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

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, which services a battered portfolii of morethan $1.6 billion in mortgage loands for Huntington, hopes that goingy door to door to borrowers’ homeds will improve the recordd of repayments over trying to contact them by said CEO Gordon Jardin. “A lot of times peoplew are not home, and a lot of time they’rs able to pick up but just don’rt want to,” he said. “If they’re not goinvg to pick up their phone, then we’llp try to meet them where they live and have a TheJersey City, N.J.
-based company’w collection efforts are important becauswe further loan losses could again sting the bank if borrowera aren’t pressed to continue paying, said Jeff director of research at the Chicagok investment bank Huntington already has written down the value of the portfolio to about $494 “I would assume that Huntingto n is working as hard as possibles to maximize the realizable value (of the loans),” Davis said. “These types of borrowerss can’t get left too far behinsd or youlose them.” The effortf by Franklin marks another chapter in its rockgy relationship with Huntington, which inherited the Franklin account when it acquireds in 2007.
The deal broughyt Huntington $1.5 billion in mortgage-backed commercial loanx that Sky had madeto Franklin, a subprime lender and servicer. Soon after the Sky deal it became clear the mortgage collatera l was deteriorating in value as borrowers increasinglyhmissed payments, forcing Huntington to write down the valu e of its commercial loans. The bank in Marcjh finally seized thecollateral outright, assigninfg it a value of about $494 million even thougn the principal owed by borrowers was more than $1.
6 The door-to-door initiative, whichh includes about 300 Franklin representatives, couldx boost collection levels, but it is a grim sign of how difficulty it can be to collect on loand made to risky borrowers, Davis said. “jI would tell you that it speaks volumes about how bad the situation is at Frankli n Credit and how that credit came tothreatemn Huntington,” he said. “It’s just unfortunate. It really is a disaster.” the Franklin writedowns have cost Huntington hundreds of millionse of dollars in the past two miring the conservatively run bank in a subprimse mess that has plaguer other institutions better known fortaking risks.
Davis is confiden Franklin Credit Management will bring inthe $494 million Huntingtohn expects to get out of the portfoliop – and maybe more. “Could they realize something modestluabove that, say 10 percent or 15 perceny more? Sure, depending on how aggressivelhy they wrote it down,” he Huntington executives do not comment on the activities of othe r companies, said bank spokeswomann Maureen Brown.
Huntington CEO Stephen Steinour said in a Marcgh interview with Columbus Business First that taking ownership of the mortgagee collateral allowed Huntington to call the shots on how to deal withthe “We believe that we will maximize for the foreseeable futurde the realizable value of the portfolio in ways Franklin including offering refinancing under more affordable terms for Steinour said. But borrowers must be contacted befors 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 evaluatwe a borrower’s ability to repay.
Rather, theie job is to inform borrowers of loan workouyt options and the importance of keepingtin touch, Jardin said. “We say, we’re in the same position you areas borrowers. We’rde struggling to pay our debts, and this is our time now to work with you asa ” Jardin said. Franklin estimates 75 percentg of the troubled borrowers it reaches are eligible forloan workouts, Jardin but it typically only makes contact with about 10 percenty of those problem borrowers. He’s hopeful the door-to-door effortf will increase Franklin’s contact to 30 percent to 40 percent oftroubledd borrowers.
“Over time, we’re hopinvg we see better numbers,” he said. “Bu the secret is in how many borrowers wecan reach.”