As a loan servicer and customer care partner to lenders across all asset classes and credit profiles, Servicing Solutions has firsthand knowledge of the challenges of working with borrowers who are struggling to meet their financial obligations.
In recent years, this has been an even more common consideration. Whether it was during the early and unprecedented days of Covid or the uncertainty of the past few months as a potential recession looms, understanding how to best handle these situations is paramount in protecting the financial health of our clients’ portfolios while helping borrowers avoid defaults in hopes that they will return to good standing and become lifelong customers.
This is a delicate balancing act that requires the skills and knowledge of a loan servicer with distressed portfolio experience. Here are some best practices that we keep in mind:
- Understand the borrower’s situation. Take the time to listen to the borrower’s story and try to get a sense of what led them to their current financial distress. This will help you tailor your approach and identify potential solutions that take into account the borrower’s unique circumstances. Research confirms that consumers value feeling listented to and understood. In our experience, doing this will vastly improve the borrower/lender relationship and increase their propensity to pay.
- Be transparent about the options available. Distressed borrowers may be feeling overwhelmed and unsure of what to do. We make sure to clearly explain the different options that are available to them, including loan modifications, forbearance agreements, and other alternatives to default. We are upfront about the pros and cons of each option so that the borrower can make an informed decision.
- Help the borrower develop a plan. Once we’ve identified potential solutions, we work with the borrower to develop a plan that outlines the steps they need to take to get back on track. This may include setting specific goals and deadlines, and providing resources and support to help them achieve those goals.
- Follow up regularly. Staying in touch with the borrower to check in on their progress and offer assistance as needed helps ensure that they are able to stick to their plan and achieve their goals.
By following these basic best practices, we have developed a track record of building trust with distressed borrowers that increases the chances of finding a mutually beneficial solution. Every borrower is unique, and we adapt our approach to meet the specific needs of each individual borrower, all while protecting our clients’ interests.
With patience, understanding, and a focus on finding win-win solutions, it is possible to effectively navigate the choppy waters of distressed borrower relations and come out on top.
Ready to “Invest in Real Experience” and partner with a team that fully understands the complexities of distressed portfolios? Reach out to us at sales@servicingsolutions.com