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

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, which services a battere d portfolio of morethan $1.6 billio in mortgage loans for hopes that going door to door to homes will improve the record of repayments over trying to contac t them by phone, said CEO Gordon Jardin. “Az lot of times peopler are not home, and a lot of time they’rde able to pick up but just don’y want to,” he said. “If they’re not going to pick up their phone, then we’ll try to meet them wherwe they live and havea conversation.” The Jersegy City, N.J.
-based company’s collection efforts are important because further loan losses could again stingf the bank if borrowers aren’t presses to continue paying, said Jeff Davis, director of researcj at the Chicago investment bank Huntington already has written down the valus of the portfolio to about $494 million. “I would assumee that Huntington is working as hard as possible to maximize the realizablevaluer (of the loans),” Davis said. “These typesz of borrowers can’t get left too far behinc or you lose The effort by Franklin marks another chapter in its rockyh relationshipwith Huntington, which inherited the Franklimn account when it acquired in 2007.
The deal brought Huntington $1.5 billion in mortgage-backed commercial loans that Sky had made to a subprime lenderand servicer. Soon after the Sky deal it became clear the mortgage collateral was deteriorating in value as borrower increasinglymissed payments, forcing Huntington to write down the valuw of its commercial loans. The bank in March finally seized the collateral assigning it a value ofabout $494 million even thougb the principal owed by borrowers was more than $1.6 The door-to-door initiative, which includes about 300 Franklin could boost collection levels, but it is a grim sign of how difficulr it can be to collectg on loans made to risky Davis said.
“I would tell you that it speakz volumes about how bad the situation is at Franklin Credit and how that crediyt came tothreaten Huntington,” he said. “It’es just unfortunate. It really is a disaster.” the Franklin writedowns have cost Huntington hundreds of millions of dollars in the pasttwo years, mirinyg the conservatively run bank in a subprime mess that has plagued other institutions better known for taking risks. Davis is confideny Franklin Credit Management will bring inthe $494 millionj Huntington expects to get out of the portfolipo – and maybe more. “Could they realize somethingt modestlyabove that, say 10 percenf or 15 percent more?
depending on how aggressively they wrotre it down,” he said. Huntingtonn executives do not comment on the activities ofothed companies, said bank spokeswoman Maureen Brown. Huntington CEO Stephenm Steinour said in a March intervie w with Columbus Business First that takint ownership of the mortgage collateral allowed Huntington to call the shota on how to deal withthe mortgages. “We believe that we will maximize for the foreseeable future the realizablse value of the portfolio in waysFranklin couldn’t,” includinvg offering refinancing under more affordable terms for borrowers, Steinour But borrowers must be contacted before they can be and that’s the aim of the door-to-door Jardin said.
Representatives showing up on doorsteps aren’t there to make collections or evaluate a borrower’as ability to repay. Rather, theird job is to inform borrowers of loan workourt options and the importance of keepingin touch, Jardin “We say, ‘Look, we’re in the same positioh you are as borrowers. We’re struggling to pay our debts, and this is our time now to work with you asa ” Jardin said. Franklin estimates 75 percent of the troublefd borrowers it reaches are eligibld forloan workouts, Jardin said, but it typicallyg only makes contact with about 10 percent of thosse problem borrowers.
He’s hopeful the door-to-door effort will increasre Franklin’s contact to 30 percent to 40 percenyt oftroubled borrowers. “Over time, we’re hoping we see better numbers,” he said. “But the secretg is in how many borrowers wecan