EP 661 - Best Practices In Special Servicing And Negotiating With Distressed Homeowners With Hazel Rivera

Foreign this is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host, CEO of We Close Nodes, Scott Carson. Good morning, good afternoon, good evening, everybody. Welcome to this episode of the Note Closure show. As always, Scott Carson. Excited to be here with you today. And I'm extremely jacked up for this episode. We've got a special person on today as our special guest today. And this lady knows her stuff. Okay. She is amazing and I will tell you right now, I could not do what I do without her. She just has been a very critical part of our team. So she joined our team a couple years ago and I've talked about having her on. We had her on with some floor and had rescheduled. And I think this episode is going to have so much impact for so many of you guys that are listening out there today that are either watching this or listening or going to read this that are in the note business that are getting into it and they have the idea that, hey, I want to self service or I want to talk to borrowers and I want save that whether that's a good or bad thing for later on. But we are honored to have the lovely, the amazing, the rock star when it comes to servicing our own Hazel Revere joining us from New Jersey today. How's it going, Hazel?

Hi, I'm good. You? Thanks for having me.

Honored to have you. So let's talk a little bit about first about who Hazel is and how did you get into Lonesome? Let's talk a little bit about your background and kind of go from there, huh?

Well, yeah, my name's Hazel. I'm from Jersey. I started off actually working for a chiropractor and I just put my resume on. Indeed. And a mortgage servicing company actually reached out to me. You know, they were really interested in having me work for them. I had no clue about the industry. You know, I don't have a mortgage of my own. And I just fell in love. I fell in love with being able to, you know, reach out and help people keep their homes as well as helping the investors, you know, get their money's worth. It's a very rewarding job.

Yeah. You've been doing this for how long? How many years now, Hazel?

Four and a half, I believe.

Four and a half years. Yeah. And the previous company that you worked at, you were like the packed. Well, you handled a lot of non performing and performing assets, right?

Yes, I handled over 600 assets.

That's a pretty good chunk. Let's dive into that. When you go from a non industry chiropractic into mortgage servicing, it's a different ball game. What is involved in and kind of the training to get you ready for something like that. You know, you have to take classes or there's fair debt collection practices and stuff like that. You got to learn as well too, right?

Yes. In the beginning they do give you training. It's about, I want to say, two weeks long. You have to answer, you know, you watch the videos and answer a few questions and then you get your certification. After that it's pretty much hands on. You're not going to learn the ins and outs of the industry unless you go through it, you know, growing pains, right?

Exactly. Because it's a lot of. Every situation can be a little bit different. As I joke, in loan servicing, especially non performing side, every notice its own country western song, right?

Yes, for sure.

Let's talk about that. Let's talk about. You handle our portfolio and you're doing a lot of things. Working with our sellers and working with our servicing company, working with attorneys. Let's talk about kind of the. When you were working for the servicing company. Talk about kind of what your day in the life of asset manager at a servicing company is like. What were you doing there on a daily basis?

Well, you respond to your emails and you pretty much, you make your performing. I mean you check on performing payments, make sure the performing notes are on time, you call anybody if they're late on a payment and then you do loss mitigation, which takes up most of your time. The cold calls and sending out letters. I don't like to send out generic letters too much to homeowners. You kind of want to make it more personable so that way they're more inclined to reach back out to you. Checking on those bankruptcy cases, those are very important as well as escrow. So you know, you're just kind of doing a lot in a day to make sure the assets are on the right track.

And that's what I'm glad you brought up with. I mean it might be okay if you've got people starting with one or two assets, they may still try to do that themselves. What advice would you tell them starting off is to oh, go do it yourself or no, you need somebody to go through it. Say that louder again one more time.

No way. I would definitely get a mortgage servicing company to help you. So that way you have trained asset managers, loan servicers helping you do homeowner outreach. You want to make sure you stay in compliance. And you know, it's very quick for a homeowner to feel harassed and go to an attorney general and make a complaint about you and then boom, you have to deal with the lawsuit. So it's definitely better to leave it to the professionals.

So let's talk about that. What? You know, there's some people that are calling borrowers at odd hours of time. Let's outline some of the what you can't do. All right, well, let's talk about some of that. So what, are you able to call them at all hours? Are you calling them at a servicer every day or are you just doing four times a week? I mean, servicers will change a little bit how much they reach out. But what are the times you can and can't call them?

Between 8am to 8pm you can give a call. Beware of the time zone. That's something that I had to learn being in Jersey. Some assets in California and other places, I think Indiana. There's different parts of Indiana where there's like an hour difference. So you really have to just google the actual address and see the time zone and make sure you're reaching out an appropriate time, I would say. As for phone calls, it depends. If the homeowner is recently non performing, I would wait, you know, maybe call twice a week or something and you realize they're going, you know, dark. You call three to four times. But I wouldn't call every day. I mean, if somebody calls you every day, are you going to want to answer?

Not really, exactly. Now and then. As far as letters, you know, demand letters and stuff like that. Can you send like threatening stuff like pay me now or is it.

Yeah, no, I mean you definitely like get those moments where you want to and you're just like, come on. Like, you know, I need to see some payments coming in. But at first you just send out a contact letter, let them know you're reaching out. Maybe they relocated and they're renting out the property or they change their phone number or their email, which happens often. So you just send out, you know, a friendly contact letter. I would wait maybe two weeks. Then you can send out an intentions letter asking them if they want to keep the home. You can provide homeowner options and if you don't get a response, that's when you should send a forfeiture notice or a demand notice.

