Without vested interest or equity into something, does an employee really care about the customers or borrowers needs? Or; are they just working to get a paycheck?
I was reading a great article and it was titled something like“Taking a Holistic Approach to Borrower Relationship Management” and it spokeabout how to establish a better relationship with these delinquent borrowers,it really aligned with the journey that our company is on right now. So Iwanted to share some thoughts.
A great way to insure that some of these delinquent borrowersare getting the proper attention is to take some of that responsibility out ofthe hands of the large institutions and redistribute some of it to the smallinvestor who has vested interest into the loan.
How do we do this?
Distribution channels have already been created from the sale of this distressed debt. Big funds are buying up this distressed debt from the 500lb gorillas and then it’s getting filtered down to smaller investors. The scraps that are left over are what we like to call scratch and dent loans, and they reside on the island of misfit toys. Nobody wants to deal with these guys but I hate to tell you;they aren’t just going to go away. There are actual real borrowers, real property and real delinquent property taxes attached to the end of these horror stories and they just want the nightmare to end.
Enter the smaller investor, these smaller investors can approachthese borrowers with real world solutions because they may only be managing 2or 3 of these delinquent loans compared to hundreds like an asset manager wouldbe. With their own capital invested into these, less borrowers to manage, thesesmaller investors can spend the time that’s needed to genuinely help theseborrowers.
Some of these smaller investors do utilize servicers and Ihighly recommend this compared to self servicing; unless you are ready to spend10-15K on the proper software to keep you in compliance, however even thesmaller investor can’t entirely rely on their servicer to make this type ofengagement.
Who is going to care more?
-The guy getting paid to do a job, or;
-The guy that just invested his own capital and sweat equity into some non performing mortgage notes and now needs to work something out with the delinquent borrowers in order to get a return.
What do we can do?
The smaller investor doesn’t have to deal with all the internal bureaucratic red tape that a large institution may have to adhere to thus increasing timelines to resolve. Look this isn’t about beating up on servicers, big institutions and their employees because we rely heavily on our servicer when it comes to certain tasks like staying compliant, however when we really want to engage with a borrower; we pick up the phone ourselves, put on our service hats and reach out; because it’s our capital that’s invested into these delinquent loans. We need to maximize our efficiency in order to get something done or nobody wins.
Small investors can bring a real world approach to dealing with delinquent borrowers and work on a solution.
Just from our own experience and speaking to borrowers who have been passed around from servicer to servicer for years and nothing ever getting done. Then we step in, reach out and save someone’s home by listening and providing solutions in a few months. Then I ask myself; how did nothing get accomplished after years when it just took us a month or two? Those borrowers now are even paying their property taxes. There has been a lot of wasted money because of this logistical nightmare.
This alone isn’t going to cure the issue, and that’s not the point, the point is to bring awareness to another solution that works; and to help redistribute some of the workload on to the small investor that wants to make a little profit from the help they provide to these delinquent borrowers,neighborhoods and cities. You can buy these non-performing loans at a big discount, help some borrowers out and make a little money along the way. A great marketplace is emerging; and this marketplace is filled with some feel good investments and yielding some solid returns.
Written by: Tj Osterman