Re: Do we save their credit? - Posted by Peter_MD
Posted by Peter_MD on November 21, 2002 at 11:46:18:
Stew: (sorry about the length of this post…but my passion on this topic got in the way)
I’m glad I don’t see it the way one of the responders posted below?they really paint a depressing picture which could, if not handled correctly, lead most impoverished people to just give up?what would be the point since they will have horrible credit for the next decade or so.
I started back in 1985 with a business that specializes in foreclosure and bankruptcy avoidance and mitigation. This business complimented the other business I had at the time and was a natural springboard to the real estate business I started years later.
In that specialized business, I was hated by attorneys that begged people to file for bankruptcy protection, and was feared by lenders because I negotiated and argued on behalf of my client, as if the loan was my own (it was natural for me since I always practice empathy in nearly everything I say or do). Lenders, even to my face, smirked and said things like, “why do you care? It’s not your problem, they should have planned ahead for the husband to die?he smoked since he was a teenager?now they have to pay the consequences, not you”. I secretly loved this type of challenge and by the time I was finished, they wanted only for me to leave quietly.
I would not provide people with false hopes. I would use carefully selected words like they should, or they could, or this might, or maybe this won’t, etc. I would tell them the way I envisioned things would play out, with alternatives and options, and discuss how things might develop if we focus and concentrate on these specific issues. We give them hope by telling them that we are going to be doing the best that we can with the best that we’ve got.
I have a wonderful mortgage loan broker that’s part of my team. He shops around for the best loan for the cheapest amount (within the limits of the persons credit history, income, and debt). I am always amazed how he gets things done and I’m comfortable that my clients are getting the best service available.
I think we, as real estate investors, are supposed to offer creative solutions and solve, remedy or mitigate problems the best that we can (working within the law) with the circumstances as they are presently.
With that said, I’ll give you three examples within the past five years that we have been successful in helping solve problems?problems we did not create that offered us challenges that were personally, professionally, and financially rewarding.
First: A lady came to us several months after her husband had died suddenly without any warning. The mortgage company was the driving force in the situation and began hounding this lady to the breaking point for late payments since her husband died. Having enough stress and misery over the death of her husband, the woman finally broke down in tears. She was agreeable to whatever arrangements we decided would be best for her?she was in our hands. Her children were grown, married, and moved away, and she had options to move in with them, get a small place of her own, or move to an assisted living facility. The worse part was that this lady didn’t even know how to write a check. Her husband paid all the bills and knew where everything thing was like prior tax returns and life insurance policies, etc. Anyway, we successfully got the lady a reverse mortgage through our mortgage guy and she is still living in the property today, and will until she needs to move to an elderly home or passes on.
Second: A young lady, the sister of a friend, called us wanting to buy a home. Seems her previous husband had a severe gambling problem and was found murdered. She couldn’t pay off the previous debts and the obligations kept mounting. After years of trying to keep their heads above water, and convinced by an attorney, the lady and her new husband filed for bankruptcy protection. “They make it sound so easy”, she said, and regretted and was remorseful having gone the bankruptcy route. The current husband had bad credit from his previous marriage that had gone bad, and the couple was desperate to get their own house because they had a child on the way. I had a property that we were lease optioning out and were recently told by the tenants that they wanted to move closer to their families and would be vacating the premises within 60 days. We showed the house to the young lady (it had basically no back yard?had a large concrete wall that shielded the house from the large highway?which was very noisy most of the time). The couple said they wanted the house and we did our lease paperwork and, at the same time, I had my mortgage guy sit down and take an application. Everything was a mess?the bankruptcy, husband’s prior credit problems, etc. The mortgage guy called me back and said he found a lender that would do a smaller loan, with a higher LTV ratio, it contained a two year pre-payment penalty clause, and was at a premium interest rate—a true rip off. I suggested the tenants wait and 14 months later, they reapplied and got a nice first trust loan and I took back a small second on the house. That was three years ago, and every Christmas she gives us a card and tells us how much they love that house and thanking us for helping them out.
The third: A young girl (the sister of a client) with a 3 year old baby boy contacted us. Her ex husband ran off with a girl he found on the internet. She lost the home, he ran up credit cards to the maximum that were acquired by forging her signature on applications, and everything was just falling apart. She got divorced and the divorce attorney had already had her prepped for the bankruptcy (because, as I was told, was because the ex husband was awarded bankruptcy and she would then be stuck with repaying the debts), which was awarded a few months after the divorce was final. This situation is a work in progress, however, next month will be two years from the date of the final decree of bankruptcy. I expect (with no promises) to get this girl a small townhouse with the assistance of her young brothers and sisters (they are a close knit family and she has been living with them since the divorce). If I went around telling her that her credit would be ruined for the next 7 years or so, I would crush all her hopes and dreams for her and her child. You can’t always help them, but you should at least give it a try or attempt to find someone that has the knowledge and experience that can possibly help them in their time of need. I see it no differently than a doctor giving up during an emergency operation because he sees other potential problems that already exist that will eventually require extensive follow up treatments.
We get paid well for solving problems?so?go out there and solve problems?and get paid well.
Just the way I view this issue?I certainly don’t have all the answers…not yet anyway.
…and life, as we know it…goes on.