EP33: Talking Notes & Servicing with Tim Griffith of FCI Servicing (Interview)

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On this episode we had the pleasure talking with Tim Griffith and getting to learn from all of his knowledge about servicing and note investing in general. All of the questions we've always wanted to ask of a servicer were answered on this call.

If you're looking to learn more about servicing be sure to tune in for this podcast.

Learn his strategies for arbitrage to fund deals.

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Transcript

EP33 
 

Announcer: [00:00:00] Coming to you from Sunny Orlando, Florida. Welcome to the Paperstac Podcast, where we cover current topics in the note industry, give you tactics for your note business, and talk with industry leaders to make you a better note investor. And now your hosts, Brett Burky and Rick Allen.  

Brett Burky: Another episode of the Paper Stack Podcast, Rick Allen. Brett Burkey. Yep. How you doing today? Good.  

Tim Griffith: Good. It's spring break ish, so we had a small vacation to Grand Cyprus for a day or two and now  

Brett Burky: back to work. Nice. Nice. Yeah, we're heading out to San Antonio. So Nice. I'm super excited today. 

Brett Burky: We have a long time waiting. We have a servicer on there. First servicer. This was the first servicer I used, what I got into the business. And we're gonna let them talk a lot about it. They are, they've been pioneers in a lot of things in this industry. And they have definitely paved the way for newer boutique servicers. 

Brett Burky: They cater to small guys and big size, big guys. So we're gonna bring on a very great guest. We're [00:01:00] happy to have them. Tim Griffith from F C I servicing. Tim, how are you  

Tim Griffith: doing? Great. How are you guys doing? Awesome,  

Brett Burky: man. Thank you so much for coming on. It's something I've been so excited about. When I got into the industry back in, I guess 2012 I, we made the CU Degra mistakes and did self servicing and once we finally got some education and kind of learned some of the the snafus that can happen and how you can blow your legs off. 

Brett Burky: We immediately found a servicer and FCI was the one that came most highly recommended. And so that's who we went with. This has been wonderful, something I've been looking forward to. I want tell, tell us a little bit about you, tell us about the company, when did you guys start stuff like  

Tim Griffith: that. 
 

Tim Griffith: Sure. So this is a family business. So my dad's the one who owns it. He started in 1982, which is Oh wow. Longer than I've been alive. So that's, this is all I've known. He started as a foreclosure business and then it just, He started picking up little ancillary pieces until it turned into the, where the nation's largest private servicer now. 

Tim Griffith: And that's [00:02:00] been, over all these years, it keeps rolling, wow. That's awesome.  

Brett Burky: How much do you guys how much do you have under  

Tim Griffith: management? So it's 12 billion is what we have. Under management. Yeah. Across the portfolio. And  

Brett Burky: Wow, that is, that's a lot. That's a lot. 82. You started in 82. 

Brett Burky: Do you, do you guys handle, I know, I think I know the answer to this, but you handle small one-off investors, but do you handle some pretty big clients  

Tim Griffith: as well? Is that right? Yes. Exactly. So it goes from, we say we do it all at one loan at a time. So if you have one loan, you can come in, there's no minimum. 

Tim Griffith: And we do that all the way up to we can't say their names, but we do large institutions who have, like some clients have a billion plus just on one client. Oh, wow. So yeah. The big guys.  

Brett Burky: Yeah. So you guys are, you're definitely definitely big and growing growing. You guys started, from what I've heard through the grapevine, maybe you can talk about it or not, but. 

Brett Burky: Have you guys, it sounds like you guys are starting to expand maybe satellite offices or.  

Tim Griffith: Correct. So we just wanna offer more and more get the bigger team going across the country. Same thing, [00:03:00] help with customer service where we're based in California, that's where our campus is. We have three buildings here about, I think 160 people. 

Tim Griffith: Wow. Last time we counted. It's not that in the office right now, it's. Say yeah. Not many people in the office right now, but across the company it's 160, so we wanna offer more services. So we're licensed in all 50 states. So we do everything outta California, but we want to get some offices, get some people around the country and just heighten that customer service even higher. 

Tim Griffith: That's  
 

Brett Burky: awesome. What sort of like, How do I wanna phrase it? I guess what did you guys see anything that had happened from Covid? You guys mentioned not everybody in the office. Has that affected your guys' ability  

Tim Griffith: to work or, so luckily we already had, we're a Microsoft shop, so luckily we were just able to flip switches on before you could never, like my email doesn't work outside of the office. 

Tim Griffith: We don't have wifi. We're a bank level, rated servicer, and that was one of the catalysts. There was a A deal where we were gonna go in and take over banks as they closed down [00:04:00] service their loans. It never ended up happening. But through that approval process, we have, I don't know if you can see it, but we have badges on our door that you have to swipe. 

Tim Griffith: All that cameras everywhere. There's. Cameras over the payment processors, glass bottom so no one can swipe checks. It's it's, we just got Fitch rated, which is a big deal. So it's complete compliance across the board. So before that, we never had, all those switches were off on, no one could take their computer, their email didn't work. 

Tim Griffith: If you had a laptop, it was, you had to protect it with your life. Oh, yeah. And now we've been able just to flip those switches on. And keep the same level of compliance, but it was like a, we had a disaster recovery in place and, 2020 is the first year we had to use it. 

