1. Loss Mitigation
Via Loan Mods
Creating a win-win situation.
win win situation

2. W
e were having a list. I knew we wouldn’t be far “aha moment”.
company meeting, behind. We needed to get 5% off of
and the volume was It became all too clear that a loan balance in order to meet
turned down on all the flat screens the industry would not be able the LTV requirements or else the
broadcasting financial data when to absorb this shock. I have seen deal in question wasn’t going to
CNBC announced that New things fall, then rise, money lost go through. I didn’t know what
Century had filed for bankruptcy. then made, but this was different. else to do, so I called the bank
We immediately turned up the It was like a plague that moved holding the note, told them what
volume. Like a war veteran with from victim to victim, first sub- the problem was, and they cut
post traumatic stress syndrome, prime, then on to alt-a, then to the note by 5% -- just like that.
I flashed back to my days in the a-paper, wholesale, insurance, Just that simple. It made good
dot com industry. I had seen what hedge funds -- ultimately no entity business sense (for them as well
kind of devastation could happen involved with real estate was safe. as us) in a difficult environment,
to an industry and fast. Something For six months, maybe more, and they did it.
told me this was going to hurt. we tried to find our way. I worried 120 days later, we have started
Over the next few weeks and about my company, my employees, a new company specializing in
months, I would turn on the TV and the people with whom we did loss mitigation, debt settlement,
only to see cable news minimizing business. There didn’t seem to be and credit repair products to
the scope of the problem – no a safe harbor anywhere. By late brokers who can now help the
one was predicting a housing 2007, I felt that a new chapter was clients they once turned away or
bubble and recession to follow. It being written in our industry. In referred to a bankruptcy lawyer.
seemed as if New Century might my gut, I knew that with all this As we started trying to modify
be a simple case of incompetence destruction there must also be a loans via loss mitigation services,
or corruption, isolated from the possibility of hope. I just didn’t the banks became increasingly
rest of the real estate industry, a know where to find it. more helpful, and we became
one-time anomaly. That wishful- As the market evolved increasingly more useful. We have
thinking-scenario didn’t last long. (devolved?), I searched for a cut interest rates, extended terms,
It took a little over 90 days business model based on what lowered principle balances, and
for the sub-prime mess to even people needed in this environment. kept clients in their homes while
be mentioned on cable news. Our clients wanted loans, financial also keeping a performing loan on
But events snowballed, more circumstances had driven most of various banks’ books.
mortgage companies went our competitors out of business, The service we perform,
bankrupt, and suddenly we were and still we could barely get any helps banks, helps brokers, helps
facing a full-blown housing and deals funded. It kept getting worse people… not a bad concept
loan crisis – a perfect storm of and worse: Banks were running because we all can use a little help
economic pain. And the whole out of money, home values were right now.
world was in denial. plummeting – the only thing Early on, we recognized that
I tried to tell myself that going up was foreclosures. I everybody and their uncle would
somehow my company would started checking the Implodo- probably jump on this bandwagon.
be exempt. I spent hours a day Meter so often I was sure the We wanted to make sure that our
on the Implodo-Meter website, letter “I” was going to be worn company did it right. We perform
alternating between horror at the off my keyboard. I expected to see loss mitigation services through
sheer number of companies going my own company’s name there an attorney. If there is an “I” that
under, and thankfulness that mine any day – and then it happened needs to be dotted or a “t” that
was not one of them. Pretty much – not my company going out of needs to get crossed, they make
every entity with which we did business, but rather, what the sure it happens.
business made the Implodo-Meter marketing gurus like to call the Brokers often ask us, “How
17
TheNicheReport.com

