THE NON-PERFORMING JUNIOR LIEN GORDON MOSS
This lender once had a borrower that he knew personally over the years call and tell him that he had a medical
issue and would not be able to pay the $300/month loan. The lender tells him “thank you for calling, as we
discussed. Tell me what’s happening”. The borrower explains that because of his upcoming medical procedure,
he will be off work for the next three months. So, the lender asks him “Can you pay $75 a month for the next
four months? (This lender understands how important it is to keep his borrowers in a rhythm of paying
monthly)”. The borrower says “Absolutely I could do that”. “Then that is what we will do”, says the lender. “This
will keep you current on your payments until you are back at work, and we will add the remaining balance to
the end of your loan”.
Would or could a bank provide this type of solution? I very much doubt it. A human being can bring solutions
that a bank cannot.
Asset Management vs. Loan Servicing of
Evaluating a non-performing
junior lien is a bit unique
– the three most important
factors might be
the “borrower, borrower, and
borrower”
Junior Liens
Let’s talk about loan servicing. Years of experience in
this field have taught me that no one cares more about
your money and investments than you. I had hoped
that my real job was to acquire these “broken” loans
and that I could turn the loans over to the loan
servicing pros and they would solve all of my problems
and make me rich. It doesn’t work that way. Let me
say that again. It doesn’t work that way.
A loan servicer can be used to collect payments once the loan is re-performing. I know several pros that get
their loans to a re-performing status and then turn them over to a loan servicer. They quickly take them back at
the first sign of a problem and leverage the relationship they have established with the borrower to get them
back on track.
Asset managers are the people that have the experience and expertise to fix a broken and non-paying
loan. This skill is one that is very har d to find and I would recommend that you plan on mastering this skill
yourself if you plan to be successful in this business.
The asset management of turning a non-performing broken loan into a re-performer is the real magic of this
business. It starts with a diplomatic and professional approach to making contact with a borrower who in many