This week, MortgageOrb has a brief chat with Gerald B. Alt, president and chief operating officer of LOGS Network. The attorney network's HEART Financial Services unit provides loss mitigation services to borrowers, coordinated through creditors' counsel.
Q: What was the impetus behind LOGS Network – an attorney group – launching HEART Financial Services, a company focused on loss mitigation?
Alt: We tried to start a loss mitigation piece a few years ago. At that time, servicers weren't very interested. But [loss mitigation] really moved a lot in a fairly short period of time. So LOGS Network, with national footprint and centralized management, expanded into HEART Financial Services. In April and May, particularly, business ramped up significantly with a couple of large servicers.
Q: Can you encapsulate what function the group serves?
Alt: HEART is focused on getting unsolicited packages to borrowers who need help, based on statistical analysis, and following up via phone from a consultative, empathetic perspective – not from a collections perspective.
Q: How does this strategy work, from a law firm's perspective?
Alt: Years ago, a borrower would place a call to the creditor's counsel about a foreclosure action. The law firm's conversation with the borrower was limited to an inquiry about the borrower's ability to reinstate the loan. If the borrower couldn't reinstate, there wasn't much more the attorney could do.
But now, the conversation has changed to, ‘Are you the homeowner? Are you living in the home? Would you like to stay?’ If the borrower answers ‘yes,’ the next question is, ‘Can you pay and reinstate?’ If so, that borrower is referred to HEART. Some clients want lawyers to refer these borrowers directly to the servicers; others ask HEART to survey the borrower's situation. If needed, HEART can direct borrowers to nonprofit counseling agencies.
A year ago, even attorneys questioned the virtues of law firms being involved in loss mitigation. But after all, borrowers served with papers very often contact creditors' counsel. Now, many large law firms are engaging directly with borrowers.
Q: Are there any potential problems associated with this creditor's counsel-borrower connection?
Alt: There are still challenges in providing any kind of loss mitigation solution on a third-party basis. The Fair Debt Collection Practices Act makes it a per-se violation to communicate with borrowers unless you go through the [‘mini-Miranda’] warnings. Plaintiffs' attorneys and consumer groups get on edge. Borrowers, however, routinely express their gratitude for the assistance.