Question 1

What does a loan servicing company do?

Accepted Answer

A loan servicing company acts as a neutral third party between the lender (or seller) and the borrower for the life of a loan. We collect monthly payments, apply them correctly to principal and interest, maintain independent accounting records, manage escrow accounts for taxes and insurance when applicable, handle IRS tax reporting, disburse funds to the appropriate parties, and provide both sides with clear documentation and account access.

Question 2

Why should I use a third-party loan servicer for owner-financed loans?

Accepted Answer

A licensed third-party servicer collects payments, maintains independent accounting records, manages escrow for taxes and insurance, handles IRS reporting (1098/1099), and provides each party an objective payment history. This protects both buyer and seller, keeps the loan administered consistently over time, and reduces the risk of a disputed payoff balance years later.

Question 3

What types of owner-financed loans do you service?

Accepted Answer

Southern Loan Servicing specializes in servicing creative real estate financing, including Bond for Deed, Contract for Deed, Wrap Mortgages, Subject-To Purchases, Seller Financing, Private Notes, Balloon Notes, Land Contracts, and Lease Options.

Question 4

Do you service loans outside Louisiana?

Accepted Answer

Yes. While we are headquartered in Louisiana and are the state's first licensed Bond for Deed loan servicer, we provide servicing for owner-financed transactions throughout the United States.

Question 5

Do I need a loan servicer if I'm only financing one property?

Accepted Answer

Not necessarily — but many private lenders find that using a third-party loan servicer is well worth it, even for a single transaction. A professional servicer acts as a neutral third party to collect payments, maintain accurate loan records, calculate principal and interest, manage escrow accounts, provide year-end IRS reporting, and document the payment history. Whether you're financing one property or an entire portfolio, the right servicing solution depends on your goals, the complexity of the transaction, and how involved you want to be in day-to-day administration.

Question 6

How does Southern Loan Servicing protect both buyers and sellers?

Accepted Answer

As a neutral third-party loan servicer, we ensure every payment is properly collected, applied, documented, and disbursed according to the loan documents. Our servicing includes detailed payment records, online account access, escrow administration, IRS reporting, and clear documentation throughout the life of the loan. Both parties get the same objective payment history, which prevents disputes and preserves the paper trail if the loan is ever refinanced, paid off, or contested.

Question 7

What documents do I need to get started?

Accepted Answer

The required documents vary depending on your transaction, but most new accounts include: the Promissory Note; the Mortgage, Deed of Trust, Bond for Deed, Contract for Deed, or other security agreement; the Purchase Contract (if applicable); the recorded deed or recorded security documents (when available); the closing or settlement statement; existing mortgage information (for wrap or subject-to transactions); and property tax and insurance information (if escrows will be collected). Our onboarding team will review your transaction and let you know if anything else is needed before servicing begins.

Question 8

How long does onboarding take?

Accepted Answer

Most new accounts can be onboarded within 2 to 10 business days after we receive the completed onboarding package, signed servicing agreement, and all required documents. More complex transactions — such as wrap mortgages, subject-to purchases, multiple borrowers, or loans with escrow accounts — may require additional review. Before onboarding is finalized we send out calculations and distribution instructions for review and approval.

Question 9

Can I transfer an existing seller-financed loan to Southern Loan Servicing?

Accepted Answer

Absolutely. We regularly transfer existing owner-financed loans from self-servicing arrangements, attorneys, title companies, banks, and other loan servicers. Our onboarding team will review your existing loan documents and payment history and set up the new servicing account with continuity.

Question 10

Can servicing begin immediately after closing?

Accepted Answer

Yes. If the onboarding package, signed servicing agreement, and loan documents are provided at or before closing, servicing can begin as soon as the first payment is due. Coordinating with the title company or closing attorney in advance is the easiest way to make sure nothing is delayed.

Question 11

What is a Bond for Deed contract?

Accepted Answer

A Bond for Deed is a Louisiana owner-financing arrangement where the buyer takes possession and makes installment payments, while the seller retains title until the contract is paid off. It is regulated by the Louisiana Office of Financial Institutions and typically administered by a licensed third-party servicer.