These are all documents that need to be basically structured similarly or professionally. Right. That aren't harassing in nature or you can't threaten people. I mean you've got to follow it down to the law. And a lot of people I think screw up on this and trying to self service because they don't send those things out. They keep trying to call and get a hold of people and delaying that, you know, the letter notices stuff. Would that be something that you've seen in the past happen?

Yes. There are home investors that want to just call and you know, get a quick answer and that's not always the case. You know, sometimes, you know, I don't answer calls that I don't really know. So it is definitely better to have a paper trail and to reach out in a friendly manner and letting them know, you know, you may understand their hardship but you know there is a debt that's owed and you're willing to work with them but be more, you know, open minded that some people do have a lot going on with them and they do try to avoid paying their debt. So you want to be as friendly as possible. So that way, you know, they feel more comfortable to reach out and let you know what's going on with them.

Now you mentioned something there. I'm a big believer you got to have empathy for borrowers because you never know. Like you said, you never know what they're going through. You know, I've been in a bad situation in the past, years ago, understand that, you know, you don't like getting a phone call from the servicing company, you don't want to answer the door for a certified letter coming in and things like that when you're late on your mortgage. But what are some of the things that you do if we were to have a conversation like you're calling the bar for the first time. What are some of the things that I think that you do that set yourself apart because you have a really, you end up building a really good rapport with a lot of our borrowers. You know, you're, I think you're easy to talk to. But let's talk about some of those things that I think is the hazel touch. Let's talk about that.

I think it's just really, you know, having empathy and getting to understand where they're coming from and let them know, you know, you're not just wanting their money. Of course you want to collect on the debt but you also want to make sure that they're okay. And that when you do work out a payment plan, it is feasible for them to make on time payments every month and that it's not going to be hurting them because if they feel like you don't care, then it's like, well, then I don't care and you know, they will drag it out longer. So it's better to just call and you know, ask them how their day was going and if, you know, there's anything that you can do to help, if there's certain options that, you know, maybe are more appealing to them and just really getting an understanding of where they're coming from and what's going on and what led them to stop paying on the mortgage or the debt that's owed.

Yeah, that's definitely thing. It's just trying to figure out what happened because everybody goes through financial hiccups and I don't think most people want to, you know, want to try to take advantage of a bad situation and not pay their mortgage. I think a lot of people want that dream of homeownership and want to own it because they sign up for it. But obviously we've seen a lot of craziness the last 12 months with everything being Covid related. So whether when you get somebody on the, when you get a bar on the phone and you're kind of starting that process, what's that process? Look, are you collecting financials? What kind of questions are you asking? What are some of the things that you're doing to uncover where they're at and maybe what they can and can't afford?

Well, first, before you even reach out to a homeowner, you definitely want to check their bankruptcy status if they're in an active bankruptcy, if they've been discharged, dismissed, or, you know, never had one. And if you have the green light to reach out, you just want to see what their intentions are. You don't want to go and discuss an explain all these things and stay on the phone for an hour when you realize, well, they don't really even want the property. They don't want to deal with having to, you know, if they're not paying their mortgage, most likely they're not paying taxes. And taxes, you know, take precedence over the mortgage. So they're going to have to deal with that and homeowners insurance. So if they, if you explain to them everything that's going to be owed and you know, their financials are going to change before you even start looking at how much they can afford. Sometimes they get overwhelmed and they're just like, you know what this is, all right, I'll sign a deed in lieu or, you know, cancellation agreement and go about my day. They realize that no, this is something that I can do and I do want to keep my home. Then you go and you discuss what options work for them.

Yeah. Now let's talk that, we'll take it back a little bit. You recheck the B case, you go to PACER and check the bankruptcy status first. What happens if you see that it's a BK7 or 13, what's your step then? Is it then to call the borrower or do you call the attorney or what's your process with that?

Oh, you definitely do not want to call a homeowner if they've been in a bankruptcy, whether it's a 7 or a 13. A 7 they don't usually pay on the mortgage. 13 they do, depending if it's a conduit plan or not. They may be paying the mortgage like the servicing company as well as, like directly and then as well as with the bankruptcy plan. So you want to just read the plan first and then you can call the trustee, make sure the payments are being mailed to the correct address. And if there's any missed payments, you call the trustee as well as the attorney. But you never want to call the homeowner.

Well, but that's always nice because now you, if you call on a big bankruptcy, whereas a lot of investors, real estate investors, avoid bankruptcies because they're not going to take the property back. We actually kind of embrace that, don't we? When we see a bk, we actually know we're gonna have somebody to talk to, right?

Yes, it depends on the situation. There are some bankruptcies where homeowners do get dismissed due to non payment and then, you know, you can't reach out to them. So you're kind of in this limbo state of what are their intentions. But for the most part, it's usually outlined in the bankruptcy. You know, who you can contact and you know, they're more reliable if you contact attorneys or trustees and the actual homeowner sometimes, right?

No, they're, you know, if they paid their attorney bills or not and gone that route. Exactly. You know, that attorney can handle it or reach out to them. Now once you've got that set up, let's take another way. Let's say, okay, they're not in bk. What are some of the ways that you try to track down right. Party contact or as we say in the industry, rpc. We see that and that's really the biggest thing when somebody's buying new assets to get that right. Party contact, right?

Yes. So you definitely want to do your due diligence. You want to skip trace. If there's two homeowners, you want to make sure you get current addresses and phone numbers for both of them. And once you speak to them, you want to verify who they are. If you have their social, you can ask them for the last four just to, you know, have verification. You can ask them to send something in. But I wouldn't go disclosing any loan, any personal loan information unless you verify that the number that you're calling is the person you're trying to reach.

