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borrower questions during the servicing period

Common borrower questions during the servicing period

Will you report my payments to the credit bureaus?

Credit bureaus require that lenders meet certain financial standards before they can report a loan. For instance, owner financed sales typically do not meet the requirements set by credit reporting agencies. Strict business criteria and financial costs are involved, making it unrealistic for a private individual to report a single account.

What are the rules for taxes and insurance?

The Seller will nearly always require escrows for taxes and insurance. An escrow just means that the servicer collects and holds certain types of funds in a special, legally protected account on behalf of another party.

The homeowners and flood insurance would be purchased for one year upfront, and then funds would be collected in monthly installments to pay insurance for the following years. 

The Parish/County the property is in will determine how the taxes are paid at closing. As an example, if the current year’s taxes are due on December 31st, then the Seller or Buyer would share the bill for that year, depending on how long each party owned the property during that year. The Seller would owe a portion of the tax bill for the months of the current year that he owned the property, and the Buyer would owe the taxes for the remainder of the year.

If the taxes were due on January 1st for the upcoming year, then they should have been paid for the year already. If the taxes were not paid at that time, then the Seller would owe taxes up until the date of the sale and the Buyer would fund the remaining balance for the current year. If the taxes have been paid, the Buyer would credit the Seller towards the remaining months that he/she has already paid.
The title company and servicer would manage the technical aspects of the transaction to determine final cost splits and charges for each party.

What are escrow holdings for?

The Seller may require an escrow account for taxes and insurance. The insurance would typically be purchased for one year upfront and then funds would be collected in monthly installments to pay insurance renewal for the following years. 

Payments must be made to an Escrow Agent if the property has an existing mortgage (underlying mortgage). If the builder has a mortgage on the property, it may need a partial release.

What happens if I am late with a payment?

Late fees are assessed as the contract is written. Bond for Deed sales do not have a grace period, but private mortgages and owner financed loans may have different terms. Late notices will be sent out via email the day after your payment due date if we have not received your funds.

How are late payments applied to my outstanding balance?

Late fees are paid first out of incoming funds. Therefore, make sure to add the additional funds to any late payments you remit to get full credit for your payment.

Southern Loan Servicing reserves the right to deduct late fees and or/monthly payment shortages from the escrow account to pay late fees and/or short payments.