Brett Burky: That's awesome. Yeah. That's awesome. What kind of, what services do you offer? So you guys obviously performing loans is everybody loves the performing stuff. Do you guys handle specialty servicing, non-performing what extent do you guys cover.  

Tim Griffith: So it's everything I like to say. 

Tim Griffith: It's the life of the loan, [00:05:00] so the entire pipeline after origination. So that's the one thing that. Like, when I tell friends that I'm in the loan servicing business, they're always like what rate should I get on a new loan? And I'm, yes, I'm down the pipeline. I don't know anything about that. 

Tim Griffith: But, so after it's originated, even if it hasn't received a payment yet, we can bring it in all the way through taking it through r e o. We can point you, we have a list of ser of Service providers once it is an re o who other customers have used. So it's literally the entire life of the loan in every step in between foreclosure, bankruptcy, collection modifications all we're completely cf, p b compliance, all the, it goes 30 days delinquent. 

Tim Griffith: You have to do the phone calls by the CF p b, go back down high touch, low touch. We got it all. So you can handle  

Brett Burky: everything. So if you have, so a lot of the users or a lot of the users, a lot of the listeners to this program they're new. And, but we also have some guys who have been in the business for 20 years. 

Brett Burky: So it sounds like if you're brand new to the business and you're like, look, I've got a loan. I bought it. It goes [00:06:00] non-performing, you don't have to worry about pulling your hair out. You guys say, look, you've got those sort of pieces filled in look, do you need an attorney in this state? We can, obviously you can run quarterback and you can sit in the back seat and then kind of everything in between. 

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Announcer: From performing note tactics to non-performing notes, Rick gives you everything he knows about investing. Bonuses include our glossary of industry terms, Rick's own proprietary calculators he created to evaluate notes, discounts from our partners, our Rolodex of vendors, a private [00:07:00] Facebook group along with a lot more. 

Announcer: We've packed so much content into the academy to take you from beginner to expert in no time to learn more about the academy. Go to academy dot paper stack.com/welcome. Again, that is academy dot paper stack.com/welcome. 

Tim Griffith: Is that, so the term I like to use is we're the sub-servicer. So whenever there's a decision, FCI will never make the decision for you. But they're gonna send you, here's. Say A, B, and C, here's your choices. Which one do you want to do? That's the way. So it's, I feel like when you get into the notes, the buying note game, there's so many unknowns, but at least FCI puts you on a trail and says there. 

Tim Griffith: Say they're 150 days non-performing. Do you wanna start foreclosure? Do you wanna start a call campaign, door knock? There's a lot of options. And then it's whatever. How hard do you wanna put the gas on or let it sit Or do you wanna try to collect it yourself? There's you have the options, but will say, here's, [00:08:00] here they are. 

Tim Griffith: So at least it makes it, instead of a thousand unknowns, it's three or five choices. That's good. Do you  

Brett Burky: Would you recommend people before they jumping into this game, what you're seeing on the servicing side to get some education or anything along those lines? Or do you, I'm sure you've seen people who are highly educated in this space and people who have  

Tim Griffith: no idea. 
 

Tim Griffith: It's a double-edged sword, right? So there's the people who have no idea, who just go with the flow and maybe do something they shouldn't have it's a case by case basis, but there's times where, a borrower doesn't call you for, say it's like a loan in New Jersey and you're a year or two into the foreclosure process. 

Tim Griffith: And then that day before the foreclosure, they say, Hey let's start making some deals. It's like we're two years down the road. I think we tried to call you 10, 15 times, sent you letters. It's a little late now. Yeah. There's those sorts of decisions that You see what I'm trying to say? 

Tim Griffith: Yeah. Is you gotta decide where the, what your strategy is and then stick to it, something like that so you don't go off course. Yeah.  

Brett Burky: Could you guys provide any guidance or is it simply look man, here are [00:09:00] your choices? I know legally you're like, look I don't wanna legally provide guidance from what I've seen. 

Brett Burky: Or is it  

Tim Griffith: exactly an attorney might be able to do that, but fci that's always the, I know we seem like the bad guys. We can't do legal advice, can't tell you what to do, but here are the options.  

Brett Burky: No, and I think it's super important to, to de, to delineate that, make that line in the sand because, as operators of a platform, people will call us off all the time and say, going reach, yeah, what should I do here? 

Brett Burky: And it's I can't tell you what to do. I can't give you legal advice. I can tell you the options you have. You know exactly somebody asking, Hey, if I originate this type of loan, will it sell on the platform? I'm like, man, my crystal ball's broken. It's in the shop. I can tell you the stuff that's been selling and it may or may not hold true now. 

Brett Burky: So I totally understand it and I think it's important for people to understand that look. The, we're, the platform or fci for sure. The servicers are there to say, look, here are the options. I can't pick the option for you, and I certainly don't wanna [00:10:00] suggest an option because if it goes wrong, it's back on me. 

Brett Burky: But here are your options. Go ask an attorney. Figure it out.  

Tim Griffith: Then on the other side, the other part the double-edged sword part is we have clients as well that, and I'm sure you deal with them too, who wanna know every single possibility down every single road and they end up never pulling the trigger on anything. 

Tim Griffith: Yes. And I think that's, arguably just as bad as worse as. Making a bad decision, so Sure. It  

Brett Burky: is paralysis by analysis. Definitely. Exactly. Flip a coin. Yeah. Flip a coin and go with it.  