Yeah. Verifying date of birth and last four is pretty normal.

Yeah.

What is some of the things that you've used? Skip tracing. We know you can buy skip tracing, but if you use social media to track any of the borrowers down or seen any of that stuff work for you?

I have, but you're not allowed to contact them through social media. But you can go and, you know, I've Googled, I've Facebook and browse and see, all right, this person's not paying their mortgage. They're saying that something's going on, but they just bought a 2020 Audi, you know, and then you're like, okay, wait a minute. So then you try to. You have to readjust and figure out how to discuss with them, you know, getting more money or what's going on with their financials. But, yeah, you can. You can reach out to them in several ways and check. You know, there's times that I've gone on Google Maps and the imaging and looking at the houses and, you know, making sure there's cars out there. So it all depends. But you just only should contact them through skip tracing and stuff like where you have verification on how you got the information or proof.

Should I say, yeah, that's a good thing. If anything's called into play, there's some. I know some people like, oh, I used Facebook. I connected and sent a message on Facebook with my borrowers.

I'm like, oh, yeah, no, not the best idea.

You've probably heard some doozies of borrowers saying why they can't make their mortgage payment. Besides just being laid off or not having money, has there been an interesting story of somebody saying, well, I can't pay because of this or this? That stands out in your mind?

Yes, actually, it was one of yours.

Oh, okay, good. Which one?

All right, we had an asset where a homeowner had told me that he had brain cancer and he didn't pay for over a year on the asset. And legally you're not really supposed to ask for proof of like, you know, their medical information and stuff because that is personal and there's HIPAA laws and stuff. So you know, it was kind of hard for me to try to be empathetic but then also work with him. And then finally I got to the point where I said, well let me see your financials and I want to see that at least medical bills are being paid. And that's when he let me know that you know, it's not true. And we ended up taking the house back from him like shortly after. But yeah, just don't get sucked into those, you know, really sad stories. It's easy to do and especially when it comes to medical reasons and you can't, you know, get the proof that you want or request certain things and ask certain questions. I would definitely just, you know, try to find ways to finagle the answers that you're needing. So that way you can, you know, handle and address the situation better.

That is interesting. I'd forgotten about that one. Lying about brain cancer, man. Good times, good times. Now you know, we've had such a wider, especially with us being so, you know, focused on the non performing side of debt. I mean performing sides pretty easy to collect on for the most part, right? Yes, just getting things set up and on an ach and stuff like that. But I mean I think you got such a great touch with people because I know that there's borrowers that reach out to you on a regular basis or even when sold assets, they still wanted to contact you because they were talking to you on a monthly basis about things. You mentioned something really important is not getting sucked in to the emotion aspect of it. And I think a lot of people that want to self service or they want to talk to the borrowers, that's where things really go awry. They give an inch and the borrowers take a mile. Right? You want to Hazel?

Yeah, no, that's definitely pretty much sums it up there in a nutshell. They do definitely try to take advantage. Not all of them, but a lot of them do, especially with their financial burden. So you know, you just try to be nice. But definitely if you're asking for something, make sure you get it. Don't be too lenient, don't wait too long. As if you see a performing homeowner has missed a payment, let them know, listen, you got to make a double payment. Or a payment and a half. Most servicing companies do accept partial payments. They'll put it in a reserve and then once it's a full payment, they'll apply it to the account so you can ask for more. Make sure that you're getting your money back. Because if they see that, oh, you don't care, you have enough, you know, assets to deal with and stuff to deal with on a day to day basis, they're going to just think that, you know, they're flying under the radar, you know, it adds up. And then it's harder to collect on a $2,000 debt, whereas like, you know, like a $500 one.

Yeah, that's the thing is you're looking at a lot of information and touching base a lot of things. Is there a number that you kind of look at? Is there like a formula in your head that you kind of look at, okay, what can they afford based on income? I know, you know, like in a mortgage. So you can try to get a mortgage, it's always rightfully around 40 to 45% of whatever their monthly income would be, roughly what their payment is. What are some things that you look at on the financial, Are you taking, making them make a list with you over the phone, Are they sending stuff into you or you just kind of have that conversation, what can you afford and go from there?

It depends on the situation. If it's somebody that I've handled, you know, been with before and we've done payment arrangements like a child payment plan, you kind of get a feel for what they can afford. They're pretty straightforward. It's a new homeowner that, you know, you just bought the note or it's somebody that was in the dark and you're, you know, having to figure out their financials. I would send out a financial application, having them list their expenses as well as their income. So you can do a gain to loss ratio and just get a really feel for what they can afford at that moment. You know, I can say, well, looking at the financials, I think that you can afford $600 a month, but they may have, you know, debt that they didn't want to disclose and they really can only afford three, well, let's meet in the middle and do like 450, you know, try to make it feasible. Because if it's not and you're just like, no, this is what I want, you haven't paid, you're not going to get your payments if it's something they can afford. You know, a lot of times they can go on automatic payments because it's like, oh, no big deal. I have that for sure in the account. And I always tell them homeowners that, you know, put the least amount that you can afford and then send more. Send it and apply it to your principal, put it into reserve, you know, make sure you're paying your delinquent property taxes. If you have a water bill. Like, you have to make sure that all the debt is being paid and not just you receiving your side of it because then you're stuck advancing funds at the end.

Yeah, no, that's really great counsel there because yeah, it's not just about the mortgage things. Taxes and water bills and a lot of times the water bills follow or. And then even the county a lot of times is obviously a lot more lenient with the borrowers calling in if they need to, you know, set up a tax payment plan versus an investor that's out of state trying to pay taxes. Right?

