Dealing With Borrowers: the BasicsAnd Some Key Insights

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AgendaAgenda

• The 3 Basics: Polite, Persistent, Creative, ,• 3 Examples of working with a Borrower

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The Most Important Person in Your DealThe Most Important Person in Your Deal

Sell

• The Borrower is Key to 4 of the 5 Exits (including Foreclosure)

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Foreclosure)

What this Means to YouWhat this Means to You

You need to work with your borrower

You need to understand what their current “situation” is

Y d t h l th t ith “ l ti ” tYou need to help them to come up with a “solution” to that situation

This is “marketing” - be polite, be persistent and be creative

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creative

Example 1: Gone Baby GoneExample 1: Gone, Baby Gone

Bossier City, LA (gas town)

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Example 1: contExample 1: cont.

Rubie’s “situation”

1. Looked up number in WhitePages, then Microbilt People Searchp2. No trace3. 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 daughter6. 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)

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(leave a number for them to call you)8. Next day – 3/6 – get a call back

Example 1: contExample 1: 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 tohusband went to Iraq for 6 months Rubie went to Utah, got a job in UT

Sh d h t th thi• She does have to pay other things.

• She had done career counseling w/prior bank.

• She pays somebody to watch the property - she called State Farm - and got my numbercalled State Farm and got my number.

• She used to pay $625/month - and prior bank h d i t t t h h did 't t

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changed interest rate - she says she didn't get a notice about the rate change.

Example 1: contExample 1: cont.

Sh h l tt f M L i B i (h '• She has a letter from Mr. Lucas in Bossier (he's 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

f bill W t t 1/2 1/2 l ta few bills. Wants to pay 1/2 now, 1/2 later.

• Now she has a job now - cashes after taxes $1,900 jevery 2 weeks. The company loaning for her car took her car back. Now she has a job and is working at W hi t T i t dWashington Terrace, registered nurse.

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Example 1: contExample 1: cont.

O l i Ut h til h t j b i B i Cit• Only in Utah until she can get a job in Bossier City again. Total credit card debt $242/month direct pay. A few other bills turned over to Collections A bit morefew other bills turned over to Collections. A bit more than $15,000.

Sh ' i th ff littl b littl• She's paying them off little by 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.

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Example 1: contExample 1: cont.

Sh h d f t i 2005 L ' O l• She had a new roof put on in 2005 - Lowe's. Only thing that needs to be repaired is the washroom. It's an add-on on the back She paid Lowe's but theyan add-on on the back. She paid Lowe s but they never did it right on the add-on. So roof is leaking on the back. No shingles on the back. She would fly g ydown there.

• Conclusion: she wants to keep the house?

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Example 1: contExample 1: 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 the3/28 – set up meeting w/realtor to do walk-through of the 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

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Her Approach = “Non-Recognition”

Example 2: “Help me out”Example 2: “Help me out”

Hollister, CA

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Example 2: “Help me out”Example 2: “Help me out”

Andria’s “situation”

1. Suing former mortgage broker

2. Back taxes of $20,000

3 Works at a bank3. Works at a bank

4. In foreclosure – for 2 years now

5. Down market

6 Still living in home6. Still living in home

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Example 2Example 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 fightingRan out of money to keep fighting

• We're barely getting the settlement statements - to h t th d t ti th lshow court the documentation on the loan

• Our injunction just was lifted

• We had a mortgage for $320K, got involved with these individuals now we're at $500K

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these individuals, now we re at $500K

• We've accrued $50,000 in legal fees

Example 2• Income - combined $120 000 Both employed moreIncome combined $120,000. Both employed more

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• She knows she has collection accounts

• Realistically, she could afford $2,300-2,500 if it

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included prop. taxes and insurance, that would be great.

E l 2Example 2

T l t $8 000• Taxes are almost $8,000

• Insurance is $900/yr. y

• 2nd $416/month - we had to take that 2nd to pay property taxes that weren't paidproperty taxes that 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 fixingy g

• Value is ~$300K - over 400 houses. Home around corner is $229K Newer home in newer area Ourscorner is $229K. Newer home in newer area. Ours has bigger lot. Better school district area.

E l 2Example 2

What actually happened:y pp

Called her another 4 times (1/2-hour long conversations ti t h l lit )– sometimes teary – she was always polite)

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”What happened: Thank You

E l 2Example 2

Conclusion

Spending a lot of time with the borrower led to a painful b t f l l i ( h f k )but successful conclusion (cash for keys)

If you receive a “Thank You” – you’ve succeededIf you receive a Thank You you ve succeeded

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 helpthat we were for real and that we really wanted to help her”

E l 3 Th C ti A hExample 3: The Creative Approach

Indianapolis, INp ,

E l 3Example 3

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 l 3Example 3

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 forb/c she's done things for Dr's she works 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 l 3Example 3

Propose Deed in Lieu, and mention continuing ForeclosureNegotiate, 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 I take a lesson from Falk on “marketing”Finally, I take a lesson from Falk on marketing

It was Wednesday, June 18th – creative juices flowing, 11pm email

K LKey Lessons

Practice / Scripts / Being Natural

Be You Not “the Bank”Be You, Not 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 ”we might be able to do to help you.”

Most important values to Borrowers: “Honesty”, Most important values to Borrowers: Honesty , “Integrity” (Be Your Word), “Consistency”

Next PAC Session Launch Yourself in 8 WeeksNext PAC Session – Launch Yourself in 8 Weeks

November 5: Week 1 of the Roadmap

“3-Desktop-Based Valuation Tools, and Getting the3 Desktop Based Valuation Tools, and Getting the Most out of Realtors”

[A Z C N t B i Will h l h i thi d[A-Z Course on Note-Buying : Will help having this under your belt: www.notebuyingprofits.com/preorder.html]

Future PAC Sessions: Each Week of the Roadmap each 2 Weeks

November 19: Week 2 – Underwriting TitleDecember 3: Week 3 Negotiating w/Banks

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December 3: Week 3 – Negotiating w/BanksDecember 17: Week 4 – Closing