Question 12

Why is Bond for Deed commonly used in Louisiana?

Accepted Answer

Louisiana law expressly recognizes and regulates Bond for Deed contracts, which makes them a well-established option for seller financing in the state. Buyers who may not qualify for conventional financing can take possession and build equity through installment payments, while sellers retain title until payoff, giving them a defined remedy if the buyer defaults. The framework is codified in Louisiana Revised Statutes and administered under the Louisiana Office of Financial Institutions, which is why third-party servicing is the standard.

Question 13

What happens if a buyer defaults on a Bond for Deed?

Accepted Answer

If a buyer defaults, the servicer issues a formal Notice of Default in accordance with Louisiana law and the terms of the Bond for Deed contract. The buyer is given a statutory cure period to bring the account current. If the default is not cured within that period, the servicer proceeds with the contract's cancellation process, which returns full possession to the seller. Southern Loan Servicing handles the servicing side of that process and coordinates with the seller's attorney where legal filings are required.

Question 14

How long is the Bond for Deed cure period?

Accepted Answer

Louisiana law provides a 45-day cure period after a proper Notice of Default is issued for a recorded Bond for Deed. The buyer has that window to bring the account current, including any past-due principal, interest, escrow, and fees. If the loan is not cured by the deadline, the seller may proceed with cancellation.

Question 15

Who records the Bond for Deed cancellation?

Accepted Answer

Cancellation must be recorded in the conveyance records of the parish where the property is located. In practice, this is usually handled by the seller's attorney or the title company that originally recorded the Bond for Deed. Southern Loan Servicing provides the servicing records — payment history, Notice of Default, and cure-period documentation — that support the recording.

Question 16

Who pays property taxes on a Bond for Deed?

Accepted Answer

Property taxes are typically the buyer's responsibility under a Bond for Deed contract, since the buyer has possession and beneficial ownership. Sellers commonly require that taxes be escrowed with the servicer so they are paid on time and can be verified year over year. The specific terms are set by the Bond for Deed contract itself.

Question 17

Who carries insurance on a Bond for Deed?

Accepted Answer

The buyer is generally required to maintain hazard insurance on the property and to name the seller as an additional insured or loss payee, since the seller retains title until payoff. Premiums are often escrowed through the servicer. As with taxes, the exact obligations are governed by the contract.

Question 18

How is a wrap-around mortgage different from a Bond for Deed?

Accepted Answer

In a wrap-around mortgage, the seller transfers title to the buyer and finances a new loan that "wraps" their existing underlying mortgage. In a Bond for Deed, the seller keeps title until payoff. Both produce monthly cash flow for the seller, but they differ in legal title transfer, due-on-sale risk, and state-by-state availability.

Question 19

What's the difference between a Subject-To purchase and a Wrap Mortgage?

Accepted Answer

In a Subject-To purchase, the buyer takes over the existing mortgage payments directly to the original lender while the underlying loan remains in the seller's name. In a Wrap Mortgage, the buyer makes payments to the servicer (who then pays the original loan), and the seller typically charges a higher interest rate to pocket the difference between what the buyer pays and what the underlying mortgage requires.

Question 20

Can you service wrap mortgages?

Accepted Answer

Yes. Wrap mortgages are one of our core products. We collect the buyer's payment, apply it to the wrap loan, and remit the underlying mortgage payment to the original lender according to the agreed schedule.

Question 21

How are payments split between the seller and the underlying mortgage on a wrap?

Accepted Answer

The buyer makes one payment to Southern Loan Servicing. From that payment, we remit the underlying mortgage payment to the original lender first, then disburse the remaining amount — the "spread" — to the seller. The split follows the wrap loan's amortization schedule and the servicing instructions on file.

Question 22

What happens if the underlying mortgage changes?

Accepted Answer

If the underlying mortgage payment, escrow, or servicer changes, the seller (or the party responsible for the underlying loan) must send us the updated information promptly. We will adjust the remittance accordingly and, if the change affects the buyer's monthly payment, notify all parties before the new amount takes effect.

