- January 7, 2019
- Posted by: august19
- Category: Podcast
Whether you want to or not, you’re probably going to talk to a borrower in this business. What is important is doing it right. Gail and Chris discuss safety when talking to borrowers as they help clear up some of the questions you may have in mind. How and when do you want to talk to borrowers? What are some serious troubles that may arise from doing so? What is borrower outreach? Learn about all of these and more while discovering fair debt collection practices and the Consumer Financial Protection Bureau. They also talk about giving a Mini-Miranda on the line as well as some pointers on talking to the right person and avoiding any possible violations that may be considered harassment.
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Is It Safe To Talk To Borrowers
My carefully planned daily work schedule has already gone out the window for a good reason. We’re closing on a property in Ohio. They sent the closing documents and I had to dash out to get them notarized and they’re winging their way back for a closing. That seemed a good reason to blow my beautifully crafted schedule.
I had several individuals give me different types of planners and I’ve got four different planners sitting on my desk. I’m laughing because I probably won’t use any of them.
You invented planning. You have taken planning to a whole new level.
One of them is a productivity planner that I quickly peruse through it. It’s interesting on how they put some tasks and things to assign things in there, but I’ll take a look. As you know, I like to keep everything planned but I’m very peculiar in my systems. I’m very finicky and picky.
I do have a datebook where I haphazardly put things. What does a productivity planner have that a regular old calendar doesn’t have?
It’s a book and it starts off with top five tasks of the week that you want to get done and then secondary tasks and then notes. It goes down from there for each day of the week on what’s the most important task. It’s got a tracking time to see how much time you spend on the task or how much time you anticipate on spending on it and how much time you spent on the task.
I would need one. They’ve preprinted a threatening message about the fact that you’re not on the schedule anymore. That would be very helpful to me. The tracking that you mentioned, my daughter informed me because I got a new iPhone and it has a function on it that tracks for you how much time you spent on social media and stuff. What an eye opener that is. No more denial.
It tracks how much time you’re online and your screen time as well and so forth.
The highlight of my holiday as you already know is that I had a birthday between Christmas and New Year, that dead zone where nobody wants to do anything. I decided that there wasn’t going to be any sitting around and moping this time. I bought the family a session at a hatchet throwing place and I discovered that my children are absolutely lethal with the hatchet. I’m so glad they’re no longer in school. They are adults. There’s no one in immediate danger if they assign too much homework to them or whatever but the rest of the world should be very concerned about them. I also found out that I pose no danger to anyone with a hatchet. I am a little baby lamb in terms of how dangerous I am. This is upsetting to me because no one tells you when you start out with children, they’re so helpless and you easily are better than them at everything that you do. At some point, the tables turn and now I’m finding yet another thing that they’re much better than me at.
The hatchet throwing thing, I’ve seen a few of those. It’s starting to pop up now. It’s the next interesting big thing in some type of entertainment. I know it was that indoor go-kart racing. That’s still entertaining for me. My holidays consisted of a quick trip up to Massachusetts to visit my mother, sisters, and family and we’ve had my wife’s family. They spent a few weeks with us as well down here. It was good to spend time with the family. Kids had a very good time and are happy and are now heading up to your state to go skiing.
If I had any more time off interacting with my family, I would have lost my mind or I would have gotten better at that hatchet throwing. It’s one or the other. There are a lot of achievers in our business. I know you’re one and I don’t react very well to not being good at things. It was a little bit of a struggle for me but seeing my kids enjoy themselves so much made it easier but I’m still like, “Why can I throw a hatchet? I don’t understand.” I’m okay with being good at notes and let’s leave the hatchets. Our main topic is one that is a favorite of mine and you’ve helped me with a lot. This segment should be called: Is it safe to talk to borrowers? How and when do you want to talk to borrowers? Do you even want to talk to borrowers and can you get into serious trouble talking to borrowers?