Yes.

Now what when you look at the stuff that you've done is there's a lot of people don't realize, I think a lot of people get into. They like, oh, I have a servicer. I'm just going to board my loans and the servicer is going to handle everything. You're already shaking your head, no, it doesn't work. No how is important because with 600 files that you're dealing previously with, you had a variety of different investors on those, right? Big that had a couple hundred like me and then others that were onesie twosies. I imagine what was probably your most frustrating thing when you were working a servicing company with investors, what was some of the pet peeves that just drive you bonkers? We don't name names out there, but actions or lack of actions or lack of communication. What?

Yeah, I think lack of communication is definitely a big one. You have to stay responsive. This is your asset. You know, you have to in your investment, you have to make sure that your hands on whether someone else is handling it or not. You want to make sure that things are getting done. But then also you don't want to be too overbearing. You know, you don't want to micromanage because if you're not sure of how the industry goes, especially with loss mitigation, you know, you kind of have to trust the asset manager and build that relationship where if there is something bothering you or you think something could be done better, you can express that. But maybe the asset manager has a reason, you know, that maybe what you're asking for is out of compliance or can be overwhelming for the homeowner. And they know the homeowner is a grumpy person and won't, you know, handle like being called every day. So it just depends. It's a case by case situation. But I, I know it's a pet peeve for me is people that aren't home investors, that are not hands on and that they don't seem to care about, you know, the investment that they have, basically.

I mean, I've had servicers call me before, like this guy bought a portfolio of loans and then disappears, you know. Yeah, and we've seen that happen. I mean it just no comment, no content, you know, people, you know, hey, do you know this guy? Like, yeah, I know that guy. Let me reach out to him. And the crickets. It's just crazy, you know what I mean? And I think servicing and distressed debt investing is a lot. People have to embrace the hurry up and wait, I think mentality. We buy things, but there's a time when stuff gets transferred over and we had Shantae on here talking about it. You know, it's a 30 to 45 day transfer. But the communication, you can reach out to bar and then you're reaching out for more information. What's the time frame that you let lapse between if you send them something and to take action? Is it a day, a week, two weeks, a month? What's the. And it probably varies a little bit what you're asking, but what's kind of that timeframe that you want to have that concept? Next touch point with a bar, what do you try to get the borrowers to do?

If you're in communication with the homeowner, you definitely don't want to not talk to them. With 30 days, you know, you want to reach out at least. Like if you're sending out financials, they can send it back within 30 days of when it's mailed out. Some servicers do 45 days so you can call them after two weeks. Did you receive it? Do you have any questions or concerns? Is there something that you want to go over? If it's an agreement, you can reach out. Do you want to have attorney review it? Go ahead. Do you have any questions for me? Not necessarily, like send it back already, I need the documents or anything like that. But just checking in, making sure they received it and if they have any questions or concerns, because sometimes they won't call in and you wait 40 days, 35 days and they're just like, oh, well, I forgot or oh, I didn't understand this. And it's like, well, you could have called me. But it falls back on the person that's managing the asset or the investor, because that's your investment. You know, you want to make sure that you stay in communication and make it comfortable for them to want to reach out to you with any concerns that they have.

Yeah, you want to make sure it's a non adversarial kind of relationship for the most part. I mean, you probably got to read them a disclosure every time you call them though. First and foremost though. Is that correct?

I don't just because I build a rapport with the homeowners. But I guess if you don't talk to them all the time, it is best to do that.

Yeah. Started off especially initial phone calls, for sure. Yes, definitely. I know you do do that for the initial phone calls, for sure. What's been some besides Mr. Fake Brain Cancer, you know, you've probably had good and bad borrowers on the phone. Some people have been extremely nice and then others that have been just downright ugly. We're to think back to the ratio of when you get new files in and that first right party kind of when you get them on the phone. What would you say the percentages of people are actually really friendly and communicative versus being ugly?

I think friendly probably like 20%. There's not many friendly people. The first time you talk to them, they're kind of defensive, maybe embarrassed and you know, they don't want to talk about having to give out money. So I just, you know, I let them know I'm not here to take your money and, you know, leave you in the dust and not care. I want to know what's going on with you. I want to work something out with you. If you love your home, I want you to keep it. I don't want you to go into legal. That is the route that will be taken if you don't, you know, communicate with me. But I'm really trying to just keep you in your home. And they're more open to that. I've had quite a few homeowners that have said colorful words to me before, you know, and I explained to them, I'm trying to help you here. You know, there's investors that they're kind of like sharks. They don't care. As soon as the 45 days, depending where you are, the 120 days that once you're delinquent, it's like they go for legal, you know, and they don't want to hear anything because they feel like you sign this, you know what debt is owed and that's it. And me, I mean I had an investor like that when I worked for the servicing company. He just wanted to put everything illegal and didn't want to talk to anybody and didn't care. And I mean, don't do what I did. But I didn't listen. I was like, listen, I'm gonna call these people and I'm gonna let them know, like I care. I want to make sure that they stay in their homes. And he had a great turnaround. He assigned all his loans to me and most of them were worked out from non performing to performing.

Well, that's the thing. And that was one of the biggest mistakes I made years ago when I got into the non performing side. I think we see that happening. I mean that's a great example. We come those investors that come from the fix and flip side or the property side, they want to take the property back and don't realize that it can be extremely profitable, if not better return on investment to get the borrow back on track to performance versus having now, not more money coming in now forking out legal fees and other things to take it to legal.