Question 23

What is a "subject-to" purchase?

Accepted Answer

A subject-to deal is when a buyer takes ownership of a property while leaving the existing mortgage in the seller's name. The buyer makes the mortgage payments going forward. It is a powerful creative-financing tool but carries due-on-sale and credit-reporting risks for the seller.

Question 24

Can you service a Subject-To transaction?

Accepted Answer

Yes. We routinely service Subject-To transactions where the underlying mortgage remains in the seller's name and the buyer is responsible for the payments going forward.

Question 25

Can Southern Loan Servicing pay my existing mortgage on a Subject-To?

Accepted Answer

Yes. If your service agreement includes mortgage remittance, we collect the buyer's payment and remit the underlying mortgage payment to your lender on the agreed schedule. We can pay multiple distributions from a buyer's payment — for example, second liens, seller carrybacks, solar panel financing, and HOA dues. We do not advance funds. We also offer an optional overnight mortgage payment service via FedEx with tracking.

Question 26

How do you reduce the risk of missed underlying mortgage payments?

Accepted Answer

We track the buyer's incoming payment against the underlying mortgage's due date, flag any shortfall or delay immediately, and communicate with the seller so remedial action can be taken before the underlying loan goes past due. Because we do not advance funds, timing matters — sellers who want an extra buffer typically require the buyer to pay several days before the underlying due date.

Question 27

What happens if escrow shortages occur?

Accepted Answer

If an escrow account runs short — for example, because property taxes or insurance premiums increased more than expected — we notify the parties, recalculate the monthly escrow contribution, and adjust the payment going forward. Existing shortages can be spread over future payments or paid in a lump sum, depending on what the loan documents and servicing agreement provide.

Question 28

Can you notify me if insurance lapses?

Accepted Answer

Yes. Where SLS is escrowing insurance or receives insurance documentation, we track the policy status and alert the parties if a policy lapses, is cancelled, or is not renewed. For Subject-To and wrap transactions in particular, keeping insurance in force protects both the buyer and the seller whose name remains on the underlying loan.

Question 29

What is a "zombie" second mortgage?

Accepted Answer

A "zombie" second mortgage is an old second-lien loan that the borrower assumed was forgiven, but which can resurface — sometimes years later — and trigger collection or foreclosure. Investors performing subject-to or wrap-around acquisitions should always run title carefully to detect them before closing.

Question 30

Can I owner-finance my property if I still have a mortgage?

Accepted Answer

Yes. Wrap mortgages, Subject-To transactions, and Bond for Deed contracts are all structures that allow a seller to finance a buyer while an underlying mortgage is still in place. Each structure has different implications for title, due-on-sale risk, and payment flow — the right choice depends on the property, the buyer, and the underlying loan terms. Southern Loan Servicing can service any of these structures once the transaction is closed.

Question 31

Can I sell my house using owner financing?

Accepted Answer

Yes. Owner financing lets you sell to a buyer who may not qualify for a conventional loan and receive monthly income instead of a lump-sum cash payout. The specific structure — seller-carried note, Bond for Deed, wrap, or Subject-To — depends on whether you own the property free and clear, whether an underlying mortgage is in place, and your goals for cash flow and risk.

Question 32

Can I service my own loan?

Accepted Answer

You can, but most private lenders and sellers eventually find that self-servicing is more work than it's worth. Amortization schedules, escrow accounting, IRS reporting, late-payment handling, and payoff calculations all have to be done correctly and consistently, and any error becomes your problem years later. Third-party servicing produces an independent, defensible record that both sides can rely on.

Question 33

How are balloon payments handled?

Accepted Answer

Balloon payments are tracked on the amortization schedule from the day servicing begins. As the maturity date approaches, we notify the borrower and the seller/lender in advance so the borrower can arrange refinancing or payoff and the seller can plan for receipt of funds. If a modification or extension is agreed to, we update the schedule accordingly.

