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For a moment, I want you to put yourself in my shoes. Ponder on the following scenario with me.
You are working on a loan and the debtor isn’t responding to anything! You’ve sent letters and nothing. You make phone calls and they’re ignored. You even sent a “Razzle Dazzle” package—more commonly known as “Shock & Awe,” but I like the rhyming, guys—and the borrower may as well have been on Mars for all the response you got from them.
Then, out of nowhere, the investor for whom you are working this loan calls you up and says, “Hey! I went to that house and banged on the door! They came to the door and we had it out right there. You’re welcome!”
End of story. Or, is it?
Some of you reading this are saying to yourselves, “That’s right! I would have done the same thing, especially if the loan was close at hand. If the servicer isn’t ‘doing their job’ then I might as well.”
I have to break it to you, folks, that this action is completely unacceptable, utterly unprofessional, and completely dangerous! We make several attempts to make contact with our borrowers if we don't we will send a door knocking service or we will send file to attorney for legal demand then we start foreclosure. That is the proper way to deal with this situation.
You cannot go to the borrower in this way. We do not know what was said or done, but a visit to the home by an investor is unacceptable. This is primarily why we will not let investors work on their own loans.
It generally doesn’t work and often will make things much, much worse; both for the servicer and the investor. Indeed, it could be very bad for you, unless you like lawsuits from multiple parties.
You see, very specific language has to be used when talking to a borrower, or it’s illegal. A specific schedule needs to be kept, or it’s illegal. A specific tone needs to be used, or it’s illegal. Records of the contact(s) and precisely what is said need to be kept and you can only contact in person a certain amount of times, or… you get the picture.
When you contact a borrower there are very specific rules in place to protect them from harassment. Those same rules also protect the servicer of the note. By abiding by these rules, we are completely legally justified to take more serious steps, including foreclosure.
Typically, the reason an investor may feel a need to contact the owner is not because the servicer is too slow, rather they are be too invested in the investment. That sounds kind of weird, doesn’t it? Nevertheless, it’s true.
Emotional involvement in investments is, perhaps, the worst thing you can do to ensure a great return on that investment. When your emotions are involved, you are prone to make rash decisions that result in less than desired outcomes. Such as a lawsuit from the borrower, a class action from other borrowers you have, if the lawyer is savvy enough, and even a lawsuit from your servicer for breaking the rules of engagement that you agree to at the time of boarding the loan.
To stop emotional involvement, you need to look at your group of loans as a whole, not individually. If you are examining the entire group’s performance, and simply investing towards a great ROI in that perspective, then you won’t be emotionally tied to any individual loan. This is actually the primary reason for investing through Main Street; we do all the work, but you get a lot of those rewards. Indeed, the rewards are usually more than if you do the work for yourself.