HOW CAN A SELLER/LENDER BENEFIT FROM A FINS NOTE SERVICING AGREEMENT

The Seller/Lender in a contract assumes the role of the Lender. In a Note and Deed of Trust or Mortgage, the seller becomes the beneficiary or mortgagee. The Seller/Lender is responsible for maintaining payment records and reporting the interest received to the IRS and the Buyer/Borrower.

By using a third-party contract servicing agent, that burden and responsibility are reduced.  FINS will collect, apply and remit the Buyer's payment to you. FINS will take care of calculating the principal and interest figures for you, according to each individual contract or note.  When the contract/note is paid in full, FINS will take care of sending the original documents to the appropriate parties or recording them if in our possession (in a contract/note processing agreement there is not a requirement to be in our possession) or recording them if requested.

 

HOW CAN A BUYER/BORROWER BENEFIT FROM A FINS NOTE PROCESSING AGREEMENT?

 

The parties are assured that all the bookkeeping accurately reflects the amounts paid and appropriately separated between principal and interest. Your account balance will always be correct. The IRS 1098 report is automatically sent to each party, plus a year-end statement. FINS provides you with the payment coupons for convenience to make your monthly payment if you request them. If the parties need “note modification” FINS can help you in the implementation and reset of the servicing to reflect the change and proceed with the new accounting of the loan. The parties have access to a customer service representative, FINS is always ready to serve you. If there is more than one person receiving payments on the note, we can provide payment accounting to each Buyer/Borrower. There are no “hidden fees.” A small monthly loan servicing fee covers all routine services. There is a fee schedule provided that covers routine and non- routine charges.

 

OTHER FREQUENTLY ASKED QUESTIONS

1. What is the primary service of FINS?

FINS is a private note processing company. Private note processing has advantages and benefits for both the Seller/Lender and the Buyer/Borrower.

 

2. What is contract/note servicing?

Contract/Note Servicing is a process in which FINS is very knowledgeable. This is a service where payments are received from the borrower and placed in a trust account, interest and principle are calculated and funds are provided to the Seller/Lender. FINS provides an annual notice to the IRS, Seller/Lender, and Buyer/Borrower of interest income/interest expenses. Safekeeping of your documents, payments of taxes and insurance and payments to underlying encumbrances are among some of the services available.

 

3. What fees are associated with an account?

There are no “hidden fees.” A small monthly loan servicing fee covers all routine services. There is a fee schedule provided that covers standard charges and non-routine charges on our website. Call us at (360) 474-4920 or email us at contactus@usefins.com if you have additional questions.

 

4. Can I manage my account online and view my payment history?

Yes, using our secure login link, FINS provides online account updates.

 

5. How can I sign my documents Electronically?

In addition to the in-person signing of documents, FINS offers a Document Management Secure Portal to send and receive documents connected to the secure document portal. The secure document portal is the ability to accept electronic document signatures of the parties. 

 

6. How can payments be made to FINS by the Buyer/Borrower?

There are many ways to make payments, including; monthly automatic payments, one-time payments through the customer portal with a debit card or electronic funds transfer; payments over the phone, or mail in a check or certified funds

Some methods of payment may incur additional charges. 

 

7. How are funds paid by FINS to the Seller/Lender?

There are many ways for FINS to make payments including checks and direct deposit. Seller/Lenders are strongly encouraged to use our direct deposit program. By having your proceeds electronically deposited each month, you no longer must wait by the mailbox or make extra trips to the bank. Funds will be automatically transferred from our account to yours and available to you, two business days after payment is received from your Buyer/ Borrower. No need to worry about mailing times or lost checks.

For more information, please request our Payment Policies and Procedures information.

 

8. What is a Contract/Note basic account and its processing agreement?

A contract/note basic account is set-up with FINS by the Seller/Lender. The account and its processing agreement sets the terms and processes that should be followed by the Seller/Lender, Buyer/Borrower, and FINS.

 

9. What is a true escrow basic account and its processing agreement?

A true escrow basic account is set-up with FINS by the Seller/Lender and Buyer/Borrower. The account and its processing agreement set up the terms and processes that should be followed by the Seller/Lender, Buyer/Borrower, and FINS. This account requires the holding of the initial original documents of the transaction as well as original documents that will complete the indebtedness documents after a pay-off is complete, i.e. Original Note with Deed of Trust with Request for Reconveyance, Satisfaction of the Mortgage, or Statutory Warranty Deed (Fulfillment Type - if contract) that will be provided to the Buyer/Borrower when the terms of the True Escrow Basic Account and its Processing Agreement are fulfilled. The True Escrow itself does not limit the ability of the Seller/Lender or Buyer/Borrower to transfer its interest or for the seller/lender to take action for a default. The True Escrow removes from the Buyer/Borrower onerous issues to obtain legal documents, to provide clear title, and among issues with the Seller/Lender filing bankruptcy, dying, etc.

 

10. Can FINS provide legal advice or complete legal documents?

FINS cannot provide legal advice. FINS can prepare, based on the parties instructions, a limited number of documents approved under Rule 24 of the Washington Supreme Court’s General Rules 65R24.