Question 34

Do you manage escrow accounts?

Accepted Answer

Yes. We can collect and disburse escrow funds for property taxes, insurance premiums, HOA dues, and other approved escrow items. Escrow accounts are maintained separately with clear accounting so both parties can see what has been collected and disbursed.

Question 35

What happens if property taxes or insurance increase?

Accepted Answer

If your loan includes escrow, we monitor the account and make payments as due. If taxes or insurance premiums increase, the monthly escrow portion may need to be adjusted. We notify the parties before any new payment amount takes effect. If there is an existing underlying mortgage collecting escrows, we must receive updated mortgage information promptly when payments change.

Question 36

Can you collect additional escrow funds mid-loan?

Accepted Answer

Yes. If circumstances change — for example, an HOA is added, a new insurance policy is required, or an additional escrow item is agreed to — we can add or adjust escrow items with proper documentation and notice to the parties.

Question 37

Do you provide IRS tax reporting?

Accepted Answer

Yes. We prepare applicable year-end tax reporting, including Forms 1098 and 1099-INT, when required for serviced loans.

Question 38

Who receives the mortgage interest tax forms?

Accepted Answer

The buyer (borrower) may receive IRS Form 1098 (Mortgage Interest Statement) if the interest is reportable. The seller or private lender reports interest received as income and may receive IRS Form 1099-INT. When Southern Loan Servicing services the loan, we prepare the appropriate annual interest reporting based on the payments processed through our office.

Question 39

Can you send year-end tax documents?

Accepted Answer

Yes. Year-end tax documents (1098 and 1099-INT as applicable) are prepared and delivered to the appropriate parties after the close of the calendar year, based on the payments processed through our office during the year.

Question 40

How do I make my payment?

Accepted Answer

Borrowers can pay online through our secure borrower portal, by ACH auto-debit, by mailed check, or by other methods described in your welcome package. The portal is the fastest option and gives you an immediate confirmation.

Question 41

Can I pay online?

Accepted Answer

Yes. Our borrower portal lets you make one-time payments and set up recurring payments 24/7.

Question 42

Can I pay by ACH?

Accepted Answer

Yes. You can set up recurring ACH auto-debit from a checking or savings account. Auto-debit is the most reliable way to avoid late fees.

Question 43

What happens if I pay late?

Accepted Answer

Late fees are assessed according to the terms of your loan documents. Continued non-payment triggers our default process, which includes formal notices and — depending on the loan type — actions that could ultimately affect your ownership or possession of the property. Contact us as soon as you know a payment will be late; there are almost always more options if we hear from you early.

Question 44

Can I pay extra toward principal?

Accepted Answer

Yes, unless your loan documents specifically prohibit it. Additional payments should be clearly marked as principal-only so we can apply them correctly. You can also request an updated amortization schedule after a principal-only payment.

Question 45

How do I request a payoff?

Accepted Answer

Payoff quotes can be requested through the borrower portal or by contacting our office directly. Quotes are typically issued within one to two business days and are valid through a specific "good-through" date. If payoff funds arrive after that date, additional per diem interest applies.

Question 46

Can I see my account online?

Accepted Answer

Yes. Investors, sellers, and lenders have a secure online portal where you can view payment activity, escrow balances, remittance history, and account statements at any time.

Question 47

How often are funds disbursed?

Accepted Answer

Distributions are made on the schedule set out in your servicing agreement — typically monthly, following successful clearance of the borrower's payment. Faster or more frequent disbursement can be arranged where the servicing agreement provides for it.

Question 48

Can I receive ACH deposits?

Accepted Answer

Yes. Direct ACH deposit is the standard and preferred method for distributing funds to sellers, lenders, and investors. It is faster and more secure than mailed checks.

Question 49

Do you keep payment histories?

Accepted Answer

Yes. We maintain a complete payment history for the life of the loan, accessible through the online portal and available in exportable form for accounting, refinance, or audit purposes.

Question 50

Can multiple investors use one account?

