Question for the experienced npl / npn / nonperforming buyers.
We purchased a note that is 5+ year delinquent with significant delinquent property taxes. The county requires 25% down to start a tax payment. Due to this, and the significant arrears, we anticipate this asset becoming REO. Currently owner-occupied.
We have significant acquisition experience, however, as we go out on our own we no longer have any back-office/asset management. We are now using FCI.
Apparently it takes 30-60 days for FCI to even make initial contact. We are considering reaching out before they fully board the loan, solely to offer a deed-in-lieu through a 'cash for keys' offer.
Contact we roughly be:
Hello, through the purchase of your loan we are your new lender. Due to your significantly delinquent property taxes and mortgage arrears, we wanted to reach out to let you know that you qualify for our incentive program. Before our servicing company takes over, we would like to offer you a cash settlement to work directly with our attorneys in transferring title and vacating the property. Based on our analysis, you qualify for $xx.
- No mention of foreclosure
- No mention of default
- Any mention of anything outside of the 'cash for keys' will be told "we do not have the authority to discuss any other programs"
What are some thoughts on this? Will this be largely non-compliant and open us up to liability?
I am interested in seeing what other replies you get to this. I would have a few questions first. Have the goodbye letters been sent out to the borrower from the previous servicer? I would recommend looking at a company like Polaris to start on the borrower outreach right away. Having a special servicer reach out instead of you takes the liability out of the situation. By sending your own Hello letter you could potentially run into some issues. You may want to contact Singer Law group about what you could to ensure you don't run into issues but more than likely they are going to tell you to wait for these goodbye/hello letters to be sent.
Thank you for the reply.
The servicer (FCI) has sent the hello/goodbye letter. Official date of transfer is a week out.
However, regardless of servicer, we own the debt and are the lender. My thought is that as long as we are not accelerating the debt or entering foreclosure, we might be okay.
You mentioned singer law. Is that a good group to get to know?
I would be very careful - you say they qualify for a program but then say your offering them a cash settlement. That can be misleading.
This is often debated on what is considered debt collecting and what is not. Some servicers will reach out in first 30 days and others do not.
Reasons why is There is no specific law in place that exactly says that a lender must wait 30 days after the hello letter, however, the nature and language of the Hello Letter, and the FDCPA, make it prudent to simply wait the 30 days. For instance, if you look at the language of the Hello Letter, it states that unless the Debtor disputes the debt within 30 days, the creditor will assume that the debt is valid. If the debtor does dispute the debt, you cannot engage in any debt collection acts until you provide them with evidence of the debt. Absent of pressing circumstances, it makes sense to simply wait for that period to pass, and then proceed with collection efforts.
As @Natasha Hunter mentioned, I've heard Polaris can reach out earlier than most other services though not sure how much advice they can offer you. Singer (also from what I've heard) may take longer to reach out, but may be able to provide you better advice. They're the two main special servicers in the note industry so it might be worth you while to reach out to both and discuss your situation and see what fits you best. And just to reiterate what @Chris Seveney said, you should be very careful about reaching out on your own especially if you're newer to the industry. I would (strongly) not advise it without a consultation with a lawyer or someone of the sort.