program capable of distributing for Capital Funds Partnerships. Additionally, we have built in Accrued Expense, Accrued Income and Prepaid Payments Accrual. Considering the sophistication of the program, the Note Servicing Center Inc. is prepared to come alongside your team by working closely in cooperation with you, the Mortgage Pool Fund Manager.
The goal of the Note Servicing Center is to assist in reducing the overhead of the Mortgage Pool Fund Owners and Operators to concentrate on generating investors and loans. Our Fund Servicing Fee is designed to cut your cost and increase profit by providing the computer software, hardware and freeing up costly office space and overhead. Because of our experienced staff, you can save time and money hiring and training and retaining employees including the cost and overhead and liability that comes with it.
To get started, we recommend you contact us to arrange a pre-proposal conference to determine and clarify the Scope of Work and Level of Service required servicing your particular loan pool offering as well as providing a clear understanding of your objectives.
I welcome your call or e-mail for information, to discuss the possibility of us coming alongside you to make you more successful or to make an appointment. You can reach me at 800-646-3445 Ext. 301 or Click here
President: Thomas Standen, IV.
P.S. During this economic downturn with the economy in tatters, it is the perfect time for investors to acquire great properties and also to accumulate funds to acquire existing notes and fund purchase money transactions. One client told us when he finally figured out to handle the distributions on to investors for even a relatively small mortgage fund, it took three employees, a total of three days to do the math and then to disburse the checks. He indicated that although the strategy allowed him to purchase more properties, increase both his wealth and that of his investors, that because of the complexity of doing the accounting and distributions he was reconsidering whether it was worth it or not.
GETTING STARTED WITH YOUR MORTGAGE POOL
In preparation of setting up servicing for your Limited Liability Company the Note Servicing Center requires specific documents, authorizations and items that need to be addressed and discussed, specifically as follows:
First and foremost, it is necessary for the Note Servicing Center Inc. (NSC) have a copy of the Private Placement Memorandum, the Operating and Subscription Agreement. Subsequently Addenda Agreements may be necessary.
The Note Servicing Center Inc. should be considered a member of the team dedicated to the successful initiation of an LLC Mortgage Pool established by the Managing Member or Mortgage Fund Manager.
It is important NSC have the authority to and ability to work with other members of the team in the best interest of the Pool. A Pre-Proposal Conference is essential to determine and clarify the Scope of Work and Level of Service requested.
Note Servicing Center will Provide your CPA with the necessary financial information to complete the Schedule K-1 at year end. We provide professional looking partner and partnership statements on request, for any period, and can include or exclude sections of information according the requirements set forth by the Manager of the pool.
It is important to obtain the contact information of the banking officer in charge of the LLC. In order for the NSC to perform tasks with respect to the reconciliation of the LLC account, have ability to stop payments and other bank accounting tasks, NSC needs authority for On Line access and downloading of Bank Statements as well as other accounts in the name of the LLC.
NSC will provide confirmation of the person in the office who will be responsible for the “hands on” daily tasks with respect to your account, including their contact information via telephone, e-mail, fax and mail.
Contact information for the person in the Mortgage Fund office who is authorized to represent the LLC and who has the authority to make decision on day to day matters related to the LLC will be needed.
Prior to the implementation of the Servicing for your firm, a telephone or personal conference should be held to discuss the actual mechanics of the servicing, paper flow, coordination of efforts.
BENEFITS OF PARTNERSHIP SERVICING
The goal of the Note Servicing Center is to reduce the overhead and free up the time of the Mortgage Pool Owner/Manager to maximize their time and do the things they do best: Generating Funds and Investors.
- The Note Servicing Center offers an all inclusive program which calculates the distribution based on shares and capital amounts for each investor. It is specifically designed for:
Share Based Partnerships
Capital Funds Partnerships
- Investors have the ability of diversification of risk by pooling investor money to fund many loans.
- Our specialized software has the ability to manage monthly cash flow, and handle delinquencies without directly impacting any particular investor.
- The investor has the option to receive monthly cash distributions, automatic reinvestment, or a combination of both.
- Recognizing the importance of promptly receiving payments from borrowers and quickly depositing partnership receipts into the Fund, we have the ability for Automatic Clearing House (ACH) automatic withdrawal from the borrower’s bank account and transfer to the Partnership Bank Account.
- The following is a partial list of the services provided by the Note Servicing Center:
- Process Partners’ original and additional subscriptions for shares, as well as requests for full or partial withdrawals.
- Our Trust Account is built in to allow us to reserve and maintain accrual accounts for an unlimited number of fees, including Reserve for Loan Losses and Reserve, Franchise Taxes, and also for built-in Accrued Expense, Accrued Income and Prepaid Payments.
- Allows us to provide a number of different distribution scenarios to the Fund Managers to assist them.
- Maintain a record of outstanding bank (or other) loans or lines of credit used to provide temporary gap financing to fund loans prior to receiving new or additional partnership subscriptions.
- Mail distribution checks to partners on a regular basis as designated by the Mortgage Fund Manager.
- Maintain a record of outstanding bank (or other loans) or lines of credit used to provide temporary gap financing to fund loans prior to receiving new or additional partnership subscriptions.
- Reconcile all Mortgage Pool bank accounts each month
- Provide the Mortgage Pool Manager and/or the Manager’s accountant with a plethora of reports. A small sample below:
Detailed Partnership Statements including:
- Partnership Share Evaluation Audit Reports
- Detailed Statement of Account to Investor after a subscription or withdrawal transaction
- Detailed Statements of Account to all Investors, we can send on a regular basis
- Check Register Reports to the Mortgage Pool Manager
- Distribution Reports to allow fund mangers to see what their distributions look like.
- Year End Reports to Mortgage Pool Managers CPA (for preparation of year-end K1 Schedules)
- Check register reports to the Mortgage Pool Manager.
- Test distribution reports to Fund Manager to allow them to see what their proposed distribution will look like prior to it being made.
- Other reports will be available to Pool Manager on an on-call basis
OUR FEE SCHEDULE IS DESIGNED TO SIGNIFICANTLY REDUCE THE COST OF CAPITAL INVESTMENT IN SOFTWARE, HARDWARE AND PROVIDING FOR ADDITIONAL OFFICE SPACE. ALSO CONSIDER THE SAVINGS IN TERMS OF MAINTENANCE, OVERHEAD EXPENSE AND THE COST OF HIRING QUALIFIED EMPLOYEES, AND TRAINING, PAYROLL AND TURN OVER OF PERSONNEL.