Tim Griffith: You gotta do something. You gotta do something. That's good. So  

Brett Burky: you guys it sounds like you handle whether you're brand new, whether you're not, whether you have one loan, whether you have a billion dollars in loans. 

Tim Griffith: You guys can consider it's all the same process. How  

Brett Burky: does it work with, when I say I onboard 10 loans with fci, do I have a dedicated. Asset manager or am I bounced around between people or how does  

Tim Griffith: that work? Correct. So you'll typically have a dedicated asset manager. So what they're gonna do is they're gonna try to pinpoint you based on the loans you're [00:11:00] buying. 

Tim Griffith: So if you're doing, newly originated, you're probably gonna have this person who mostly deals with that. If you're doing non-performing, you're gonna have a different person. Sometimes you'll get split up based on how big that portfolio is. But most say you have, nine non performing and one performing. 

Tim Griffith: You'll all, like we have Glen over here in boarding. You'll probably be all with Glen. Yeah. Something like that. I  

Brett Burky: was just talking with Glen. We, yeah, we spoke to Glen. I spoke to Glenn. Oh, there you go. Yesterday we were  

Tim Griffith: trying to get some some transfer docs over to you guys and it was  

Brett Burky: Glenn and a lady's  

Tim Griffith: name. 
 

Tim Griffith: I forgot. Cassandra.  

Brett Burky: Probably, maybe. Yeah. We one of the things that we did at Paper Stack is whenever there's, whenever a loan sells, we kick off the servicing transfer, we notify the outgoing servicer, the incoming servicer. Here's a cutoff date. Borrowers copy everybody onto it because I can't tell you how many times that's the servicing transfers part of it. 

Brett Burky: The seller may forget because they got their check and they say yes. And then you have a buyer calling up or a buyer and they're, reaching out. There's their servicers reaching out, going, Hey we just got this loan. Are you gonna send it over? [00:12:00] And. The outgoing servicers what are you talking about? 

Tim Griffith: Yep. So it's, so when we were talking about biggest mistakes to make when you're servicing, I think that's the number one, is assuming that the servicer's either reading your mind or like they just magically got that information that happens like in a payoff or something. They'll be like of course that fee wasn't, and you should know that. 

Tim Griffith: It's I don't know what you're, what fees you're doing on your side, in your own system. If you're not emailing us, calling us, communicating with us in some way, and then, it's. Yes. It's just classic. Yeah. Yeah. It's,  

Brett Burky: yeah. Try to keep the servicer in the loop on everything.  

Tim Griffith: That's good. Exactly. 

Tim Griffith: Cause then statements go out wrong and it's a whole, oh gosh. Then everyone's pointing fingers whose fault it is. And one of the things that fci prides themself on, if we make a mistake, we write a check. And I think that's what a lot of our reputation is based on. On something like that, when you didn't say that, we're not writing a check for not writing, reading your mind. 

Brett Burky: Something else you guys. You said you pride yourself on that is I want to talk a little bit about your guys the [00:13:00] technology. And I know definitely since you've been in as long as I've known that you've been with fci, the technology, the, it just keeps get ratcheting up. 

Brett Burky: You keep having that sort of influence. I have a feeling you're the driver behind that. Talk a little bit about like the investor side of your portal because a lot of times. There's some servicers out there who, there's a login and you can maybe see the most recent payday, but that's the extent of it. 

Brett Burky: And one of the things about FCIs portal that I wrote, the first thing I noticed is, wow, the access to reporting is just unreal.  

Tim Griffith: Exactly. So that's probably the feather in our cap is that technology. So we have the system the login, fci, web l irs, everyone has a, it's had different names through the years, so you can tell when people signed on by what they call it, I tend to call it l i r s, that's the old name. It's. Stands for lender information reporting software, but what it does is you see everything. So anytime someone in our system, like hypothetically, say you have a non-performing loan and there's a collector calling they're gonna type the notes on that call, spoke to them. [00:14:00] They said they're willing to pay, they just can't make. Get this month, whatever. And when they hit enter, boom, it's on yours instantly in a second. It live updates. And then same thing when a payment's processed, you can see, okay, the check was received for this much went principal, this much went interest. 

Tim Griffith: Here's a, they did it by a check by phone. So there's the, if a, there's a check by phone fee. And then you can see there's a little Paragraph at well as well that says the check is gonna clear on X date. So then you're gonna start seeing, you can, map out everything, everything is there. 

Tim Griffith: Our system, it's exactly mirrored. That came out in, I want to say 2003, 2004, something like that. And it was a live update then. And it just, That's what got the ball rolling on how big it got. I think that's the big feather in the cap. Yeah. And then we just keep updating it. So we launched a new, it's got, I know it's a love hate relationship people have. 

Tim Griffith: When we changed the buttons around, we changed the interface. You can still go back to the classic. So people are getting used to that. And the reason we did that is we're trying to [00:15:00] convert our whole system to be API so we can API every single field in our system to. The app. We have a lender app, or a lender and Barware app on the phones the web. 

Tim Griffith: And then people are gonna start pulling the api. So however people want to customize their information, it's you can pull everything. Now we're working on the pushing, so you don't have to call email anymore. So that's where it's headed right now. And it's all  

Brett Burky: yes. Nerd alert. Nerd alert. 