 

11. What do basic/standard services include?

• Electronic withdrawals/electronic deposits
• One electronic disbursement per month
• Seller receipt or buyer receipt emailed
• Online account listing 24/7
• Holding original documents for safekeeping
• Year-end tax reporting to buyer/seller, 1098s/1099s

 

12. What happens to my records?

FINS destroys all checks, ledgers, daily work, check stubs, and deposit slips that are more than six (6) years old.  Any file that has been paid in full, withdrawn, canceled, or terminated may be destroyed after six years from the date of being removed from the active system.

 

13. How do I close my account before payment in full?

If a Seller/ Lender in a Contract/Note Processing Account wishes to close the account before the loan is paid in full, FINS will need a signed request, and all outstanding fees will need to be paid.  If a Seller/Lender wishes to close a True Escrow Account, oftentimes a signed request also needs to be received from the Buyer/Borrower. The Seller/Lender does not need an agreement for the return of documents in a Contract/Note Servicing agreement. Upon receipt of the agreement, a Non-True Escrow Agreement and Terms of Agreement that allow the return of any original documents we are holding and will be mailed to the Seller/Lender or their attorney, as instructed. The account will then be closed with FINS. Please remember to keep us updated if your address changes after the account closure, as we will still provide the current year-end statement for tax purposes the following January.

 

BANKING INFORMATION

14. Banking information

     a. Change of ACH Bank Deposits

Seller/Lender may change banking information regarding their ACH once per term of the contract without charge. FINS charges a fee of $25 per year per account for each ACH bank notification change greater than one.

This policy also applies to changing from printed checks to ACH deposits.  Any fees of FINS may be waived by FINS in its sole discretion.

 

    b. Nonsufficient Funds NSF/Returned Checks Policy

NSF checks may be re-deposited a second time unless otherwise noted and will incur an NSF fee from FINS if one is charged by FINS’ bank. NSF checks returned a second time will also incur an NSF fee.  If any payment is returned for other reasons (such as account closed, death of account owner, no account on file, etc.) an automatic NSF/Return Payment fee will apply.  FINS may, in its sole discretion, cancel automatic debit payments if one or more payments are returned or rejected.

If two or more checks or automatic payments are returned, FINS may demand all future payments be made in guaranteed or certified funds only.

FINS reserves the right to hold payments presented by borrowers due to NSF occurrences. If a monthly payment is placed into a holding account by FINS payment to Payee/Seller may be delayed which may result in a late charge to Buyer/Borrower.

 

15. How do I calculate interest?

One of the most frequent questions from our clients is centered around the topic of calculating interest. This page is designed to answer a few of those questions and help our clients understand how payments will be applied to their loan. As always, please feel free to contact FINS for further explanation.

There are several ways to calculate interests. However, we choose to use one of two methods for our loan servicing process. Interest can be computed by assuming a fixed period between payments (monthly interest). Interest can also be calculated in actual time this is usually known as daily interest. At FINS we prefer, to use the daily interest calculation.

 

16. Why calculate daily interest?

Interest is simply the fee that you pay for using another’s money. The amount you pay is based on the interest rate, how much money you are borrowing (usually called the outstanding balance), and the term (the length of time between each payment). With the daily calculation the shorter the time frame between payments results in less interest. This is a good benefit to the Borrower/Payor because more money is applied to the actual loan balance or principal. The more loan balances are reduced today resulting in less interest due to the balance.

Conversely, the greater the timeframe between the payments causes a higher interest.  If the payment is not enough to cover the interest due, then no principal reduction takes place and leaves unpaid interest carried forward to the next payment. This situation benefits the Seller/Payee as more money will be diverted to the interest before it is applied to the principal.

To calculate how much interest will be due, you can use a simple formula. By multiplying your current principal balance by the interest rate as a decimal and divide the answer by 365 which is the number of days in a year the answer will give you the amount of interest that is calculated daily.  By looking at the number of days between payments you can determine how much interest you pay on a monthly basis.

 

17. How do I calculate monthly interest?

When calculating monthly interest, a year is broken into 12 equal months, and interest is due according to a 30-day cycle. Most of the time only 360 days of interest are calculated in a year, rather than the usual 365 since the monthly interest amount is always based on 30 days. This method of payment is not affected by the due date. There is always a fixed amount of interest calculated. The only thing that will affect this is the principal balance. As the balance decreases so does the interest.

 

18. What about amendments to the agreement, termination and the law?

FINS reserves the right to cancel an Agreement and terminate an account upon 30 days written notice to the parties of this Agreement. In the event that a current Fee Schedule may have rates different than set forth on the website, the rates in the current fee schedule are the correct rates. This Agreement shall be governed by the laws of the State of Washington. If any lawsuit is filed in connection with this Agreement, venue shall be in Snohomish County, Washington. This Agreement may be executed in counterparts, all of which together shall constitute one and the same original Agreement.

 

19. My spouse/partner isn’t on my loan, but I want him/her to access the account information.

Providing access to your spouse/partner will be easy for FINS.

 

20. My family member passed away and I am now the personal representative of the estate. What needs to be done?

FINS can provide information to the personal representative as to what would be required to clear title in the new seller/lender or new buyer/borrower.

 

POLICIES, PROCEDURES, AND PRIVACY POLICY 

1. Policies and Procedures

For more information about our Policies and Procedures please contact us. Our Policies and Procedures include additional information about:

• The Destruction of Records
• Requests for Production of Documents
• Limitations of Duties
• Limitations on Providing Legal Advice
• Limitations on Preparing Legal Documents
• Litigation Disputes

   

2. FINS also has a Privacy Policy that is available 

Please contact us for additional information.