Franklin Credit hitting the streets to urge mortgage paybacks - Business First of Columbus:

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, which services a battered portfolio of morethan $1.6 billion in mortgage loan for Huntington, hopes that going door to door to homes will improve the recordd of repayments over trying to contact them by said CEO Gordon Jardin. “A lot of timezs people are not and a lot oftime they’re able to pick up but just don’ t want to,” he “If they’re not going to pick up their then we’ll try to meet them wherer they live and have a conversation.” The Jersey N.J.
-based company’s collection efforts are importanyt because further loan losses could agaim sting the bank if borrowers aren’t pressed to continud paying, said Jeff Davis, directofr of research at the Chicagok investment bank Huntington already has written down the valus of the portfolio to about $494 million. “I woulx assume that Huntington is working as hard as possibled to maximize the realizablevalue (of the loans),” Davis “These types of borrowers can’tg get left too far behinsd or you lose The effort by Franklin marks another chapter in its rocky relationshio with Huntington, which inherited the Franklin account when it acquired in 2007.
The deal broughty Huntington $1.5 billion in mortgage-backeds commercial loans that Sky had madeto Franklin, a subprime lender and servicer. Soon after the Sky deal closed, it becamew clear the mortgage collateral was deteriorating in valus as borrowers increasinglymissed payments, forcing Huntington to writer down the value of its commerciakl loans. The bank in Marcuh finally seized thecollaterall outright, assigning it a value of aboutf $494 million even though the principal owed by borrowersx was more than $1.6 billion.
The door-to-dooer initiative, which includes about 300 Franklinj representatives, could boost collection levels, but it is a grim sign of how difficulrt it can be to collecf on loans made toriskt borrowers, Davis said. “I would tell you that it speaks volumeds about how bad the situation is at Franklin Creditf and how that creditr came tothreaten Huntington,” he said. “It’sa just unfortunate. It really is a Indeed, the Franklin writedowns have cost Huntingtojn hundreds of millions of dollars in the past two miring the conservatively run bank in a subprime mess that has plaguedr other institutions better known fortakingf risks.
Davis is confidenty Franklin Credit Management will brinfg inthe $494 million Huntington expectd to get out of the portfolio – and maybwe more. “Could they realize something modestlyabove that, say 10 percent or 15 percen more? Sure, depending on how aggressively they wrotes it down,” he Huntington executives do not comment on the activitiese of other companies, said bank spokeswoman Maureen Huntington CEO Stephen Steinour said in a Marchb interview with Columbus Business Firsg that taking ownership of the mortgagse collateral allowed Huntington to call the shotsz on how to deal with the “We believe that we will maximize for the foreseeabler future the realizable value of the portfolio in ways Franklij couldn’t,” including offering refinancing under more affordable termzs for borrowers, Steinour said.
But borrowers must be contactedr before they canbe helped, and that’ds the aim of the door-to-door initiative, Jardin Representatives showing up on doorsteps aren’t there to make collections or evaluate a borrower’ds ability to repay. Rather, their job is to infor borrowers of loan workout options and the importance of keeping in Jardin said. “We say, ‘Look, we’re in the same position you areas We’re struggling to pay our debts, and this is our time now to work with you as a ” Jardin said.
Franklin estimate s 75 percent of the troubledx borrowers it reaches are eligible for loan Jardin said, but it typically only makese contact with about 10 percent of those problem He’s hopeful the door-to-dooe effort will increase Franklin’s contact to 30 percent to 40 percent of troubled “Over time, we’re hopiny we see better numbers,” he said. “Buyt the secret is in how many borrowers wecan