Brett Burky: This is where I get real excited. I get real excited here. Because when we started Paper Stack and We were inspired by FCI Exchange, which I wanna talk about in a little bit. But when we started Paper Stack, one of our goals was to have as much transparency as possible and as much live rich data. 

Brett Burky: And we thought that starting out, that we were gonna be able to go to any and every servicer and they'd be like, oh yeah, I would love to give you the data, which was not the  

Tim Griffith: case. Yep.  

Brett Burky: It was very much di very much, very difficult, even to the point where even once we had the platform up and started talking with [00:16:00] servicers, they were like, look, yeah, we want to integrate with you. 

Brett Burky: We can send you spreadsheets or stuff like that. And we had this realization that our technology company paper stack was for no rhyme or reason other than we were brand new and just on cutting edge tech. We were a little bit further down the road than most. 

Brett Burky: Other servicers, but FCI was the closest thing to it. We were so excited when we learned. I think we heard about it in LA last year that it was in the works. And then we just actually got our first API token yesterday. Oh yeah. Yeah. We have an API token now with them, and so we're so excited. 

Brett Burky: Awesome. Because it's so important for. Loan sales to have rich, accurate data. Totally. Yeah. And so now, just outta curiosity of you, you see you, we can pull anything. Can we pull the servicing notes?  

Tim Griffith: Yep. Oh,  
 

Brett Burky: man. Oh, sweet. That's great. And for, that's a game changer right there. It is a game changer. 

Brett Burky: And just because on our end, if you're buying a loan and Tim, you buy loans is [00:17:00] correct. Yep. Yeah. You buy a loan you want the servicing notes if you're buying the loan. Because Totally. What does it  

Tim Griffith: do? Does it tell the story or? Absolutely. There's been plenty of times where a deal looks great on paper, paid to date, house looks great on, before you order a BPO or whatever. 

Tim Griffith: And then you get in those notes and it's I'm just making this up, but oh, basement flooded. I'm gonna be behind on my, or all the windows are broken. Or you see something they say that says, oh, there was black mold or something. And you're like, I'm gone. And it, it just means everything. 

Tim Griffith: Or you find they're a litigious borrower and it, that stuff scares me personally. I don't want to get into legal ba or, if you buy it cheap enough, maybe it works, but you never know what you're gonna find in there. Or there's on the, that's the bad side. On the good side, I found where people are saying, can I get a modification? 

Tim Griffith: Can you work with me? Something? Yeah. Bingo. These big guys won't do it. And you're like that's gold right there. Yeah. You just gotta be a little nice and. You'll change everything.  

Brett Burky: There was, we did that, what was it, the case study where, yeah, we, he had a really good one with the servicing notes I had. 

Brett Burky: I had one there where it was it was a contract for deed. It was [00:18:00] in South Carolina and they were, the house was worth like fixed up 180. And the u p B on it was like 35 and the total payoff was like 42. And so I was looking at it and they were asking like 33 and I ended up buying it so close to that because I got in the servicing notes and I was like they wanted a modification, they had literally drawn up modification paperwork and the borrower went dark. 

Brett Burky: And I go, if I have to take it to foreclosure, I'll probably make 20% cuz somebody will buy that at the auction. Totally, but if I can get him to sign it over. And it turns out that the borrower I got when I talked to him, they was like, yeah, I didn't like the attorney that they wanted me to deal with. So I just said, no. 

Brett Burky: And it's that, those are the little nuggets of gold. And that was like a 60 day turn from 33 to, we sold it for I think 95. And it was in 60. Beautiful. Yeah. 60 days. And it, but that sat on paper stack for three months and nobody bought it. Damn. And it's just a diamond sitting there. And I looked at it and I, that's the thing is a servicing [00:19:00] note. 

Brett Burky: So I'm super excited that now anybody who, and so if I understand this if they service with fci and they subscribe to your guys api, then we can then start getting their API key and then pulling stuff Into their accounts  

Tim Griffith: over here. Exactly. So the way I like to bring it down or make it more broad, when you go on a website and they have the sign in with Google or sign in with Facebook. 

Tim Griffith: It's gonna work like that. So I'm assuming they would just put in there Yeah. FCI token or whatever in the paper stack. Yeah. We don't, we have get in the weeds  

Brett Burky: on that when the developer, it should be that  

Tim Griffith: easy. It will be as easy as signing in with Google. Yeah.  

Brett Burky: Yeah. And that's exciting. 

Brett Burky: For us, we look at that as an exciting thing because whenever it's time to, like if there's a loan transfer, we, I'd like to be able to have but push or push button technology to where here, let's suck all the data and send it right to you. And that's on  

Tim Griffith: its way. Yeah.  

Brett Burky: That streamlines everything for you, right? 

Brett Burky: Exactly.  

Tim Griffith: It cuts down on man hours. That's awesome. Cut all that min Yeah, cut all that middle man out. So that's  

Brett Burky: cool. All right. I talked a little bit, just a little bit ago that when we started Paper [00:20:00] Stack, we were inspired by FCI Exchange. And I don't know if many people know this, but FCI Exchange was the pioneer of the online marketplace digital transaction. 

Brett Burky: Can you talk a little bit about it? Wh how long, how you guys started it, came up with it, and then Sure. Like why you guys are not doing it  

Tim Griffith: anymore. Sure. So it started in, I wanna say 2012, 2011. And the reason was we were having funds were getting, I wanna say their non-performing loans were turning performing, and they had a certain. 