I had a lot of beliefs about this topic. I was the original person who was terrified to talk to a borrower. I can remember the second note I ever bought. The borrower called me with the servicer FCI that that note was at, if you don’t supply them with the name of an outreach person or an attorney, if a borrower calls them for any reason, they give them your phone number. It’s the way that they punish you for not hiring them to do the borrower outreach. It’s like you either let us do it or we’re going to have them call you. I saw that the number was from Georgia and at that time I didn’t know anyone in Georgia. I froze because I thought, “I know I’m not allowed to talk to this person. What do I do?” That was ridiculous because the first thing to know is if a borrower calls you, none of the normal Consumer Financial Protection Bureau rules apply. Is that your impression also?
That is but I just follow the same pattern all the time. I’m more conservative. First, I want to make a statement that none of us are providing legal advice and all that other CYA stuff about this information. You should all verify it and go take a class on it. For me, I’m less enticed to talk to borrowers than you are. I know you do a lot of your borrower outreach. For me, I like to keep those with my servicer. I still like to be educated and informed in case they do pick up the phone and call me or reach out to me. When they do call, which is not too often, I will let it go to voicemail just to see what type of message they’re going to leave. I will call them back and then when I do, I’ll still read them what’s called that Mini-Miranda which is for debt collecting. People think of Miranda if somebody is getting arrested. In debt collecting, it is an attempt to collect a debt and any information obtained will be used for that purpose.Be like Nike and just do it. Click To Tweet
Who is it who makes the rules about talking to borrowers? It’s about the fair debt collection practices act and the enforcement arm is the Consumer Financial Protection Bureau. Is that your impression also?
That’s who people would complain to, your borrowers would complain to if you ever break one of the rules. I printed out some information on the CFPB website to make sure that even though we are not attorneys and we are not advising you to do this or not do this, I could at least give you some complete information. The first thing that I want to say and this is something that you should verify because it makes all the rest of this potentially not necessary. I’d heard this as a rumor that if you are the actual lender and not a third-party collector, you don’t have to follow any of these rules other than the common-sense rules about not harassing people and not calling them at crazy hours and things like that.
It says on the website that the Fair Debt Collection Practices Act generally does not cover collection by the original creditor to whom you first became indebted. We are not the first owners of most of these notes. We buy them from other people, so we are not the first creditor, but we still fall into that category of being the creditor and not a collection agency or an attorney who regularly collect debts. Under the FDCPA debt collectors include debt buyers. We’re back in the gray area where we’re debt buyers. Now, we are required to do this.
The consensus is a lot of things that are related to federal or state agencies, there’s something that says, “Here you don’t have to do it and here you have to do it.” Our recommendation is to just do it. There are also state laws which may have something different as part of state laws. This is a common-sense approach when you’re talking with people, having the conversations with them and being professional, respectful and just following some simple guidelines and rules.
Be like Nike and just do it. Let’s talk about who wants to do it and who doesn’t want to do it. You don’t want to do it mostly as a matter of time and this is the way that you managed to run a large note business. You also have a whole other big life and big job going on at the same time. You let your servicer do the borrower outreach. There is also an option to have an attorney do the outreach and I know note buyers who as soon as they buy a distressed nonperforming note, they hire an attorney. I always thought that was crazy but now that I see how many borrowers need that official letterhead with an attorney name on it to get to come to the table, that strikes me as not a terrible idea. It doesn’t mean that you’re going to necessarily take it all the way to the end and do a foreclosure or forfeiture. Just sending a demand letter is often the thing that gets people’s attention and gets them to call you.
I know people who dislike talking to people. They don’t like problem-solving. They just want to be able to start paying and not give them any excuses or whatever. I know a buyer who as soon as he gets a note, he’ll skip trace the borrower to get all the possible phone numbers for them and put them in his phone under the borrower category. When the caller ID comes up and it says borrower, he doesn’t answer. He never wants to talk to a borrower. He doesn’t care what’s going on. They could want to give him $10,000. He does not want to talk to them and forget about it.
People may hear stories from other people about things that have happened or have gotten sued. There are extreme cases in every aspect of every business. You only hear those disaster and horror stories. That also sometimes has people to shy away from. It’s more again about the time and what’s the best use of my time.
