Stop Foreclosure: Some Lenders Step Up To Help Credit Crunch
@ 12:42 pmIf you are behind with your mortgage payment, don’t dodge that call from you lender. They may have a plan to help put you back on track with a loan modification agreement or a brand new loan with a lower interest rate.
Banks and lenders are forming special in-house team to help customers manage their way through difficult times with adjusting interest rates and other problems related to the credit crunch.
Newspapers, radio, and television are blasting us with statistics about the mortgage crisis. The recent news about the government bail out of Beares & Stern Investment Bank hasn’t help the feeling of alarm creeping into our daily lives.
Banks are forming in-house alliances comprised of collections, foreclosure, and production. The results have been impressive.
Fifth Third, for example, formed a pilot mortgage production team to reach out to at-risk clients. Their goal? To provide restructuring or refinance in order to improve the client’s cash flow making it easier for the client to make their mortgage payments on time.
“We took a proactive approach to helping our customers, often before many realized they could have a problem,” says Geoff Hill, manager of the Fifth Third Mortgage Company’s national direct channel. “Our approach paid off.”
In just the first three weeks of the pilot, the team took a list of 1,300 leads and refinanced mortgage loans totaling $5.8 million. In addition, they performed several modifications to the loan terms.”
So far this year, the team is on pace to exceed $175 million in saleable loans and modifications in 2008.
A new team, called the Creative Loan Solutions Group, was formed to help customers who had recently been denied traditional credit. They have recently expanded their focus to include customers who are 16 to 40 days late with payments. “These customers are struggling to make their payments, so they may be panicked,” says Hill. “They may think nothing can be done to help them. The key is to reach these customers before they move closer to the collections phase.”
The people in the collections department are putting in the overtime, too. “In our attempt to help borrowers, we make more than 3 million outbound calls per month, and handle another 100,000 inbound calls,” says Fred Troncone, Chief Collections Officer. “We’re doing all we can to let our borrowers know we want to help them, but we have to talk with them to find out what’s going on.”
The Homeowner’s Assistance Team was formed to help the most “at-risk” customer. They can restructure a debt using techniques that include lower rates, extended terms and even, in special cases, some debt foregiveness.
And banks aren’t just focusing on homeowners. Like the Repossession Prevention Team at Fifth third, team members help customers to avoid the repossession of their vehicles. “We’re looking for ways to enable our customers to continue making payments so they can keep their home or vehicle,” says Troncone.
It’s easy to do business with a bank in good times. It’s important to be able to work with your banker when times are tough.
Don’t dodge the calls if you want to dodge the bullet.
March 18th, 2008 at 2:00 pm
Wait a second, the collections department is usually the one demanding payment and calling homeowners at home and work all day. It’s the loss mitigation or workout department at most lenders that put together solutions. If collections is making 3,000,000 calls per month, and only getting 100,000 calls back into them for payment, there’s a good chance they’re scaring away too many homeowners from calling to make arrangements.
March 18th, 2008 at 2:25 pm
You may need to help me understand what you mean by “wait a second…”
By “usually demanding payment” I suppose you have the perception of threatening, unforgiving, and even belittling tactics used by collectors to collect what they might deem to be a “bad debt.”
You must be thinking of sub-prime lenders or poorly trained collectors. Let’s not confuse sub-prime collection tactics with value based customer service tactics employed by reputable lenders. The lender does not “win” if the house goes into foreclosure.
Collections, bankruptcy, foreclosure, loss mitigation and asset managers are all under the same departmental unmbrella. In order to work in a collection or foreclosure position, using a club, hurling insults, or making threats are not the skill set employed by reputable lenders. (stress reputable).
Let’s face it. There are vultures out there who benefit from borrower’s being afraid and not contacting their lenders. If the borrower doesn’t contact the lender, then no solution can be found. If no solution can be found, the foreclosure proceeds and, whalla…somebody gets to buy a house from a lender through foreclosure for a much reduced price.
Lenders and borrowers, working together, can solve the problem and cure the delinquency and avoid foreclosure. This only works, of course, if the borrower has the willingness to repay the debt, is cooperative, and doesn’t allow an attitude of avoidance to get in the way.
Perception is simply reality for many people. The perception is that if they are behind in their mortgage payments that they need to avoid the lender. It rests on the belief that there isn’t anything the lender can do. As noted in the article…there is a lot a lender can do.
And there is a lot that the investor can do.
This article is designed to help amend that perception. If one person who is behind in payments turns to their lender for a solution and successfully negotiates a difficult time and gets back on track…then this article has accomplished its intended goal.
March 19th, 2008 at 5:31 am
Wait a second, the collections department is usually the one demanding payment and calling homeowners at home and work all day. It’s the loss mitigation or workout department at most lenders that put together solutions. If collections is making 3,000,000 calls per month, and only getting 100,000 calls back into them for payment, there’s a good chance they’re scaring away too many homeowners from calling to make arrangements. Thank You.
March 19th, 2008 at 7:00 pm
Janice: “Don’t dodge the calls if you want to dodge the bullet.” This is great advice. I’m always surprised when people think ignoring the problem will make it go away. Rather they should be proactive and take action. They should be the one dialing the lender! Timely post, thanks!
March 20th, 2008 at 4:21 am
This is a good way to stop the foreclosures.
April 9th, 2008 at 9:11 pm
I had made a payment online (or so I thought). Apparently, THIS lender’s website had one additional step despite the fact that it had all the other signs of a completed payment. Well, here’s the thing. I’d been teetering on the brink of not being able to make ends meet. I have managed to make payments by the skin of my teeth but had always said that if I hit 30 days, it’s game over.
Well… I had made the transfers to make the payment, THOUGHT I had made the payment only to find out that I missed an extra “click”. The lender refused to work with me on my credit report.
With such an impact on your report, one black mark is enough to push some people over the edge. The credit rating was my last reason for sticking with it. I feel that if I’ve already been hit 50 points, who cares?
Truth is… I have more losses on my property than I could EVER have to pay income tax on. So… I’ve tried to do the right thing. The lender won’t work with me. Their site had the visual as if I’d paid in full (I even printed it out for my records thinking it was complete - I know… buyer beware, but I pay several mortgages a month online and this is the worst I’ve seen). So as I see it now, why bother? The chance of going to foreclosure either way is great, so why try and work it out.
They wouldn’t even extend the courtesy to me to have it removed from my credit report. Sure, it’s my bad, but it’s my bad for getting into the wrong property. So, they could have had a borrower willing to go the extra mile and find a way out, but the credit scoring model is so warped that for some people that first 30 day late is the catalyst for giving up.
Seems that MAYBE the lenders should use some common sense because NOW… I’m happy to short the loan and this lender won’t get but a fraction of the amount due. I have the losses on books, so it doesn’t matter much to me.
You’d think they MIGHT choose to make some concessions to keep performing paper as such…
Any ideas on negotiating this. If it goes til the end of the month, there’s no turning back. And truth be told, I might as well stop paying ‘em all if that’s the case!