Tim Griffith: Bank line. So now say that they borrowed money at 6% and it's performing at 4%. They're getting eaten for 2% a month, and it's better to just get it off the books. So we wanted to create a platform where they could just move it from FCI servicing to FCI Exchange. That was the original idea. It grew into more where we were taking 'em on from all servicers hoping that they would service at fci. 

Tim Griffith: But the thing that made it different, one was that it had the FCI emblem on it, and that gave it. Instant [00:21:00] credibility. And then the second one was, it had a real, what's the word? It's like a a simplistic version of what the API was. Because the systems were both in-house, they connected. 

Tim Griffith: The new API has all the securities to go out, but the old one was It was basically two trusted systems connected. That's why we allowed to do that. So it had the same thing that we're probably gonna talk about here, that paper stack will be able to do now with the api. It had a very early version of it, of where if a payment was made, the paid two date would roll forward properly. 

Tim Griffith: The principle would go down properly. It had all of that and it was It ran pretty well for those years. We had a problem at the end. It was a growing problem where people thought that the seller was fci. Oh. And then when a seller would do something, a little wild, say, pull a deal or claim that, a loan was something that it wasn't, say it wasn't serviced at FCI and they were typing in whatever they felt like. 

Tim Griffith: Cause you can only, I'm sure as you guys know, you can only verify so much. People can skate under the radar. They [00:22:00] caused some legal noise claiming that it was us and it was enough of a nuisance to say this problem's, it keeps happening. We're done. So we closed FCI Exchange, made it just FCI lender services. 

Tim Griffith: We reopened for a little bit as exchange loans. But it never took off because of that, it was missing that FCI diamond, at least in my opinion. And it was too hard. People didn't understand the jump Now it became a thing where like, why isn't this working? It doesn't have the api, it doesn't have fci, so let's pull all our resources into api. 

Tim Griffith: Partner with a program and or, work together. And that's where we're at today. Cool. That's awesome. I haven't been more excited in a long time. So it was the whole exchange loan saga was frustrating. And now the api, I'm just, I'm so fired up about it. That's  

Brett Burky: cool, man. It's I remember when I got the email, I was like, FCIs got an  

Tim Griffith: api, everyone in the company, I was like, look man it's got an  

Brett Burky: api. 
 

Tim Griffith: It's  
 

Brett Burky: it's such a big deal because we've been trying to crack that egg with people and the, the [00:23:00] closest we got is when we get nightly data dumps now from a servicer, but it's still, they're just sending out, they just wrote a script and they're sending out CSV files, which is fine. 

Brett Burky: But it's, yeah, it  

Tim Griffith: works. It works. But  

Brett Burky: we do the same. The, that sort of the gold is the api and so we're so  

Tim Griffith: excited about it. We have this giant mountain of a backlog of stuff, and then it's we put it in there. We had a meeting last week. Yeah. And we're like, all right, look, all this is great. 

Tim Griffith: Yeah, let's just take this FCI thing and put it right at the front of the line.  

Brett Burky: Yeah. It literally, I love that it got moved to the front of the line and it's, it's behind stuff that has been there for two years. Yeah. Yeah. So we,  

Tim Griffith: I think our our developers maybe talked to somebody at your company. 

Tim Griffith: I know if that got that  

Brett Burky: far yet. Yes, it has. It Mike Lucy was exchanging emails with Lucy and then I got tasked to get the API token because I have to log in through our account. Oh, gotcha. So we're. We're logged in. We're set. Cool. We got our test site going and Nice. That'll be fun. 

Brett Burky: Yeah, it's gonna be good. It's gonna be great. Not, I think it's gonna be great for you great for [00:24:00] your clients and customers. It's look, if they need an platform to start selling loans, they can Totally. And it's absolutely, and the data's live, and that's the most important  

Tim Griffith: thing. So one of the things I wanted to hit too, because when the whole API thing started and even today, like I'm the one who's moving on it from the ideas, but I work with a programmer. 

Tim Griffith: So if people wanna like, go in detail about how to connect things I just forward those to the programmer. You know what I mean? Yeah. I'm more the front end of it, but on that same thing, so I invest, I work with two companies buying loans. We have a company over here, and then I do it with my dad, me and my brother. 

Tim Griffith: We have a. A company as well. So we would update our charts manually. I'd like to know where our U P B was, loan to value, that sort of thing. And it was like once a month I would go through and be like, here we go, cuz we have our Excel sheets in a certain format and FCI pulls the Excel in a different format. 

Tim Griffith: So you'd either have to copy and paste them or just go down line by line. And it's we could hook up the api, but I have no clue how to hook up an api. I could hire [00:25:00] somebody, which you know is not a bad idea. But what we did was we made this Excel template. So all you do is you download the pre-made Excel template, paste your a p i key in it and hit you can change which variables you want. 

Tim Griffith: So I just do loan number U P B and I think I do paid two date. And then I just match the fields and now whenever I want it, I hit go on the Excel and it comes right over to my other Excel. Nice. And that's with no coding experience or anything? If people are using like a sales force, a copper, or just managing their things, I use Excel and Power BI to do our own. 