I’m a people person. Relationships are a little bit my genius zone but it’s not even that I need the human contact so badly. I’ve been in so many situations where there was an intermediary and somebody was calling people for me. They would report back, “They said such and such,” and I’d be like, “Did you say such and such?” They were like, “No.” It’s frustrating to me because I feel that I’m a high-level problem solver and nobody that I ever hired to do outreach for me ever had the conversation the way I thought it should happen and that I thought you would get most directly to a conclusion. It costs time for me to make those calls and therefore it costs money but sometimes I get a much swifter resolution or I get clarity much quicker. I feel that it balances out.
Let’s talk about how you call people. The main thing is that as soon as you get the correct person on the line, you give them Mini-Miranda. Sometimes you will say, “I’m required to tell you that this call is an attempt to collect the debt and any information given will be used for that purpose.” Before you even get that far, you have to make sure you have the right person. If you look in servicing notes, you will see that they confirm that they got the right party contact. Who is the right party? If you have a married couple but only one of them is on the note, that person’s spouse is not someone you can talk to at all. You can assume all you want that they know everything about this loan and the fact that it’s delinquent and whatever the reason it is that you’re calling, but legally you cannot speak to anyone who is not on the loan.
You’re not sure if they’re even the spouse. They could say they’re the spouse. That’s a good point. Whether it’s their mother or their father if it’s not that right party, there’s very little you can tell them. You’re not even supposed to tell them the name of your company or the purpose why you’re calling. You’re just trying to get information from them on asking them, “How can I reach out to get in contact with them? It’s regarding a personal issue.”
You can’t tell them there’s a debt, that they are late on a debt and that you are contemplating to taking some action because of the lateness. We started talking about this when I was looking for a woman who had abandoned a house and they had a land contract. She and her friend had a land contract on a house and she had moved away and left her friend holding the bag on the land contract. I was trying to track the woman down to see if I could get her to sign a cancellation of the land contract so at least I could work with the one woman who was still there. This woman could not be found. I ended up calling her adult son. Another thing is she’s an elder lady in her 80s. Before I knew the rules, I was telling her adult son, “I’m a lender. I’m trying to find her.” Luckily no one cared or that could have been bad.
One thing I’ll mention, and I know you’ve got a list of questions and so forth, but I’ll tag along with when you reach out and call somebody. Don’t leave a voice message either.
Don’t send an email. Voice connection only.
The reason not to leave a voicemail is because if it’s the person’s house phone and they have roommates or whatever the case may be, then somebody else is hearing that message. Technically, that could be a violation. That’s one reason that if you’re calling somebody and you get them, it’s great but if you don’t, then don’t leave a message for them.
Doctors have the same rules about leaving information. I have a friend whose doctor left him a voicemail that he had cancer. Luckily, everything’s fine and he’s cured.
That’s not the type of thing you leave a voice message for. What other pearls of wisdom do you have for us, Gail?
Before we move on from leaving a voicemail and getting the right party, I don’t remember it and I don’t see it on here. When you call someone’s work and they’re like, “Who’s calling?” leave a voicemail on a work phone if it’s the person’s own mailbox and tell someone else who answers the phone if they say like, “What’s the reason for the call?”
On the work phones, I just keep it. I don’t leave voice messages. If it’s somebody’s executive assistant or something, I would say I’m calling about a personal matter. In regard to the workplace, if you do get somebody on the phone at the workplace and they say, “I cannot take calls at work,” that is their get out of jail free card in the sense of you can’t continue to call them at work. If they stipulate to you, “I can’t receive calls at work,” you are not allowed to continue to call them. If you do, it could be considered harassment and a major violation.
Do we know what happens to you if you violate any of these?
It’s about $1,000 per offense. It’s what it is.
Is that each call to the workplace after getting the message would be an offense?
Yes, an offense is each action. If you do something, one action consisted of three violations, then it’s just that one action but if you were constantly doing it, it’s my understanding that it’s per each occurrence.Any threat stronger than I'm not going to send you a birthday card this year should be avoided at all costs. Click To Tweet
We should also mention that there are ways to automate this a little bit. I know some people who have phone numbers like Google voice numbers that they set up, which is their borrower line. It’s the phone number they give if they send out a welcome letter to their borrower. It’s like, “Please call me at this phone number.” They will put a voicemail message on there that already has the Mini-Miranda on it like, “Thank you for calling. I want you to understand that this is an attempt to collect the debt and any information will be used for that purpose.” You’ll notice too if you use attorneys that do a lot of collection that they all have signature lines that put the Mini-Miranda in there. Servicer communications all do also. It’s a good practice to go ahead and put these things and cover yourself and get it set up, so you don’t have to be thinking about it all the time. If you have one or two notes, it’s not going to be a big deal but when you have 50 to 60, people are going to call you.
