Tax Lien Servicing Essentials - VADAR Systems

1. © 2016 NTLA and VADAR® Systems 1 #NTLAANNUAL16 Lien Servicing Essentials Operational Efficiency VADAR® Systems Jed Reitler, VP Sales Feb 25, 2016
2. Portfolio Management Asset Classes and Securitizations Investment Philosophies Alternatives theNTLA.com | vadarsystems.com 2
3. Servicing theNTLA.com | vadarsystems.com 3 Varied Statute Compliance Tracking and Reconciliation Parcel Data Management Collections and Notices Foreclosure and REO Legal Filing and Fees Custodial Services
4. Servicing theNTLA.com | vadarsystems.com 4 Due Diligence Acquisition Subsequents Legal and FeesNoticing Disposition Analytics Analyze Manage Report
5. 5
6. Competition October 22, 2015
7. Technology October 22, 2015
8. Spreadsheets → Systems
9. Collaboration
10. Your Back Office Parcel Research Field Inspection Parcel Analysis LoC Payment Raise Capital Auction Bid Court Filing Fees Lender Reporting Load Acquisition Portfolio Organization Flags and Holds Owner Notices Court Notices Hold Notices Payment Plans Collections Cash Flow Analysis Assess Subsequents Load and Integrate Subsequents Integration and Valuation Analysis Audit Discrepancies Report Transactions to Auditor Rectify Lender Reporting Load Redemptions Review and Post Payments Report Cash Flow Analysis Report Redemption Curve Bankruptcy Foreclosure Title Clearing Legal Notices Court Filing Borrowing Base Reports Operational Review and Audit Bottom-Line Profit Analysis Adjust Investment Strategies theNTLA.com | vadarsystems.com 10
11. Your Back Office theNTLA.com | vadarsystems.com 11
12. State-by-State Servicing theNTLA.com | vadarsystems.com 12 CO FL IN NJ Bid System Premium Bid Bid Down Premium Bid Bid Down w/ Premium Interest Rate Fed disc. + 9 pts 18% 18% Redemption Term 36 months 24 months 12 months 24 months Accrual Term Monthly Monthly Every 6 Months Daily Penalty 5% Minimum 10% then 15% Fixed Premium Allowed Yes No Yes Yes Premium Recoverable No No Yes Yes Premium Interest No No 10% No Pay Subsequents Yes No Yes Yes Subsequent Interest Fed disc. + 9 pts N/A 8% - 18% Fees • Fed disc + 9 • Property Search • Tax Deed App • Property Search • Recording • Tax Sale • Property Search • Recording • Penalty 2%-6%
13. Profit
14. Risk theNTLA.com | vadarsystems.com 14
15. Scale theNTLA.com | vadarsystems.com 15
16. 3 Choices Build BuyServicer Their Strategy Less Control Basis Points Cost Over-Runs Never Finished IT Experts Your Strategy Configurable Scalable
17. Servicer theNTLA.com | vadarsystems.com 17
18. Build Build costs 180% more for 1/3 of the planned design.
19. Buy
20. Acquisition Custodian Redemption Subsequents Enforcement Search Audit Instant Analysis Export Interface Dashboard
21. 1-Click Reports
22. Measurable $ Results Quantifiable Improvements: •Enhanced cash flow •Lower error rates •Increased scalability
23. LienApp.com sales@vadarsystems.com 877.823.2700 vadarsystems.com 24 Thank You Question and Answer Session

Editor's Notes

Thank you for coming. Comments on accommodations, participants, NTLA.
Banker and the Frog joke as participants enter Lab 2.
VADAR background: 20 years, $2b A.U.M., Private AND Public solutions.
Agenda: (1) Servicing vs. Portfolio Mgmt (2) The Cost of Servicing (3) Servicing Choices (4) Servicing Solutions
Misnomers and terms carried over from investment finance.
Alpha and Beta risk management focuses on research, selection, strategy.
Fewer statute variances, mature and standardized regulations, mature markets.
Online mechanisms of research, distribution, researching, communications, allocations, etc.
Less mature marketplace with thousands of statutes varying county by county.
Exponentially greater friction, inefficiencies and cost of management, servicing a portfolio.
[Survey audience – how many outside AZ/FL and appreciate these activities]
What is your bottom-line impact of servicing? Do you measure your OpEx and impact on revenue?
EBIDTA vs Operating Income (EBIT) drastic.
What is your risk of error? What is your audit cost and risk of fraud? How does turnover impact operations? What is your OpEx trend as investments grow?
30,000 foot view of Tax Lien Servicing process. Over simplified.
Inefficiencies, redundancies, retraining, legal compliance, paperwork.
Deming Plan/Check/Act. Feedback loop and improvements.
Spreadsheets are “Free” up to a point…
Good for up to 100 liens and subsequents, state depending
Human error, unreliable data back up and recovery
Non-compliant, non-collaborative, non-consolidated
Encourage audience to see Oct15 Forbes Insights survey of hundreds of Wealth Managers
Review competitive market pressures: rush to Alternatives, more Bidders, giants with 0 cost of capital
Forces executives to look both outward (improved returns) and inward (productivity, profitability)
Technology for Profit / Risk / Scale
Efficiency drives profits (2) Reduce risks of error, fraud (3) Facilitate growth at lower cost
When Free isn’t Free
1. Human Error 2. Non-Compliant 3. Non-Collaborative 4. No Data Recovery 5. Not Scalable 6. Cannot Test 7. Inflexible 8. Not Consolidated 9. Slow Decisions 10. Fraud
Share in Real Time, Increase Security, Reduce Errors, Save Time and Money
Does your back office look something like this?
Compartmentalized or matrixed? Series or parallel?
How often do you reconcile discrepancies?
How often do high-cost errors occur in records, notices, filings?
What is your office’s readiness? Time efficiency? Profitability?
29 States – each with different calculations
Sampling –6 states to represent and encompass all variables and rules in the industry
CO –Lost premiums need time for interest to accrue
FL – 0.25% interest is very common …
NJ –Majority with 0% interest … 1-time flat rate penalties change the game
What are your annual Operating Expenses?
What are your business Liabilities beyond your financial Liabilities?
[Ask Questions and Make it Personal]
How close are you to breach, fraud or loss?
How many errors could cost 5 or 6 figures?
3 Servicing Choices
Serviders – beholden to their investment philosophy, with classic fee structure punitive to growth
Build - $250,000 and 3 years earlier…
Buy – Take advantage of 20 years experience in 5 years of development. Scalable from institutions to individuals
Their fee structure, their investment philosophy, their servicing systems
Dire decision to do it all.
Maybe lucky on scope and on budget.
But then: IT costs, obsolescence, lose compatibilty with other systems
All in One SYstem
Let visuals speak for themselves – represent wishes.
Home screen with powerful dashboard
Instant overview of portfolio return, value, and status by fund
Thank you for your time, and we look forward to answering any questions you may have.

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