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 billiojn in mortgage loans for Huntington, hopes that going door to door to homes will improve the record of repayment s over trying to contact them by phone, said CEO Gordom Jardin. “A lot of times peopled are not home, and a lot of time they’res able to pick up but just don’y want to,” he “If they’re not going to pick up their phone, then we’ll try to meet them wheres they live and have a TheJersey City, N.J.
-based company’s collection efforts are important becauses further loan losses could again sting the bank if borrowers aren’ t pressed to continue paying, said Jeff Davis, director of researchb at the Chicago investment bank Huntingtoh already has written down the valu of the portfolio to about $494 “I would assume that Huntington is workingy as hard as possible to maximize the realizable value (of the loans),” Davies said. “These types of borrowers can’t get left too far behined or you lose The effort by Franklin marksw another chapter in its rocky relationship with which inherited the Franklin account when it acquiredin 2007.
The deal broughrt Huntington $1.5 billion in mortgage-backed commerciall loans that Sky had madeto Franklin, a subprime lender and Soon after the Sky deal closed, it becamd clear the mortgage collateral was deterioratinfg in value as borrowers increasingly missed forcing Huntington to write down the value of its commercial loans. The bank in Marcyh finally seized thecollateral outright, assigning it a value of abour $494 million even though the principal owed by borrowersd was more than $1.6 billion.
The door-to-doof initiative, which includes about 300 Franklijn representatives, could boost collection but it is a grim sign of how difficuly it can be to collect on loanws made torisky borrowers, Davis “I would tell you that it speaks volumes aboutf how bad the situation is at Franklin Crediyt and how that credit came to threaten he said. “It’s just It really is a disaster.” Indeed, the Franklinn writedowns have cost Huntington hundreds of millionxs of dollars in the past two miring the conservatively run bank in a subprimes mess that has plagued other institutionw better known fortaking risks.
Davis is confident Franklinb Credit Management will brintg inthe $494 million Huntingtob expects to get out of the portfolio and maybe more. “Could they realizes something modestlyabove that, say 10 percenr or 15 percent more? Sure, dependingg on how aggressively they wrote it down,” he Huntington executives do not comment on the activitied of other companies, said bank spokeswoman Maureen Huntington CEO Stephen Steinour said in a March interview with Columbusw Business First that taking ownership of the mortgage collateralp allowed Huntington to call the shots on how to deal with the “We believe that we will maximize for the foreseeablw future the realizable value of the portfolio in ways Franklin including offering refinancing under more affordablw terms for borrowers, Steinour said.
But borrowersa must be contacted before they canbe helped, and that’s the aim of the door-to-doof initiative, Jardin said. Representatives showing up on doorsteps aren’t there to make collectionsz or evaluate a borrower’s ability to repay. their job is to inforkm borrowers of loan workout options and the importancr of keepingin touch, Jardin “We say, ‘Look, we’re in the same position you are as We’re struggling to pay our and this is our time now to work with you as a ” Jardin said.
Franklin estimates 75 percent of the trouble borrowers it reaches are eligible for loan Jardin said, but it typically only makes contact with about 10 percent of those problem borrowers. He’s hopeful the door-to-door effort will increasre Franklin’s contact to 30 percent to 40 percent oftroubledd borrowers. “Over time, we’re hoping we see better numbers,” he “But the secret is in how many borrowers wecan