Accepted Answer

Yes. Loans with multiple lenders, partners, or note holders can be set up with split remittance instructions so each party receives their agreed share of every payment on the same schedule.

Question 51

What happens if a borrower misses a payment?

Accepted Answer

We follow the terms of the loan documents and servicing agreement by notifying the appropriate parties, tracking payment status, assessing late fees where permitted, and assisting with servicing-related documentation throughout the default process. Our goal is to resolve the default quickly where possible and to maintain a clean paper trail if further action is required.

Question 52

What happens if a payment is returned?

Accepted Answer

If a payment is returned (for example, for insufficient funds), the payment is reversed on the account, an NSF fee is assessed where permitted by the loan documents, and the borrower is notified. The account is treated as unpaid until good funds are received.

Question 53

What happens if the buyer stops paying entirely?

Accepted Answer

If a borrower stops paying, we continue notifying the appropriate parties and documenting the default. Depending on the loan structure, the next steps may include issuing a formal Notice of Default, starting a Bond for Deed cancellation, or supporting the seller's or lender's attorney in a foreclosure. We coordinate with counsel throughout to make sure the servicing record supports the legal process.

Question 54

How are late fees calculated?

Accepted Answer

Late fees are calculated exactly as specified in the promissory note or Bond for Deed contract — typically a percentage of the past-due payment, assessed after a defined grace period. We do not assess late fees beyond what the loan documents authorize.

Question 55

When is a Notice of Default sent?

Accepted Answer

A Notice of Default is issued once the account is delinquent by the number of days specified in the loan documents or by applicable state law. For Louisiana Bond for Deed contracts, the notice triggers the statutory 45-day cure period.

Question 56

Do you perform foreclosures?

Accepted Answer

No. Foreclosures are legal proceedings handled by an attorney. Southern Loan Servicing supports the process by providing the certified payment history, default notices, and other servicing documentation the attorney needs, but the foreclosure itself is filed and prosecuted by counsel.

Question 57

Do you perform Bond for Deed cancellations?

Accepted Answer

We handle the servicing side of a Bond for Deed cancellation — issuing the Notice of Default, tracking the 45-day cure period, and providing the documentation the seller's attorney needs to record the cancellation. The recording and any court filings are handled by counsel.

Question 58

Can you coordinate with attorneys?

Accepted Answer

Yes. We regularly coordinate with sellers' and lenders' attorneys on defaults, cancellations, foreclosures, refinances, and payoffs. Providing complete, accurate servicing records to counsel is a routine part of our work.

Question 59

Can title companies refer servicing to Southern Loan Servicing?

Accepted Answer

Yes. Title companies and closing attorneys routinely refer owner-financed and Bond for Deed transactions to us for post-close servicing. We work directly with the closing team so the transition from closing to servicing is seamless for the buyer and seller.

Question 60

When can servicing begin after closing?

Accepted Answer

Yes. When onboarding documents are provided at or shortly before closing, servicing can start as of the first scheduled payment. Coordinating with our onboarding team ahead of the closing date is the easiest way to make sure servicing is live on day one.

Question 61

What documents do title companies need to send us?

Accepted Answer

For most transactions we need the executed promissory note, the recorded security instrument (mortgage, Bond for Deed, Contract for Deed, or deed of trust), the closing/settlement statement, and any escrow-related documentation (property tax bills, insurance declarations, HOA information). For Subject-To and wrap transactions we also need the current underlying mortgage statement and lender contact information.

Question 62

Can you service transactions in multiple states?

Accepted Answer

Yes. We service owner-financed transactions throughout the United States. Louisiana Bond for Deed contracts remain a specialty because of our OFI license, but our servicing platform is not limited to any one state.

Frequently Asked Questions

General

Getting Started

Bond for Deed

Wrap Mortgages

Subject-To Purchases

Seller Financing & Private Notes

Escrow, Taxes & Insurance

IRS Tax Reporting

For Borrowers

For Investors, Sellers & Lenders

Defaults, Late Payments & Enforcement

For Title Companies & Referral Partners