Published on October 27, 2008
Dealing With Borrowers: the Basics And Some Key Insights 1
Agenda • The 3 Basics: Polite, Persistent, Creative , , • 3 Examples of working with a Borrower 2
The Most Important Person in Your Deal Sell • The Borrower is Key to 4 of the 5 Exits (including Foreclosure) 3
What this Means to You You need to work with your borrower You need to understand what their current “situation” is You Y need t help th d to h l them t come up with a “ l ti ” t to ith “solution” to that situation This is “marketing” - be polite, be persistent and be creative 4
Example 1: Gone Baby Gone Gone, Bossier City, LA (gas town) 5
Example 1: cont cont. Rubie’s “situation” 1. Looked up number in WhitePages, then Microbilt People Search p 2. No trace 3. No response to Borrower Letter 4. Ordered personal report (people finder service) 5. Tracked her down in Utah 6. Called Utah number: got Grey, her daughter 7. Called Utah number: got Grey, her daughter – on 3/5 (leave a number for them to call you) 8. Next day – 3/6 – get a call back 6
Example 1: cont cont. • Notes of 3/6 Conversation: • She lost her job. Her daughter was in UT her husband went to Iraq for 6 months - Rubie went to Utah, got a job in UT • She d Sh does have to pay other things. h t th thi • She had done career counseling w/prior bank. • She pays somebody to watch the property - she called State Farm - and got my number number. • She used to pay $625/month - and prior bank changed i t h d interest rate - she says she did 't get a t t h h didn't t notice about the rate change. 7
Example 1: cont cont. • She h l tt f Sh has a letter from Mr. Lucas in Bossier (he's M L i B i (h ' former bank’s mgr in Bossier). • House is vacant - she's not renting it. Her daughter's husband is back from Iraq (in January). She had quite af few bills. W t t pay 1/2 now, 1/2 l t bill Wants to later. • Now she has a job now - cashes after taxes $1,900 j every 2 weeks. The company loaning for her car took her car back. Now she has a job and is working at Washington Terrace, registered nurse. W hi t T i t d 8
Example 1: cont cont. • Only in Utah til h O l i Ut h until she can get a j b i B t job in Bossier Cit i City again. Total credit card debt $242/month direct pay. A few other bills turned over to Collections A bit more Collections. than $15,000. • Sh ' paying them off little by littl She's i th ff littl b little. • She has a little savings with Shompert Hospital. g p p • Wants till March 15th - to bring it current. • Her biggest worry right now is her mortgage. 6 months employed now. 9
Example 1: cont cont. • She h d f t Sh had a new roof put on in 2005 - L i Lowe's. O l ' Only thing that needs to be repaired is the washroom. It's an add-on on the back She paid Lowe's but they back. Lowe s never did it right on the add-on. So roof is leaking on the back. No shingles on the back. She would fly g y down there. • Conclusion: she wants to keep the house? 10
Example 1: cont cont. What actually happened: y pp Called her another 3 times (1-hour long conversations) 3/13 – explains her financials again 3/28 – set up meeting w/realtor to do walk through of the walk-through house with her 4/1 – finalize meeting “Goes dark Goes dark” 4/2, 4/3, 4/5, 4/6, 4/30, 6/2 – attempted calls Her Approach = “Non-Recognition” 11
Example 2: “Help me out” Hollister, CA 12
Example 2: “Help me out” Andria’s “situation” 1. Suing former mortgage broker 2. Back taxes of $20,000 3 Works at a bank 3. 4. In foreclosure – for 2 years now 5. Down market 6. 6 Still living in home 13
Example 2 Make contact 6/18 (former bank had phone number) ( p ) • Lawsuit for 3 yrs • Last court hearing was in Alameda Cty • Ran out of money to keep fighting • We're barely getting the settlement statements - to show court the documentation on the loan h t th d t ti th l • Our injunction just was lifted • We had a mortgage for $320K, got involved with these individuals now we're at $500K individuals, we re • We've accrued $50,000 in legal fees 14
Example 2 • Income - combined $120 000 Both employed more $120,000. than 6 mnths. She can earn a little more. 2007 earned 120K. • 2 vehicles, 1 in her name, 1 in her mom's name • Total debt - $50K in legal, $22K on car, $28K on mom's • Haven't been able to get copy of credit report. • She knows she has collection accounts • Realistically, she could afford $2,300-2,500 if it included prop. taxes and insurance, that would be great. 15
E Example 2 l • Taxes are almost $8,000 T l t $8 000 • Insurance is $900/yr. y • 2nd $416/month - we had to take that 2nd to pay property taxes that weren't paid. weren t paid • Taxes due are $20K • Inside condition is a 4 of 10. Plumbing is shot. House is 55 yrs old. And front and back fence need fixing y g • Value is ~$300K - over 400 houses. Home around corner is $229K Newer home in newer area Ours $229K. area. has bigger lot. Better school district area.
E Example 2 l What actually happened: y pp Called her another 4 times (1/2-hour long conversations – sometimes teary – she was always polite) ti t h l lit ) Really really really wanted to stay in the home Refi #1 – the junior Refi #2 – the HML And finally, the foreclosure What happened: “Thank You Thank You”
E Example 2 l Conclusion Spending a lot of time with the borrower led to a painful but b t successful conclusion ( f l l i (cash f k h for keys) ) If you receive a “Thank You – you’ve succeeded Thank You” you ve Key measure of success in creating “win, win, win” Persistence in working different options convinced Andria that we were “for real and that we really “wanted to help for real” wanted her”
E Example 3: The Creative Approach l 3 Th C ti A h Indianapolis, IN p ,
E Example 3 l The Situation Divorce Both have moved out Husband’s business was failing – big IRS tax liens Borrower Letter sent 1/10/08 Contact attempted 1/14 – 1/18/08, 1/25/08 – no response
E Example 3 l Home is listed – contact the realtor to “request the borrower to call me – would like to speak about her loan” Finally – 2/13/08 – call from borrower’s attorney Husband was ordered to make house pmts. Barbara is her attorney in Indianapolis - she represents developers. One particular developer. She knows Sue b/c she's done things for Dr's she works for for. Her divorce lawyer she's talked to. Her son - 1st yr in college. Pipes have frozen in the home - bills haven't been paid.
E Example 3 l Propose Deed in Lieu, and mention continuing Foreclosure Negotiate, negotiate negotiate – for 3 months Attorney doesn’t want her to sign Deed-in-Lieu Is traveling all the time Is not “helping things along” Finally, Finally I take a lesson from Falk on “marketing” marketing It was Wednesday, June 18th – creative juices flowing, 11pm email
K L Key Lessons Practice / Scripts / Being Natural Be You, Not “the Bank” You the Bank Best Line: “We’re a couple of guys out of San Francisco who buy loans – we bought yours, and I wanted to find out your situation in order to see what we might be able to do to help you ” you.” Most important values to Borrowers: “Honesty”, Honesty , “Integrity” (Be Your Word), “Consistency”
Next PAC Session – Launch Yourself in 8 Weeks November 5: Week 1 of the Roadmap “3-Desktop-Based Valuation Tools, and Getting the 3 Desktop Based Most out of Realtors” [A-Z C [A Z Course on Note-Buying : Will h l h i thi under N t B i help having this d your belt: www.notebuyingprofits.com/preorder.html] Future PAC Sessions: Each Week of the Roadmap each 2 Weeks November 19: Week 2 – Underwriting Title December 3: Week 3 – Negotiating w/Banks December 17: Week 4 – Closing 24
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