Right? Yeah. Because that can be a stressor in itself having to go to legal. And then sometimes you need proof, like how much, how many times did you actually reach out to the homeowner? Where is that paper trail? Did you send out contact letters, intentions letters, demand notices or did you just call them? You know, and the homeowner can definitely fight that. Sometimes they go and they file for bankruptcy and then you're stuck having to deal with the bankruptcy. So to avoid all of that, you just try to be more open minded and patient and you work with them.

Now what's a story, case study story of your friendliest borrower that was non performing. You have anybody that's, you know, sent you Christmas cards or. When you think of a friendly borrower or an ideal situation, is there a story that pops to your top of your head?

Yes, I did have a homeowner one time. He just was like smitten with me. I helped him go from non performing to performing. We polished his loan. He was able to eventually refinance and he, you know, when I worked there, he called me in the servicing company even after his loan wasn't there, asking me how my day was. He told me how to fix a dryer. Like he just called me for random stuff to just talk and, and you know, have someone to talk to on the phone. And honestly I didn't mind it because you know, you spend five minutes talking to the person on the phone and that's how you build the rapport. And he can go and tell somebody else, listen, you know, maybe we're trying to turn switch your servicing company and you know, like help you find other properties so that the investor can go and invest in. So it's always good to just be very friendly with people and you know, just talk to them. Sometimes people just want to talk.

Well, and I was gonna say that that's kudos. It's like it reminds me of that movie Red with Bruce Willis where he keeps calling the Social Security, the payroll department and keeps tearing his checks just to talk to the lady or Chris Contan from a night at the Roxbury to call the credit card approval company.

People are like that.

Well, and as I think too sometimes you're probably a little bit of a counselor too on the phone with some people as they've gone through bad things too. I mean you've sometimes probably gotta let people just kinda just talk. Cause they probably don't have anyone to talk to. Is that true?

Yeah. I have a homeowner now, one of your assets and she's not doing too well. She has a lot of medical issues and she'll, you know, I ask her how are you feeling, you know, what's going on with you? And we've gotten so friendly that she'll just call me after her doctor's appointment to let me know how it went and you know, that she's stressed out or something. You just not that everybody you have to go being so personable and friendly with because you know, it is a business. But when you have those people that you see want to actually talk to you and they need someone to, you know, just hear them out. What is it going to hurt you to take 10 minutes out of your day to just let them know that you care? You know, not all the time, but yeah, it does.

Yeah. And you know, that's the same. You have to have an empathy. And that's why I think the note business, if you're going to be doing this, you need to have a portfolio because you're going to have some cases like that. Like I had a borrower years ago, lived in Jacksonville, Florida. She was on a fixed and we've had a few of those very low income, fixed income, handicap. You're not going to boot somebody in a wheelchair out of their house. You're going to try to work with them as best you can to make it a win. Win your win may just come a lot longer after they've passed on. But just trying to help take care of people a little bit, right?

Yeah, no, definitely. I mean, it all depends. But especially when they, you see that they're trying and they're not making excuses for, you know, their financial situations and all of that, and they're willing to give you their financials to show proof of their hardships and stuff, you definitely want to be more lenient. But if feel like they're, you know, blowing smoke by just saying stuff and not providing any info or calling you back all the time, that's when you're kind of like, all right, well there, you know, there has to be something else that I can do. Different options.

Now, if you think back to all the loans that you have been involved with, not just my stuff, but previously, everything like that, is there a percentage that kind of breaks down in your head, Hazel, about if we were to split them up into three kind of buckets? The first bucket being those that get re performing or modified or trial payment of some of sort. The next bucket being those that just sign the property over and walk away. And then the third that's got to go to legal foreclosure. What kind of percentages would you put on, say out of 10 assets? What kind of percentage do they kind of fall into that you see that you can think of.

I don't know. That's a complex question. It's like it's loaded because it all depends on, you know, where the assets are. Most people are not inclined to sign the property over unless you let them know, like it's going to be illegal, it's going to affect your credit. And you're not saying it in like an aggressive manner more. Now I'm concerned for you because if you want to eventually buy another house or you want to go rent an apartment, this is what's going to happen. Those are the people that eventually sign over. I think maybe like 70% end up having to go to legal if they've been dark for a long time. And that's exactly why you want to reach out frequently send out those letters and send out a field agent, a door knocker to check on the occupancy, take pictures and all of that. So that way you don't get to that point where, where it's, they're just gone.

Well, but that's a good point. If it's, if it's not responsive, 70% go to legal that makes a lot of sense in a small percentage will sign the property over to walk away because they got divorced or moved on or moved out of the air. We've seen it happen with our portfolio, and you're doing a good job of getting people to sign over, stuff like that. What has been one of the biggest surprises with the last 12 months of COVID You know what one of the things that you've been maybe surprised about as seen as a trend taking place here with everybody struggling or people being out of work and stuff like that.

I think the homeowners that I build a rapport with, I'm very proud of. A lot of them have had hardships, and they'll call me like, I'm gonna make my payment. I'll make a double payment next month, and. Or they'll let me know. I'm trying to get financial aid. So it's like, I don't even have to reach out to them to see what's going on with them. They're reaching out to me because they know, you know, that it's easier not to say that they're using the pandemic as an excuse, but it's easier to discuss these things because it's something else to fall back on and not their negligence, you know? So I definitely think that that's a good thing. But I have seen a lot of homeowners become unresponsive during the pandemic, and it's unfortunate because you have helped them out, giving them payment options and stuff like that. So it all depends on the homeowner and, you know, their mood and stuff like that. But for the most part, they've been pretty good, the performing ones.

