There are many borrowers out there who are wondering why they have been sent to Special Servicing for no valid reason. As you may have seen from what I have previously posted to the site, many loans have been unfairly transferred Special Servicing for things such as renewing leases, not paying 30x reserves, and dying without Wells Fargo's permission.

First off, the master servicing fee, for example, in the FULBA trust is .06% (pg 23 PSA table) whereas the Special Servicing fee is .25% (pg 42 PSA). When a loan is transferred to Special Servicing, the Special Servicer begins to charge a four-fold increase to the FULBA trust. Can you think of any reason why a special servicer wouldn't want a loan in Special Servicing? One reason is that the Master Servicer, who is usually a different company, is watching the Special Servicer to make sure that the loan returns to Master Servicing. The Trustee, who is supposed to watch out for the Trust also wants the loans in Master Servicing so the Trust doesn't lose money due to unnecessarily high expenses.

This is where the crooked Trustee comes into play. The Trustee gets to book MSR's (mortgage servicing rights) as assets, based on the fees made. More fees means a bigger MSR asset. So, why would the Trustee want to book less MSR's as opposed to more MSR's? The answer is, they wouldn't! This is why Wells Fargo books more and more MSR's every year.

This example was based on Wells Fargo who is the Trustee, ORIX who is the Special Servicer, and Keycorp who is the Master Servicer. Before ORIX sold their servicing portfolio, ORIX was also the Master Servicer, so they would unilaterally transfer loans from their .06% division to their .25% division.

Wells Fargo and ORIX make more money when you are in Special Servicing at the cost of borrowers and investors. That is why Wells Fargo and ORIX want YOU in Special Servicing.