Old-Fashioned Standards, Modern-Day Success
Fay Servicing CEO Ed Fay believes every good relationship is long-term and evolutionary
When Ed Fay, founder and CEO of Fay Servicing, discusses best practices in mortgage servicing, he likes to talk about the “something old” his company offers customers and clients.
“We are about ‘old-fashioned’ standards in our business: talking to people, understanding what the situation is, trying to find the best solutions and just working out distressed loans,” said Fay. “We started out exclusively as a special servicer, and everything we have done since then stems from our efforts to expand the aspects that people like most about us: the quality of care we provide on both the investor side and the customer side.”
Fay Servicing was founded in 2008 to meet the biggest industry challenge at that time: handling an expanding onslaught of past-due mortgages. Fay’s previous decade in the servicing industry working with household names like Countrywide and HSBC gave him unique insight into the ways the industry was changing—and not always for the better—in the wake of the housing crash.
Fay hoped to avoid the financial losses to investors that come with a “collection-shop” approach to mortgage servicing. His clientele clearly appreciated the effort. Today, Fay Servicing is active in all 50 states. Its affiliated businesses, such as its renovation and fix-and-flip contracting services, operate in 49 of 50 states.
“We do not try to be all things to all people, but we do try to treat every single person we work with the right way,” Fay said. “We work with different styles of loans than most servicers, and our style is a little different from other servicers as well.”
Fay is particularly proud of his company’s customer satisfaction ratings, which hover just over 98% even though many customers at the company are in some level of mortgage distress when they first encounter the company. He credits that high level of satisfaction to his company’s dedication to helping borrowers work through their payment issues, including figuring out ways to bring loan payments down when refinancing is not an option. Fay Servicing also helps customers visualize foreclosure alternatives, such as selling and downsizing, rather than simply accepting the default.
Each customer is assigned to a specific company representative rather than being treated as a case number and bounced through an automated system. As a result, Fay Servicing is often able to create winning situations out of losing ones.
For example, in Chicago, the company was able to work with the owner of two homeless shelters to avoid foreclosure on those properties. Another customer who bought her home in 2006 and faced litigation and delinquency shortly after, described Fay Servicing getting her mortgage as “a blessing” due to the efforts of her personal account manager.
“Foreclosure is, frankly, not good for the community. Our core business is being a servicer, and both our servicing business and our affiliated businesses support that,” Fay said. “Having additional ways to help people makes a big difference.”
Creating Long-Term Relationships
Fay focuses on flexibility, and his company structure demonstrates that. In addition to servicing performing and nonperforming notes, Fay Servicing’s affiliate companies have done more than 4,000 flips, served countless insurance clients and made thousands of sales. They take pride in always helping investors and borrowers look at challenges and opportunities from every angle.
“We wanted to create a unique situation for our customers and investors that helps them cover all their bases,” said Fay.
He emphasized that his company is a servicer first and a flipper second.
“I never compete with my clients, but it is my job to make sure I meet my fiduciary responsibility to tell my client what the payoff will be if they repair a home first compared to selling quickly,” he said. “Once they make that decision, we are positioned to help them make repairs, make the sale and, if they want to source properties, we can help with that as well.”
Al Roti, president of Construction Renovations LLC, the construction and contracting affiliate of Fay Servicing, explained how his company works with Fay Servicing to provide that wide-angle perspective to investors.
“We do things differently thanks to our phased workflow. We break down the renovation process so each specialist is focused on one phase of the workflow: multiple stages for pricing, comps and actual repairs; a billing team; and a management team once the renovations are complete,” he said.
Roti believes A-to-Z asset managers who handle procurement, construction and then sales or renting are simply spread too thin to perform at optimal levels for their clients, even if they are experienced in all of those areas. To combat this on behalf of investors, Roti’s experts obtain multiple opinions, present them to investors and leverage their own specialized expertise to create a winning scenario for the project.
Fay explained that Roti’s unique approach to his side of the business is the kind of trait he looks for in every member of his staff and servicing team.