Tim Griffith: I like to use FCI as a reference and then have my own numbers, like what I purchased it for, the fees, that sort of thing that FCI doesn't house. Yeah. And now I make them talk with the Excel template, and that's with no coding experience. Nice. And there's a tutorial on the website how to do it. 

Tim Griffith: Yeah.  
 

Brett Burky: So that's a, that's an interesting thing. So for because such a big part of. If you're not the guy who has a structured fund and you've got a fund manager, there's everybody below that, which is a big segment. You're left with this [00:26:00] sort of puzzle piece or puzzle on how do I manage the loan, how do I account for the transactions, how do I account for, oh, I had to pay for fpi. 

Brett Burky: How do I, all these different things that can happen. And so now it's, that's another great use case for the APIs look. You can sync up your spreadsheets with the API so that way stuff is updated.  

Tim Griffith: Exactly. Track your return, all that stuff. Oh, that's, it just made it very easy. It was a big, hour or two headache that now is a button press. 

Tim Griffith: So that's awesome. I gotta tell  

Brett Burky: you, that's amazing because I know how much of a headache that is and it is a pain. Let's talk a little bit, it's super easy to get started with fci. You go on, you can onboard. Let's talk about some of the things maybe like your top three or four or five biggest mistakes you're seeing. 

Brett Burky: You're like, look, here's some things that new investors hear, like the ahas, the gotchas that they need to watch out for when choosing a servicer, when coming on board, or just in loan investing in general.  

Tim Griffith: Sure. [00:27:00] So do you wanna do the buying loans first or the servicer  

Brett Burky: part? We'll do the buying loans first. 

Brett Burky: Okay. Because I think that'll be good. And then the servicer part will follow  

Tim Griffith: up right afterwards. So my dad has a saying, and this has been I've it's gone in my favor, and then some of them have not gone so well and I'll tell a specific story about it. It's hope for the best plan for the worst. 

Tim Griffith: Yeah. So if your due diligence isn't, I wouldn't say spot on, but you gotta make sure that you're gonna make money, even in the worst case scenario. Which I tend to think is getting the r e o back. Yeah. But I got a reality check where we were. We started borrowing some money to buy loans cuz we wanted to ramp up more and more. 

Tim Griffith: So my line of credit was at about 5% and there was I live in California, so there's the city Yor Belinda right down here. It's like the it's the kind of old part of town, but it's it's old town. The houses are nice, they're big, they're expensive. You assume that the houses are probably like a million dollars, something like that. 

Tim Griffith: And a loan came up in your Belinda and I'm like, I can go drive there. I don't have to hire A B P O. I don't gotta do anything. And I know your Belinda's nice. That'll sell. No problem. [00:28:00] I'm in. So the house was worth, I think, let's just say a million dollars. And the loan was 700, 750,000. And I'm like that's a slam dunk. 

Tim Griffith: So I bought it. The interest rate was two and a half percent and it was non-performing. And then he starts performing, which is usually a good thing. But now, just like I was saying, how the FCI Exchange started, now I'm on the hook for two and half percent every time he makes a payment, I'm losing money now. 

Tim Griffith: Oh my. And that's one of those things that I, I. Never put the pieces together on until I started getting burnt by it. So it's those sort of, I would've thought that the worst case scenario was, they, the house is all busted when we get in there, that sort of thing. But the actual worst case scenario was he starts performing, he started perform at my higher borrowed rate. 

Tim Griffith: So it, it's really bizarre how that thing worked. Or here's another one where like you buy, I bought a loan in New Jersey where it's supposed to foreclose in, four or five months cuz it's so late. And then, For some reason the foreclosures in New Jerseys, they almost always sell at auction. At least [00:29:00] that's been my experience cause it's so far out. 

Tim Griffith: It's like a thousand days or something to foreclose. Then covid happens and I'm paying a year of interest while, foreclosure has been frozen. So luckily I had enough of a window on it, but, Yeah. Every month it just eats more and more. So it's that sort of thing. If they play game, there's times where borrowers can play the bankruptcy for closure game. 

Tim Griffith: You just gotta make sure that you have, you're, buying at that right price to make sure you have that window so you're not going upside down. You never wanna be at the time where it's it needs to sell at this at auction, or, I'm burnt across the board. So just plan for the worst. I would say that's number one. 

Tim Griffith: That's a good one.  

Brett Burky: I had the bankruptcy, somebody played the bankruptcy game on me that we bought. It was I think the judgment was like three 30 and we got, it was already in judgment. Judgment done. It was just waiting sale date and we bought, we paid 2 25 for it. House is probably worth, high threes at the time. 

Brett Burky: And just same thing, that's a dunka [00:30:00] roo. I was like, oh, they filed a bankruptcy, but it's dismissed. We're good. We're moving and three bankruptcies later and just, my attorney dropping the ball a little bit. It was just one of those things where it was like, man, that, that got us. 

Brett Burky: And so we had to, fortunately, Time helped us out too. Property values went up, but instead of what was looking like gonna be, a 70, $80,000 deal in a matter of 90 days, turned into, we made 20 grand and we did it over the course of three years. So  

Tim Griffith: it, that was no good. So I think that's funny about note investors cuz it's in a worst case scenario, I made 20 grand. 

Tim Griffith: I, I always try to, cuz I have those same stories too, as I thought I was gonna make a hundred, I only made $20,000. Which, hey, all in all, yeah.  