I use Twilio and I’ve got numbers there for my entities. It’s the same thing. If somebody calls before the phone even rings to me, it’s an automated message that this is the Mini-Miranda. Once that’s done, the phone gets forwarded to me, so I don’t need to repeat it. I already know from them calling that number which comes through to my phone that that’s already been stated.
I’ll leave it to you to have that already worked out. Here are the other specific things. Restrictions on communications by debt collectors. Time and place. Generally, debt collectors cannot contact you at an unusual time or place or a time or place they know is inconvenient for you.
From what I have read, the normal standard is not before 8:00 AM and not after 9:00 PM in their time zone and that’s Monday through Saturday. Contacting somebody on Sunday is not kosher.
Not before 8:00 and not after 9:00. If the debt collector knows you’re not allowed to receive calls at work, they’re not allowed to contact you there. Harassment. Debt collectors may not harass you or anyone else over the phone or through any other form of contact. You’ll notice a certain lack of detail about what constitutes harassment. It leaves everyone wide open for interpretation.
Harassment could be, “I’m sending somebody to your house,” to telling somebody, “I’m going to foreclose on you.” It could be considered harassment. From that perspective, I’m very careful and not telling anybody. I’ll just say, “I will review that, and I’ll be sending you a letter in the mail.” That could be the demand letter or it could be Cash for Keys offer. I won’t tell the person, “If you don’t pay by this date, I’m doing legal.” That could be construed as harassment.
Let’s assume that any threat stronger than, “I’m not going to send you a birthday card this year,” should be avoided at all costs. Maintain a calm and level demeanor. I have a very dear friend who went to do an inspection of a house for me where we were trying to ascertain whether it was in a safe condition or not. We were greeted by an angry borrower and gave it back as soon as he got. It was fortunate that we weren’t attempting to collect a debt at that moment, but it was funny. I don’t know if I’m ever going to be able to use that video in court for anything. Representation by an attorney. If a debt collector knows that an attorney is representing you, it’s like this language is all from the standpoint of you, the borrower, are reading this and trying to determine if you have a cause of action against your debt buyer who has called you. Let me flip it around. If we know that an attorney is representing the borrower, then the debt collector has to stop contacting you and has to contact the attorney instead?
Correct. If they tell you that they have an attorney, you just ask, “Can I have their contact information?” You get that and then you can reach back and reach out to that attorney.
It says though that this is only true if the debt collector knows or can easily find out the name and contact information of your attorney. How would you easily find out? Only if it’s a bankruptcy you can easily find out.
If they responded to a letter.
The Consumer Financial Protection Bureau has prepared sample letters you can use to respond to a debt collector who’s trying to collect a debt. I don’t think I’ve ever received one of those. Have you?
I have received not a simple letter, but I did receive a borrower who is disputing a debt which is an interesting topic. If it is disputed, you can’t reach back out to them until you have validated the debt.
What does that mean? Get a complete response from the servicer or what?
What it entails in this instance is I had to show the complete chain of title that I own that note. I need to do original note, all the assignments of mortgages, the launches, the complete package saying, “My entity does own this.” I had to also provide the complete pay history on the asset as well. Until all of that is provided to the borrower, they have 30 days to dispute a debt from you and send them a letter. Once my attorney sends them all that information, then reach out can continue to ensue.
Is that what is known as a qualified written response, a QWR?
I believe it is.
That’s often the first volley in a lawsuit, it’s demanding that. If someone is disputing the accuracy of your information on what they owe and what they’ve paid etc., the QWR, and I found this out the hard way, the servicer prepares it and the servicer has only so much time to prepare it. If they miss the deadline to get it to the attorney or the borrower, you are in a very much weaker position in the lawsuit because they have a cause of action against the servicer. I’d only owned a contract for deed for a very short time. They had a major beef with the previous servicer but my servicer got dragged into it because that one thing they had not produced the qualified written response by the deadline. Because of that, it cost me $1,500 and I had to amend the loan also because hell hath no fury like this borrower once they got rolling. It was a costly lesson.
