Credit Counselor: Lenders Search for Ways to Make Borrowers Feel Comfortable in Negotiations.(Brief Article)

In the mortgage industry, we all know that it's always the lender's goal (at least the reputable ones) to keep troubled borrowers in their homes and avoid foreclosure. Obviously, sometimes it's possible and sometimes it's not.

Borrowers in these troubled situations tend to be frightened and avoid contacting the servicers, who are left being the ones to make the first contact. The discussion at the recent Western States Loan Servicing Conference in Las Vegas, was on how to make borrowers feel less threatened when they are contacted.

D. Todd Sibley, president of Titanium Solutions, a Salt Lake City-based provider of real estate services and loan resolution consulting, speaking at the conference, said, "Some borrowers have been sent videos explaining the foreclosure process. We need to make the (video tape) boxes more conducive to get borrowers to open them.

"One woman received a box wrapped in plain paper only stating that it was from the lender. When she was later contacted, she had never opened it because she thought that it was a box to send back her keys."

According to Mr. Sibley, the servicers' strategy should always be to make contact with 100% of the delinquent borrowers. "If you talk to them, you will have better results in loss mitigation," he said.

Among the voice methods that he suggested were the standard auto dialers as well as "face-to-face contact, going to the home." Mr. Sibley also suggested pre-agreed loan modifications. "The last time I took this out to borrowers, 40% of borrowers signed it."

For borrowers who can no longer stay in their homes, Mr. Sibley suggested servicers use positive incentives to move the process along faster and more cost effectively. "One servicer sends out compensation for borrowers participating in selling (their) property. The borrowers get $15,000," he said.