Dealing with impaired loans is not necessarily a bad experience, but it can be a pain in the ass if you don’t do it on a regular basis.
Impaired loans become a distraction from your primary revenue generating activity and detract from your core business. Lucky for you, Richter has your Plan B when it comes to disposing of problem loans. Impaired loans is our only business and we are damned good at it, it’s all we do. We have been called a one trick pony….well, okay but we’ve have mastered the trick and we will confidently tell you we are the A TEAM when you’re ready for PLAN B
You have questions, we’re right here to talk to you (831.233.1626) or, in the meantime, here’s an overview:
Basic steps in the process
- Lets talk about the loans
- Bidding methodology
- Diligence process and findings
- Clearing conditions, if any
- Collateral request
- Purchase & wiring funds
- Servicing transfer and follow up
Q. I have loans held for sale, what’s the first step?
ANSWER: Call us (831.233.1626) and let’s talk about the loans, why they may be considered unsaleable and what is your expectation for an optimal outcome. We will listen to you. We have to. Would you really take our recommendation seriously if we didn’t know your loans as well as you do? I hope not.
Q. Can you tell me what these loans are worth?
ANSWER: Sure! After you tell us about the loans and send us a spreadsheet that captures basic loan data. Loan data coupled with a thorough understanding of the problem allows us to give you an accurate price. Price is important, but a real price, (a price you can literally take to the bank) is really important. Richter takes a great deal of pride in giving clients pricing that stands up from bid to settlement. The overwhelming majority of our bid prices never change and the loans trade at the price quoted at bid. No surprises, no last minute adjustments.
Q. If I like the bid, what next?
ANSWER: Good question and probably the easiest to answer. We will give you a written Letter of Intent to purchase along with a link to upload your electronic file. The LOI will specify bid price and, to manage expectations for both of us, it outlines the diligence process. You can help us expedite turn around by sending complete files: the credit, income and closing documents, pre disclosure and compliance documentation (don’t worry, theres no limit to file size so you can upload everything you have all in one piece). Generally speaking the due diligence begins the day following receipt of the files.
Q. What does diligence entail? You know these are closed loans, right?
ANSWER: You bet, we only deal with closed loans and we review each file as a closed loan, not new origination. Upon completion of diligence you will receive a full report. Based on past experience there are few, if any, conditions and generally those are simply missing, illegible, or incomplete document pages. Nine out of ten times these things can be addressed and cleared quickly by email, or phone.
Q. How do I get my funds?
ANSWER: Once all conditions are cleared your bid price will be reconfirmed. Pricing is expressed as a percentage of the Unpaid Principal Balance and you will not be subjected to any add ons. We will ask you to forward the collateral package and provide the most current pay history showing escrows disbursements and balances. A funding schedule will be prepared using the pay history and an agreed upon cutoff date for settlement.
Q. What do you need besides the note and wiring instructions?
ANSWER: We will ask you to ship the original note, allonge, recorded deed of trust, final title policy. We will never ask for collateral until all conditions are cleared and we are prepared to wire funds.
Q. How soon do I get my money?
ANSWER: The collateral package is reviewed the same day it is received. Assuming nothing is missing (endorsements for example) the note is forwarded to a custodial bank and, upon their acknowledgment of receipt and acceptance, the wire will be prepared. Wires are typically sent within 72 hours of receipt of the original note and allonge. We wire as soon as practical and adjust interest based on the funding schedule cutoff date.
Q. What about trailing docs and servicing transfer?
ANSWER: Immediately after you have received your funds, we will forward servicing transfer information along with a list of appropriate contacts for trailing docs, MERS assignments, and customer service questions.
TIPS: (let’s make this easy for both of us)
You can speed up turn time by assigning a contact person for all communication.
Often there is a delay in clearing conditions, assuming there are any, and generally that can be done by email. Having a point person speeds up turn time.
The biggest time stealer is shipping. When you send information always request delivery by 10:30 am.
Early morning shipments often arrive before the building is unlocked and get put back on the truck for later delivery, costing a day or more.
Deliveries scheduled for afternoon delivery will not be processed until the following day.
Before you ship collateral; double check all assignments, endorsements, live signatures, allonges etc. Having to resend an incomplete or incorrect document can cost 2 business days.
Always provide tracking numbers and advance notice of shipments. That allows us to effectively monitor service levels and provide accountability.
So, What is the bottom line?….we say No a lot.
Richter = No surprises
Richter = No excuses, we do what we say we do
Richter = No lack of transparency, we own the process
Richter = No confusion, we communicate
Richter = No tombstones, every trade is confidential
Yep, it’s that simple.
now call us