Brett Burky: Okay, I made 10%, but I did over three years and you just, if you're, if you have money involved if you're paying. 

Brett Burky: Then you're like, it eats you up and you're like, [00:31:00] I could have done that. Made three times that much if I just would've done something different. But anyway, so I know hope for the best, plan for the worst. What else do you have out there?  

Tim Griffith: I think at least this is what seems to be happening right now with Covid and it kills me on some level. 

Tim Griffith: Is it's getting harder to find inventory. Which loans are. With less loans means the prices are higher and like non-performing loans, I see people asking a lot of money. And I understand that it's tempting when you have money to deploy. It's I gotta put it in something. But, be careful. 

Tim Griffith: I guess would be my next one is, I love buying notes. I love having the pipeline full, all of that. But I've gotten. I've overextended sometimes because I wanted to, I wanna buy X amount of notes a week, a month, and then you're, you're, I wouldn't say attention goes down, but like  

Brett Burky: your buy box gets just a little bit bigger  

Tim Griffith: and a little bit bigger. 

Tim Griffith: Exactly. And it's not supposed to. Exactly. And they're yeah, like nothing against Michigan, but it's not my [00:32:00] favorite to buy loans or Pennsylvania. That's another one. But then there was a time where I'm like there's a lot of Michigan in Pennsylvania. I'll just start, I'm not buying anything else. 

Tim Griffith: I'll just start sweeping 'em up. And then now, years later, I'm still trying to. Get that big buy done. But on the other end, I feel like we'll do a negative then a positive on the positive. I'm a firm believer that there are no bad notes. There's only bad prices. So even like what's a state that I tend to stay away from Florida or like Georgia, I don't have the license to buy in Georgia. 

Tim Griffith: But if someone had a pool or loans that was the right price, I would go get that license. I would put up with the foreclosure timelines it. Money's money. And it's just all the returns. So what, or New York I bought two foreclosures in New York. I don't know if one that was like three years ago. 

Tim Griffith: I don't think one still foreclosed and then one took two years to foreclose and it was just like, I wouldn't say it was hitting the jackpot, but because I put all that work in over two years, when it finally foreclosed, it sold like that. Yeah. And it was like new [00:33:00] York's one of my never buying states, but that one price was right. 

Tim Griffith: Pencilled out. I. Let's do it. So yeah. The worst made sense. Yeah, definitely.  

Brett Burky: I hear you there. Okay. What about on the servicing side?  

Tim Griffith: So we've got, sure. So I feel like on the servicing side it's pretty simple. Just stay in communication when they, ask for, I need, form X, Y, and Z, they'll highlight 'em for you. 

Tim Griffith: Just fill this out. Just do stuff in a timely manner that, that's about it. If someone sends you an email with a choice, a business day or two, Just right back. It's real staying simple. Yeah. Just communic go smoothly if you Exactly. Yep. I got, that's it. A question. So we do have a lot of people that are new, right? 

Tim Griffith: And so they don't have a servicer or they're like, they haven't set one up and I usually always say, Hey, stay with whoever is with already, cuz that's just the best practice, and so I didn't know if they need to have the loan in their possession to actually start the process with F C I or at the seller. 

Tim Griffith: Surfacing transfer. That alone would start them creating accounts like, I don't know what, so just on, my side for [00:34:00] like customer support, what would be the best process? Hey, you don't have a servicer. You're gonna go with fci. Here's the documents you need so that when it happens, it's you're not missing like a payment or something like that. 

Tim Griffith: What's the best system for  

Brett Burky: that?  
 

Tim Griffith: Absolutely. So when they say they finished the purchase on Paper Stack, they would either call and the numbers are on the website, so you would just call, you'd either get Gordon or Lucy. They're the incoming for the entire company. So they'll listen to what you bought, what you're looking to do, that sort of thing. 

Tim Griffith: And then they put you in contact. I like to think of them as a. They're the gatekeepers. So then once you tell them what you have, what you're looking to do, they open the gate and say, you're gonna talk to Glen. You're gonna talk to Chris, you're gonna talk to Felicia. And they set you up and they hold your hand. 

Tim Griffith: And then if you ever have any problem at F C I, you just go back to the original people you talked and say, Hey, Something changed or I wanna do this, or I'm bringing more, whatever it is. When that transaction happens and you're getting ready to service transfer you can call up FCI and we'll start that process. 

Tim Griffith: So you can't, you can do it  

Brett Burky: before you close on the loan. Just say, look, I'm closing on this loan. Correct. I'm gonna do, I'm gonna close on [00:35:00] it next Friday. It's a scheduled to close. I wanna go ahead and set up all the paperwork. So once it closes, it's It just seamlessly transfers over.  

Tim Griffith: Exactly. 
 

Tim Griffith: And this perfect, the same thing's true with newly originated loans. Like we won't touch it before it's actually originated, but when people say, Hey, I have, five. Finishing this week. Let's start that process then we'll, put you in contact with who you need, get you the forms, that sort of thing. 

Tim Griffith: So a week  

Brett Burky: out, it's probably a pretty good timeframe for people like, look a week. I would think so. All  

Tim Griffith: right. Great. Yeah. I feel like everything's case by case, but a week's probably pretty safe. Is there so we had questions from people users, and they were asking you like, Is there fee structures that are shareable that we can maybe put someplace in our site  

Brett Burky: where we can  

Tim Griffith: say, Hey, this is a fee structure for performing, not performing for all these different services that, cuz they ask about that. 