There are a lot of guidelines here about how to use the CFPB’s sample letters. If you’re a borrower, what they can and can’t do to make you stop, what they can demand from us, the fact that they can dispute the debt. There’s very complete information online. This is the takeaway. A motivated borrower who wants to fight with you and give you a hard time because you broke one of these contact rules has very complete information. They have a friend in the CFPB. There’s a lot of great information on the website.We don't want people giving us a hard time when we're being nice. Click To Tweet
Everybody should go to the CFPB’s website and familiarize yourself with what the agency is telling people they can and should do. I also want to say we’re acting that the borrowers are being difficult here but the reason these rules exist is because there have been incredibly bad, horrific harassment cases against people who owe money. Not just on their mortgage, but also medical debt and credit card debt. The collection agencies buy these debts for very little money and put incredible nasty effort into getting the money any way that they can. We don’t want people giving us a hard time when we’re being nice. Just understand that there’s a reason these rules exist. It’s not about people like us. I hope everyone out there is treating people decently and fair-minded in your interactions with borrowers.
Another thing you can do is you can go on some of this FDCPA or CFPB websites and so forth. One thing I did is I took $100 in a course online that was helpful. They go through videos and some other things that show what you can and can’t do. I took that through a website called ACAInternational.org, which is the Association of Credit and Collection Professionals. From there, they’ve got all different types of rules and laws and stuff like that in training. It’s videos that you can watch that are like, “This is good information that they have.” It’s what credit bureaus or those companies or debt collectors, they’ll send people through a certification program like that so they can learn. I like to, even if I’m not doing it, know what the rules are in case I do get a phone call or I do have to talk to somebody. I do once in a while and the attorney will say, “Can you reach out to this guy? This guy wants to work something out with you instead of me being the middleman. Just give him a call directly.”
Whether you want to or not, you’re probably going to talk to a borrower at some point. Let’s get into our Notes and Bolts unless you have anything else.
One more thing to add. If they do say during the call that, “Please stop calling me,” you have to stop calling them. You’re allowed to send them one follow-up letter from that point to say, “Confirming I’m terminating the conversation.” That letter can also say, “I’m taking legal action,” whatever it is. If someone says, “Leave me alone or don’t call me,” you can’t keep calling them. Even though if they owe you money, you have to find another means to get the issue resolved.
Does that mean not only can you not call them again, but you can’t have anyone else call them either?
This is good to know in case anybody out there owes anybody money. These are the magic words, “Stop calling me.”
Look at it this way, Gail. If you and I are a partner on a deal, I’m calling somebody in each entity we had. I have 50%. I call them first and says, “Leave me alone.” I can’t just have you call them, then the servicer and then the attorney. That’s skirting the rules a little bit.
That was a juicy episode, Chris. Thank you. Let’s move on to Notes and Bolts. This is not much of a Note and Bolt but it’s on my mind, so I just want to say it. I started out the first workday of 2019 with a very carefully worked out plan for how my days are supposed to go. I want to say that I did feel some momentary upset about that. What I’ve realized is that it’s important to have a plan and it’s important to be flexible also so that you don’t miss opportunities to send back the closing documents that are going to get us a big chunk of money instead of sticking to my strict schedule.
Remember within your note business, anyone who you have paid a bill to or any partners you have that you’ve given them interest, make sure you have a 1099 from them. I’ve gone through the few that I was missing and reach out to somebody and they were like, “Why do you need one for me?” I was like, “Because you’re getting money or you’ve gotten money.” That’s a side note to make sure that you have taken care of because your accountant or bookkeeper or somebody will be asking for it. It’s easier to chase it down now than wait to have your returns be delayed from filing because you’re waiting for some paperwork.
Our next episode should be about the end of the year wrap up paperwork and steps.
That’s a good idea.
Thanks again for being with us. Hope you’re excited about what we’re all going to do in 2019. Go out there and do some good deeds.
Take care. Thanks.
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