And that's the thing. I mean, it's. You never know what's gonna happen. We've had some performers go dark, and then others that popped up out of the blue. They've started paying again or looking to do a payoff or get refinanced out of the property and stuff like that. Yeah, that's always a good day when we get a refi. It rolls in.

No, I agree. There was one typical homeowner that's actually gonna pay off, so. And that's after three. I've been working with you for two, but I think I had your loans at Madison, so almost three years reaching out to this homeowner. And during the pandemic, now he wants to sell. I mean, buy his house outright. So I think that's great.

No, and that's the thing, is that I don't like to go legal, I'll go legal. You know, it all depends on the situation, what' going on. But we've really had our hands tied this last 12 months of not being able to go legal in a lot of cases because the counties and states out there, the foreclosure and eviction moratorium, stuff like that, but, you know, we've had good and bad. That's just. That's the thing. I mean, it's such an interesting industry out there. It's going to be even more interesting this next year. You know, 2021 and into 2022 is things kind of get a little crazy with foreclosures and evictions again starting to pop back up. But when you think about the industry a little bit it and new investors, what are maybe two or three things that will make your life a whole lot easier besides communication? Is there, like, if an investor comes to you with like, hey, I'm willing to do A, B or C and this is the way I want to go, or here's what my plan is for my assets. What are some things that you have experienced that you love when they do?

As far as game plans?

Yeah.

Just knowing what they want to accept or not, I think that's really a good thing. They definitely have to do their due diligence. You can't go saying that you want something from a homeowner and they're not, you know, financially there, or they're renting out the assets so you can't even find them. Even if you do a door knocker, I think that's important. But definitely having a game plan, if you're going to send it to a servicing company, that's the first thing that the asset manager is going to ask you. What would you like to do? You can't expect them to know what you want them to do. So you kind of have to have an idea. I want you to skip, trace the homeowner, verify phone numbers, verify the address. You know, after 30 days of no contact, send out a letter. Is there a co homeowner? Do they have other relatives living in the house with. Is it a business? You know, you want to check all of those things and then let them know, listen, I'm willing to do a payment plan. You know, we can do a trial payment plan for 12 months and then we can modify the agreement or do an addendum to the land contract. So if you know and you can say with confidence where you kind of want it to go, even if it doesn't pan out, that way it reassures the asset manager that you know what you're talking about. And when they go to talk to you about something, you're going to stay in communication and that you care about your assets. So they're going to care about your assets.

Yeah, that's, that's. I think it's one of the best advices actually care. Come up with a plan. That way you get some marching orders versus trying to let somebody make decisions that they don't have. No type of direction, it's impossible. And it'll just, your loans will just sit there kind of riding on the vine for the most part. What would you. When you think about all the loans you've done, what's been probably the most creative workout that you've heard of a borrower or investor working with a borrower on or a borrower is presented to an investor investor that went that way.

In terms of, I'm sorry, workout, you know, anything.

I mean, or is it pretty cookie cutter? Pay monthly or increase the interest rate. So we'll do a, you know, the staggered closing to have you refinance anything weird, you know, to swap out houses.

I mean sometimes there's like, you know, an incentive to pay off your loan. I know one agreement, there was a balloon payment at the end and the loan, we ended up modifying it and the investor said, listen, if you pay off sooner than what we agreed upon, I'll take off that $15,000 balloon payment. And that's exactly what happened. So I went from a non performing loan to performing loans to being paid off fairly quickly because there was that incentive. So if you give them a reason to want to pay, maybe after 12 months you can, you do a trial payment plan and when you modify the loan, you go from a 10% interest rate to a 6.5 or a 7% interest rate. You know, you're still collecting, it's still still a little high on the interest side, but it is an incentive for them to make their payments monthly and on time.

What's your favorite thing to do when reaching out to a borrower? And then what's your least favorite thing to do?

I like introducing myself. I think I like getting to know them and building that rapport. And it feels good. You know, sometimes it's draining having to deal with them being grumpy at first, but then, you know, you get those calls where they're excited and happy to hear from you and they want to talk to you and it's like, wow, okay. Like I definitely have a good turnaround and it makes you feel good. It's rewarding. The ones I'm not too excited about, I want to say, are homeowners that maybe finished their bankruptcies and now they're going to pay you directly. And they kind of, you know, have sometimes, not always, but like a little chip on their shoulder. You know, they feel like they can go back into bankruptcy, they can deal with that and they don't have to deal with you or talk to you. And it's like, listen, let's. Let's just work something out, you know, and it's different, but it's all in a case by case. And I think a lot has to do with the states. If you're getting in a rural area, it's harder to, you know, communicate with the homeowner and have field agents, door knockers, go out to swampy areas and check. And they're well aware of that, you know, so they kind of play off that sometimes.

So avoid Louisiana is what you say.

Yeah, there are places that, you know, you do want to do your due diligence before you buy that note because you have to think about if you're going to send a door knocker out. I had an investor that really wanted pictures, photographs of the property, and we weren't able to do it because the third party for the field services wasn't able to get out there. And it was not fun to deal with for him or the homeowner because the homeowner, you know, it affected their credit and they got evicted instead of trying to work something out. So it's unfortunate at times, but it's, you know, it's case by case.

Well, that's the big thing about rural assets. I tell people avoid the rural assets just because that reason it's hard to get people to go out there. Realtors, people don't necessarily want to live, live remotely. They like to be around towns. It's just the days on market are a lot longer and the fact that it's remote often leads to a lot of vandalism on vacant properties, too. In an area less populated, when there's no neighbors peeking through the windows to see what's going on, it's more likely to have things happen. Right?

Yeah. No, it's very true.