3. does this work?” Lots of phone procedure. To top it off, each research on the company that is
calls, lots of networking, lots of bank, servicer, or warehouse has representing you. Sometimes this
software, and lots of attorney its own procedures for dealing is tough because loss mitigation
contracts. Inventing a new product with defaults. Some have staffed has only recently appeared in the
that most can’t define, and doing up and risen to the occasion, and marketplace – no company has
it legitimately, has its challenges. surprisingly enough, some have a sign out front that says “Loss
We have gone to many seminars, not. Some banks want to clear the Mitigation – For the last 25 years”
met with the CFL, DRE, books, some banks don’t. The key – they don’t even have a sign (or
legislators, you name it. Laws are to it all is to speak the language at least a truthful one) that says,
changing every day, and the only of common business sense – the “Loss Mitigation – For the Last
thing consistent… is nothing is homeowner and the bank both three years”. The business is just
consistent. By using attorneys on have needs, and by meeting each too new.
all our files, we guarantee that the other part way, they can avoid a The way to find out who you
most up-to-date legal practices are devastating collision. are dealing with if a company
the rule rather than the exception. People have the capability is new, is to find out who owns
We don’t look for ways to to call the bank themselves it and what they did before. It
circumvent the rules, but rather, to and try to work things out. is worth the time to do your
embrace them. Loss mitigations Depending on the bank and research; your home is the biggest
helps people, but it can only help the individual homeowner, the investment you will ever make. As
if it is done correctly – there is too outcome can be positive – or a Broker/Lender, we have seen our
much at stake to cut any corners. awful. I personally would not share of modification companies
recommend a homeowner that claim to help and seem to be
attempting loss mitigation, and I good at cashing checks, but not so
Brokers forward us leads with have heard enough horror stories good when it comes to the actual
the documentation that we need to be confident in the value of our work of modifying loans. If you’re
to underwrite the file. The process service. a homeowner, or even a bank, you
is so tedious and delicate that we It has been quite a process don’t want to get involved with
keep everything in house. The educating people about how loss a company that is incompetent,
entire work load of loss mitigation mitigation works. The scams are overwhelmed, or just plain
is done by us. All we require of plentiful, and some brokers are crooked. Due diligence is a must.
the broker is to find someone that so desperate that they will do and If I have one major concern, it
needs help and send them over. say anything to make a buck. We is that the focus of the people who
Once a case is opened, the have total control of the process so will ultimately write the book on
process that results is often a even the worst brokers cannot take how loss mitigation is done, will
classic case of hurry up and wait advantage. look to place blame, as opposed to
as we zig and zag uphill, downhill, Homeowners need to be looking how to make the situation
left side, right side fast and slow careful about whom they do better. As a broker/lender, we have
as we make our way through business with these days. In tough been audited in almost every state
various bureaucratic mazes – we times, the public tends to be more we are licensed in, and have been
move with urgency, but also vulnerable and gets caught up scrutinized by various mortgage
with complete deliberation and in scams more easily. If you add entities. It is our goal to help
attention to detail and proper in the emotional attachment to regulate, help standardize, and
process. It doesn’t help anyone a home you own and live in… work with all the relevant agencies
if you skip a step and everything desperation can take over, and and businesses in order to develop
falls apart. We do not want the desperate people more often the right products, and the right
house going into NOD, so time than not make poor decisions. rules to protect the public.
is of the essence, but so is proper It is important to do some This is a monumental time
18 May 2008

4. Are the ever changing
market conditions
affecting your lenders?
How does Fairview Commercial Lending continue to fund
while the market is in flux?
Toll Free (866) 634.1270
www.FairviewLending.com

5. WHEN IT COMES TO
NON-TRADITIONAL that will define the way the mortgage industry operates for
many years to come. As the regulators try and regulate, the
COMMERCIAL LENDING, law makers make more laws, and the home owners find their
way back into financial security, I think we all will be a bit
more conservative moving forward and rightfully so. There’s
a lot of pain out there. Ultimately, you need to make sure the
client will be protected from scams that prey on people who
need help. Big Banks and legislators, let’s work together and
we will get more done. Nobody has a perfect answer – at least
not yet.
Curt Melone is the Founder of
PacWest Funding and Green Credit
Solutions. PacWest Funding is a
Broker/Lender established in 2004. It
has been noted as an industry leader in technology and customer
service with some of the fortune 500 banks and industry leaders.
Green Credit Solutions has been credited as a leader in new
product development as well as helping regulate products during.
HERE’S THE PROOF:
If you would like to learn more please info Green Credit at info@
getgreencredit.com or call (877) 793-8634.
SBA/USDA/non-conventional
owner occupied commercial
mortgages to $2MM
Credit scores as low as 500
Up to 85% financing
Difficult-to-finance industries welcome
including gas stations, auto repair,
motels and specialty trade contractors
Low minimum debt-service
coverage required
Private money refinancing specialists
CREDIT AS LOW AS 600 OR LESS
Call now for a fast evaluation and approval of your deal!
1-877-337-3757
www.oceancapitalonline.com
Brokers are fully protected and well compensated