Tim Griffith: Absolutely. Yeah. Okay. Yeah. Here I'm gonna pull it up right on my side right now. The answer that, so Gordon's our head guy, and he's one of the people you will talk when you come into, and Lucy and Gordon work together. Gordon wants you to call him to talk about the fees. Okay. But you [00:36:00] can see the, like he, he doesn't like what I'm about to do. 

Tim Griffith: If you go on, it's my fci.com. Yeah. And you go to general fee schedule on the left, you click it. Every single one of our fee that you can possibly encounter is listed black and white in sales. Okay? Like right here, foreclosure noi, 30 day notice of intent if sent by FCI $95. And it just listed, it breaks it into all the the different categories. 

Tim Griffith: I think the reason why he doesn't want you to just read through that is because it's gonna be overwhelming. It's this is gonna cost a million dollars of service alone. And that's not the case. We're one of the cheaper ones. Start at $15 a month for performing $30 at non-performing. But there is a lot of stuff that you can encounter, so that's great. 

Tim Griffith: Yeah. But that's where you can go. Cool, man, I  

Brett Burky: appreciate that. Cool. So I guess, couple parting questions for you. COVID 19, what did you see it do  

Tim Griffith: to the market? So it basically, it's if there's a loan pipeline, it just basically put air in the pipeline so you could see everything finished in the pipeline. 

Tim Griffith: Big gap. And then newly originated are [00:37:00] trickling back in. So in our standard performing, the big thing is we have the fix and flip loans. Yep. So there, a year or two. That's the only life of the loan and they pay off and then they originate new ones and it's just this constant role. So the main problem with c o D is they were paying off and not getting originated cuz everything paused. 

Tim Griffith: Yeah. So it it made the servicing dip and now it's climbing back. And a lot of our a lot of customers, I mean including me, I haven't bought a loan in, a handful of months cuz it's I just think everyone wants to see. The original prediction when covid happened. I'm like, people are gonna be fire selling and I'm just gonna be, I'm gonna eat 'em all cause I know it's gonna come back. 

Tim Griffith: And then it's like the the housing crash on some level. It's like all this housing, if you would've had the foresight to buy all that housing, you'd be, yeah. It'd be real nice right now. So I thought that's what was gonna happen, but it's not, it didn't seem, at least I didn't see that. 

Tim Griffith: It's like everyone paused and said, I'm not gonna fire cell and I'm not gonna originate. New loans and then just sat there. So that's the main thing. I don't know if that was that your guys' [00:38:00] experience that people were nervous? Yeah, there  

Brett Burky: was like, definitely there was some fire sale, like for a flash in the pan I saw. 

Brett Burky: I saw some, and especially a lot of the guys in the fix and flip, I saw people taking 80 cents on the dollar. For fix and flip loans. And, some of that stuff was tied into, I think floats on the, on stuff they were doing with holding back money for repairs and the so I don't want to go into that, but yeah, we did see that little flash in the pan, but then it as quickly as it started, it stopped, I think there was almost like a 45 to 60 day window of that. 

Brett Burky: And then people settled in and said let's just sit tight. Yeah, what any predictions on the next, maybe 12, 24 months as the moratoriums lift, the eviction moratorium stuff, all of  

Tim Griffith: that happens. I'm hoping it just all comes roaring back. J just across the board that's from loans to stocks, to servicing everything. 

Tim Griffith: I just think that, I'm hoping all that pent up, we've been stuck in our house and we wanna, make some money, get back out there.[00:39:00] I truly believe that's gonna happen, great. And then what I'm also hoping too is as the moratoriums get lifted, we get more non-performing loans out there to sell, get the process started and. 

Tim Griffith: Get, find some loans again. Yeah. I think that  

Brett Burky: there's gonna be more loans come available in the next  

Tim Griffith: Yes, too. Yeah. Yeah, for sure. So I hope so. At least. Any I think  

Brett Burky: we'd be a year out. Any last parting words, anything else you wanted  

Tim Griffith: to touch on? We hit it all. Api I, so the whole, I guess the main thing, all the technology things we talked about, the a p i is a new subscription, but the whole lender login that's all free with servicing, so it's not an upcharge. 

Tim Griffith: You get all of that included. Export to Excel, all of that. The API has a free. Program with a, it has a data cap and then the next one's $20 and the next one above, that's a hundred dollars per month. If you're just starting with one or two loans you're gonna be totally fine with the free No, no problem at all. 

Tim Griffith: Good stuff. Yeah. That's the main thing. Give Lucy or Gordon a call and they'll They'll walk you through it. It's real easy.  

Brett Burky: Awesome. So we're gonna go ahead and in the show [00:40:00] notes, we're gonna go ahead and put Lucy and Gordon's email down there and your guys' phone number so they can reach out if they wanna start servicing. 

Brett Burky: Tim, man, thank you so much. It's been a pleasure really. It really has. There's been so much that I wanted to cover and get somebody on the phone, and you're the guy I wanted  

Tim Griffith: to talk to, so thank you. Thank you. Thanks for having me. Yep. All right guys. Thanks for joining into the Paper  

Brett Burky: Stack Podcast. 

Brett Burky: We will have this thing. It's already up, but you're listening to it. So yeah, join us on our next one. We'll talk to you soon.