You mentioned early on about working about borrowers calling how they're working with like local cities or states for help. Can you talk briefly about that? Because I know it's different across the country, each state, each city is different. But I think a lot of borrowers don't realize there are outreach programs or church groups or charities and things like that that work with borrowers or people that are struggling, right?

Yes, they definitely are. They just have to google them. That's something that I also help homeowners with if I know that they're not able to afford and they do have a hardship. You know, I know Indiana has the hardest hit fund, so you can contact them. I've actually sat in a few of their meetings to just get an understanding on what their requirements are and how it works. Ohio has a dream act of Ohio. So it depends on the state. You can look it up and then you can inform your homeowner or you can have them reach out themselves. But there are places that are willing to help, even with the littlest stuff, you know, like if the debt is $2,000, they'll bring them current. And if you have them do that, you just work with them in the meantime before you get your check because there is a waiting period. And then you try to modify their loan where you make it more affordable so that they can make their payments every month.

You know, making payments in the month. And sometimes you've got to split the payments up or adjust the payment date so it doesn't draw on their account before they get paid and overdraw the account. We had that happen a couple times where simply change delaying the date that we drew from allowed for their check to get deposited on a regular basis. Actively, right?

Yes. Sometimes you do have to switch it maybe from the first of the month to the end of the month or you know, accept bi weekly payments. There's some. Not always, it's really, it's rare. But there are homeowners that like to pay weekly. You know, maybe they get paid weekly. As soon as they get the money, they don't want to spend it so they just want to be able to just put it in the account. So I think when looking for a servicing company, that's very important, making sure that they accept partial payments. Because there are servicers that don't accept partial payments and they need the full payment. And it's harder for a homeowner, you know, when they have other bills in their face coming in, to not pay that and have to hold that money until the end of the month or the beginning of the month to send it in. So partial payments and biweekly and ACH is. Those are very important.

How hard has it been to get borrowers to set up an ach? Do you see people open to it more so or people avoiding ach?

It Depends if you let them. If you put them on an agreement, they're more open to it. If you're trying to work something out and they're really delinquent, they're not because they feel like I'm going to start sending money, you're going to just deduct it from my account, but then you're going to foreclose on me, which is a myth. You can't go and foreclose on a homeowner. If they're making payments, they have to be usually 120 days delinquent and then you can file. So it just depends. But I see more often than not people are willing to get on ach. As long as you're willing to like, you know, lower their interest rate or make their payment more affordable, you know, they'll get on ach.

You have to dangle that carrot of some sort in front of them to get them to work with you.

A lot of times, yeah, yeah is great because then you don't have to worry about it. You just do a payment check. Even if it's at a servicing company and you have a performing loan, you should always make sure, you know, at the end of the month, at the beginning of the month that that payment came in.

Yeah, exactly. Where if you could give one bit of advice. You've given such great nuggets so far, Hazel, those that are listening out there and you, you are a jewel. You know, if somebody's looking for somebody to handle what's the characteristics of a good asset manager? Somebody's organized. Because I bet you're pretty organized handling all the phone calls and asks, 600 files. You got to be pretty organized.

Yeah, you have to be organized. You have to have, you know, your follow up dates in line and what you're gonna discuss and little notes around just to make sure that you don't want to call somebody and not have that understanding of what your last conversation was or what you're requesting or needing or requiring of them, because if they feel like you're calling and you're talking about something you already said before and you're just being repetitive, it's like you don't even remember why you're calling me. You don't know like you, you're taking me as anybody else. But if it's like, hey, how's everything going? I remember, you know, you weren't make last month's payment because your job gave you your payment late or the amount your check bounced is everything okay? And then you collect on a payment, is Easier than calling them and then having to hold on one second and checking the notes and making sure, not even having a note and just calling on the payment. You want to make sure you remember what you discussed with people. You write it down, you follow up and you stick to your follow up dates. Yeah, it's very good to be organized, empathetic, friendly, patient. People are rude, you know, sometimes they're very rude, they can be offensive and you kind of just have to take it. And you have to understand that it's not a good feeling to have to owe money and a lot of money. And if they're not in a financial situation where they can pay that, it's a big stressor. So you just have to put yourselves in their shoes. Would you want someone to call your mother and be aggressive trying to get money? No. You know, you'd want them to be understanding and kind and soft spoken and you know, get more bees with honey. That's true.

I can remember a couple conversations when Jennifer was working with us and you dealt a lot with Jennifer. And Jennifer would stress out on phone calls and I'd be listening. I'm like, whoa, whoa, whoa, take it down a notch with a borrower. She'd be like, I don't want to talk to this bar. I was like, let's call her. And the borrower gets aggressive. And the minute you come on and just try to take it down a notch, hey, same thing. I'm trying to help you. Let's talk. Let's figure something. It's a win win here. And we'll go from it, totally change the whole conversation. But I think if you're having a bad day, don't start dialing and talking to borrowers. Right?

Yeah, I agree. If you don't have Pat, have someone else call. Because sometimes you're, you know, you want to ask a quick question, you're on the phone for 20 minutes, but you don't want to rush them. You want them to feel like they're being heard. You know, that's very important.

Are you ever calling borrowers when you're first trying to track them down at their work or place of business or their employers, trying to get them on the phone, trying to make contact with them initially or.

