Customer payment problems should be addressed as early as possible by the Bank. From the customer’s perspective, threatening calls and letters from the collection department do little or no good for either party. From the Bank’s point of view all of the millions of dollars spent on advertising promoting good will and creating a positive image is lost when the collection calls and letters are received by the customer. The customer is already in a state of denial and most “under water” customers retreat from the problem and the situation continues to get worse rather than better. After all you cannot get blood out of a rock. Once a foreclosure suit has been filed attorneys, Realtors and third party “short sale” companies inundate the customer with letters and post cards advertising “short sale” services. No one knows for sure what the solution is but Boss offers the following idea and consulting service:
Boss will assist the Bank to determine the most cost and public relations effective way to deal with any given customer and property. The best solution is that the customer remains in the property and the Bank’s economic loss is less than foreclosure. We have identified three of the most common circumstances. They are:
- The customer has missed two or more payments but would be able to make future payments if the payment is lowered.
- The customer will not be able to make any future payments.
- The customers’ payments are current but the Bank has received a call requesting a loan modification.
The Bank “person power” nor do the employees have the training necessary to accomplish the following steps but we do. Boss has professional credit repair personnel on staff.
- The Bank Identifies Non-Performing Notes (or for category number 3 customers).
- The bank calls the customer and advises that an agent of the bank will make an appointment to gather information.
- Boss is notified by the bank and an appointment is set with the customer.
- Current financial and job status information is gathered by Boss’ personnel and forwarded to the Bank.
- If warranted a Loan Modification plan is proposed by Boss to the Bank. (The Bank has pre-approved Loan Modification scenarios with Boss.)
- A Loan Modification program is offered to the customer.
- The customer has to submit to monthly credit counseling provided by Boss. (A probation period ensues until the Customer recovers or goes under).
- Payment for Boss’ consulting services will be determined before the program is started.
- Deed in Lieu of Foreclosure.
- After the steps set forth in the first three bullets of paragraph 1 are completed the Bank has two options if the Customer is not a candidate for Loan Modification either commence foreclosure proceedings and “short sell” the property during the foreclosure period or take a deed in lieu of foreclosure.
- The least expensive and best alternative from a public relations stand point is to take deed in lieu of foreclosure with release of the customer from any further liability.
- When title passes to the bank the procedures set forth in Part I paragraph 1 should be followed.
- The Bank Sells Non-Performing Notes.
- Boss can offer non-performing notes to investors. Investors will pay substantially discounted sums for these notes.
- Whether the investor forecloses or re-negotiates a loan modification with the customer the note is “off the Bank’s books”.
The “public relations” and economic benefit of the Loan Modification program is invaluable. The bank gives the customer every chance to recover and at the same avoids the public relations and economic cost of foreclosure. During the last stages of foreclosure all to often customers take out their frustration on the property which adds additional cost. Many banks have experienced these phenomena.
If the property must be taken back the humiliation of the foreclosure procedure is avoided by the customer. This will lead to fewer acts of sabotage, there will be no sheriff evictions and it will make the most out of a bad situation.
Needles to say the particulars of loan modification plans need to be discussed and assessed to arrive at a balanced solution.