“Every time I am looking to add opportunities for our investors, I go out and I look for the smartest people in the country and the brightest people in the industry,” he said. “We have a number of different companies, and the thing that ties them all together is hard work, good people and a willingness to integrate to serve the customer and the investor.”
Key to Future Success
That integration that Fay holds so dear has been a driving force in every angle of Fay Servicing’s evolution since he started the company out of his house in 2008.
“My primary goal has always been treating people the right way,” he said. “Part of that includes having integration in the business.”
To Fay, integration is also the reason real estate investors and professionals survive economic downturns—or the reason they don’t.
“Whether you earn your experience the hard way or you hire it, you have to have very good, very detailed knowledge about the space in which you are investing in order to succeed. You also have to be willing to be involved in multiple angles of the industry and integrate across those categories,” Fay said.
Fay predicted the next few years will hold a great deal of opportunity for investors willing and able to be flexible with their investments, both due to the ongoing situation with COVID-19 and suddenly less-high-profile issues like construction labor shortages, supply line issues and international trade tensions and tariffs.
“There is no way to be a one-trick pony during a downturn,” he said. “You have to have integration on some level. One thing every investor should remember, however, is that no one has ever made a killing betting against housing long-term.”
For Fay Servicing, betting on housing means betting on being the best option for borrowers and investors possible, whether that’s by assisting with a sale, working to modify a loan, simply guiding the homeowner through the next best steps to avoid foreclosure, or providing concierge servicing to some of the best-rated business borrowers in the country. “Keep in mind, we manage all sorts of loans for all sorts of customers and
clients,” Fay said. “The thing that ties them all together is not whether they are distressed or performing, but that they require and realize they deserve the highest level of servicing and dedicated attention that a loan servicer can provide.”
Sidebar: Covering All the Bases for Real Estate Investors
Fay Servicing and its affiliated businesses are dedicated to serving the best interests of clients. That dedication increasingly requires the company to offer far more than just top-of-the-line servicing options. Because many of Fay’s clients are real estate investors interested in sourcing new properties as well as handling existing mortgage situations, they look to the company’s other offerings when they are seeking investment options.
“We look at everything as a long-term relationship with multiple opportunities,” Fay said. “We can offer opportunities to investors that other companies cannot, whether it be finding them properties to buy, helping them with construction management or helping them leverage their investment strategies once a renovation is complete.”
That flexibility enables Fay Servicing to keep eyes squarely on the ultimate prize as well: building up communities where its accounts live. Literally.
“Helping people stay in their homes or helping them avoid foreclosure is always the best option for the community and for the customer,” Fay said. “Our goal is always to provide the best service and put the best properties out there on the market when the customer or investor decides the best option for them is to sell. Our customers and our investors are not just account numbers. They are also homeowners and property owners with individual and specific needs and situations.”
Sidebar: A Servicer’s Insight on Interest Rates
As the coronavirus spreads through the U.S., the Federal Reserve has endeavored to provide guidance on policies that might bolster the housing market during this economic downturn.
In March, the Fed announced it would cut its benchmark interest rates and “engage in quantitative easing” to help shore up the economy. It also announced it would engage in “unlimited bond-buying,” including mortgage-backed securities.
These assurances may have temporarily leveled off some of the volatility in the mortgage market via what Mortgage Bankers Association chief economist Mike Fratantoni called a “huge psychological benefit for lenders, which allowed them to feel comfortable bringing rates lower.” But Fay Servicing CEO Ed Fay warned that interest rate juggling does not always yield
the expected effects.
“You lose some degree of control in your monetary policy when you give up the ability to move rates to impact the economy,” he said, noting that rates are historically low and have very little room to go lower in the future.
“We have used interest rate policy to spur incredible economic growth for a number of years, so it will be important to watch what other options the government has. Spending is likely to
be the next area of policy,” he said.
For every economic cloud, however, there is a silver lining. Lower interest rates ultimately will create more affordable housing and may even offer distressed borrowers a window of opportunity to ease their financial pressures if they can refinance at lower rates.