No, I have. Yes, you, when you call, you don't let them know where you're calling from if you're talking to somebody other than the homeowner. But you do. It's a good thing to call employers just to verify employment. It does show up on skip traces sometimes. If you use tlo, at least it does show. And you can contact them like that. Sometimes you contact relatives, that's a good way. It's not always the best because they get mad at first. Like, why did you call my grandmother? Why'd you call my aunt? You know, but it's like, well, you weren't answering. I didn't know this was your phone. So, you know, then they end up having that talk with you because they want you to stop calling their relatives, you know, so they do reach out to you. But you can do that.

Applying a little pressure to grandma.

Yeah. You know, there have been times that I've called, you know, relatives and all of that, and employers just don't say where you're calling from or what you're calling about. Just let them know that you're trying to reach the homeowner. If they're not there, you let them know, can you know my name's Hazel and can you just have them give me a call back and you leave a phone number, go from there.

This is such great stuff. Such great stuff. When you think about a non performing loan, let's just talk about non performing. What would you say, on average the amount of time that you spend per loan and looking at notes, making a phone call? Would you say it's about an hour per month per note, an hour per week, 30 minutes per week? What would you say is an average? Let's just say that they're non performing. You're trying to work through them. Obviously it's more heavily laid in the front end to get them back on track. But at the beginning, say, how many hours or minutes do you spend per note, per deal?

It depends. I mean, sometimes you want to look through the collateral file, you want to see, you know, who signed it. If there's two homeowners on there, you're going to do your skip trace. If you have a lot of numbers you want to call all of them, jot down. Did it beep? Is the line disconnected? Is, you know, is the voicemail in Spanish? Leave your voicemail. Do not email off your tlo. If there's, you know, scriptures and you see email addresses on there, don't do that. Only email. Only if they provide you with their email address. But then you can, if they did provide you with it in the past or you see the notes from servicing company, you email. So if there's information on there you want to spend over, definitely over an hour, maybe hour an every three days, every four days, maybe twice a week, you know, you Want to touch on it for like two hours or so. If it's something where you don't have a lot of information, you're doing a lot of googling, you're trying to find other people and you send out the field agent. So it depends. But you definitely want to put in that footwork in the beginning for the first 30 days to see where it's standing.

Yeah. And then after 30 days, then it's kind of the tail of the tape. They're communicating great. If not, then you got to get more aggressive with legal or the man letters at that point. Correct?

Yeah. I mean, after 30 days, I would probably send out, you know, the contact letter and then the attentions letter. Homeowners option. There is a fee for demand letters if you send it from the servicing company or forfeiture. And you know, if you send a demand letter, you have to wait 30 days before you can send it to legal. If you send a forfeiture for land contracts, it's 45 days. So in that time you want to still send out a paper trail and do some, you know, more skip tracing or calls and verify that they didn't get a phone call from you and then they just filed for bankruptcy. You know, that's very important because if you want to be in compliance with bankruptcy, that's nothing to play with. You don't want to have any attorney generals on you because of that. It's important.

Are there days, I mean, you obviously enjoyed this year, but there are days that you get drained. What do you do to recharge yourself, Hazel?

No, just listen to music. I take a break, walk away, you know, take a walk and listen to something soothing. Because when you're like that, it's more of an emotional distress. You know, you're taking on somebody else's hardships and burdens. And I am an empath. I do feel bad and I want to help everyone. And, you know, you want it to be a win win for the investor and the homeowner. So sometimes you do, you know, feel like a burdened by trying to help them, but then also not take their money where they're not able to, you know, have food on the table at the end of the night, you know, so be kind to yourself when you're doing this. It's not always easy.

Yeah, exactly. Now, what are your long term goals? What do you want to keep doing this for a while or you're looking to do other things in the future? What's Hazel got? The future, Hazel. What do you want to Do.

I don't know. I think I want to be like an investor. I want to buy and flip houses and, you know, help out homeowners. Maybe have my own organization where I can fund for people that aren't, you know, financially stable and stuff long term. Right now, I'm happy doing this. It'd be nice for you to have more notes so we can have more homeowners and work out more deals and stuff. But I love my job, I love what I do and I can't complain at all.

Well, we're working on that. Right? Same here. Thing I want more deals is just me. Matter of things coming across the pipeline and make sense for us. But you know, the thing, I know that you worked on getting your real estate license there as well too, for you and doing some nice stuff there. Then it just comes in handy being able to pull values and kind of know what's going on with the deal. So that's awesome. So, Hazel, this has been awesome. I think people are going to love this episode. Such great stuff, you and I, I just love talking to you. We just have such great energy and stuff like that. And I just absolutely love what you do. And you've just. Like I said before, Steph is outside right now, but she said, oh, make sure she. Hazel, make sure you tell her hi.

Sorry. I said you guys are great.

Well, we love you. Thank you so much. We're very, very blessed to have you as part of the team out here and keep doing what you're doing is always, you know, if I can do anything to help out, feel free. Alrighty.

Thank you. I appreciate it.

Thank you, guys. Thank you, Hazel. All right, guys, that's going to wrap it up for this episode of the no Closure show. You wish you all could find a Hazel, but that's the biggest thing. When you see. I see so many investors out there get started and they want to try to do it themselves. You can shoot yourselves in the foot very quickly, quickly. Don't get drugged down a path where they take a mile. When you want to give them an inch, you've got to be a little bit. I mean, you got to have that balance of empathizing with them but also being very kind of strict and hey, you know, determine we need you to do something of some sort or we've got to go to plan B, plan C, plan D up there. So highly, highly encourage it. Talk to your asset managers. Once you've got your own board of service, don't self service. Don't try to do the workout yourself, hand it off to a professional, somebody who's experienced at it, knows the options, knows what you can and cannot do to keep you out of trouble. So go out, take some action, everybody, and we'll see you all at the top.

Bye.

Sam.