When it comes to getting resolutions on a non-performing note, using a credit counselor along side a servicing company can yield solid returns for the note investor. Imagine not having to spend the money in legal fees needed to complete a foreclosure on a vacant house when a resourceful credit counselor can track down the borrower and explain the benefits of doing a Deed in Lieu of Foreclosure. These are the type of win-win solutions that can be achieved using a light touch approach of a credit counselor versus a debt collector from the servicing companies
Deed In Lieu
A Deed in Lieu of Foreclosure can often times be the best win-win solution for a note investor and a distressed borrower who has given up on the house or in many cases were unaware that a DIL was even an option to save their credit history from FC marks. A typical conversation between a credit counselor and a borrower who went thru bankruptcy finds confusion on the part of the borrower. They usually think that the BK took care of them on title of the property. The credit counselor can take the time to explain that they are still on title and if they called the county they would see that is the case. Once they know they are still on title with taxes accruing and liability of the property still vesting with them, a DIL becomes an easy solution for the borrowers.
Door knock agents
Let's face it. Many time a simple phone call of mail piece will not get the attention of the distressed home owner with their head in the sand and avoiding all phone calls for fear of collections on the other end. Polaris has a nationwide network of door knock agents that can hand deliver the message of hope from one of our counselors. Many times, the agent can get the confused and stressed borrower on the phone so we can introduce ourselves and create rapport with them. Once they realize we are not debt collectors and are here to help them, the door knock investment will pay dividends.
The use of a credit counselor allows the lender to take a deeper look at the financials of the distressed borrower to help work out a solution. In many cases, the lender and the borrower will agree to a 12 month forbearance plan to prove the cooperation level of the borrower. Once the 12 month FB payments have been completed the lender can offer a permanent loan modification as a reward for no broken promises. The forbearance allows the borrower a second chance to prove themselves with no downside to the lender.
Polaris counselors can help note investors by working directly with the distressed borrower to determine just what is affordable. Once the borrower has pledged to work with the lender under a forbearance or a loan modification, the credit counselor can work to insure the household budget and finances are in line with being a homeowner and making timely payments. Creating a Debt Management Plan (DMP) is the best way to get the borrowers on the right path to affordability.
Hardest hit funds
Many lenders and distressed homeowners are not aware that the US Treasury has deployed another round of TARP funds to certain states that have a Hardest Hit Fund program in place. This program allows borrowers who fell behind on their mortgage payments due to health of economic hardship reason a way to get current. This means a way for the note holders to get a note reinstated using federal money earmarked for just such a situation. In other words, another win-win solution for everyone involved.