Banks are afraid! Use that fear to lower your interest rate.
If you’ve been reading my blog, you know that banks are willing to just about anything to get rid of bad debt (their REO portfolios). Banks are also afraid of more properties entering their REO portfolios. At the most basic level, they want to avoid foreclosing on any more loans – almost at any cost.
In our current market, I am seeing people harness that fear to lower the interest rate on a loan they have. Here is a simple scenario of how that might work, where a Property Owner goes into meet with a Bank VP:
Property Owner: Hello Mr. Bank VP! Times are tough, I’m worried about not making my next mortgage payment.
Bank VP: That’s too bad, I wish we could help.
Property Owner: Actually, you can!
Bank VP: Oh?
Property Owner: I think all I need is a slight reduction in the interest rate, and I’d be able to keep my head above water.
Bank VP: Hmmm, we really can’t do that.
Property Owner: Well, in that case I’m afraid things don’t look good. With the way things are going, I don’t think I’ll be able to make the December payment. Do you really want to foreclose on another loan?
Bank VP: Not really, bu-
Property Owner: - I recently saw your REO portfolio on your website, and its huge. Really, all I need is a slight reduction on my rate, and we’ll keep me OFF that list of bad debt properties eating away at your profts.
Bank VP: Well, that makes sense, What if we….
And you’re off to the races!
It CAN be that simple. Many of you are owners of investment properties and income-producing properties that are in legitimate distress. Many of you are negotiating with banks to buy properties. Talk to your bank. Don’t take NO for an answer. I recently took a variety of questions about this topic on a Seller Financing Q&A Training Call with my students. You can now access a free recording of that call.
Over the next few days, I’ll talk about how to make a non-assumable loan ASSUMABLE, and how to find amazing deals in distressed REO portfolios at your local banks. Stay tuned!
{ 6 comments… read them below or add one }
Thank you Mike!!! You go above the call to equip us with the latest information to create success. This information is incredable and simple at the same time. I look forward to using the information and getting back to you with the results.
Thank you for giving your all.
Ryn Rude
Thank you so much for giving us a script template to get us going on this.
Would some people consider this a loan mod? If so we have heard that you have to be certified to do loan mods for people here in Nevada. Have you heard anything about this?
Thanks for everything,
Scott Olsen
Mike,
I am about to test my bank on a second home we have that I want to try and reduce the interest rate on. I have the first meeting Wed., with my private banker and I will have him put me in touch with the appropriate person. Unfortunately the bank is Wells Fargo, but we will see how it goes. I will let you know. Regards, great meeting in Vegas.
Steve Gubin
Is it ethical to threaten to violate your loan contract with your bank if you aren’t really in distress? (Hint: The answer is “no”.)
[...] am seeing assumptions being added and interest rates being reduced right and left. Or, like in the example above, banks will consider waiving a due on sale clause. [...]
Mike,
“Banks are afraid,…” page from my binder got missing, perhaps when I took out of it and was making a note. This blog has really helped me. I truly enjoyed the Seller Financing Camp in LV and will join you again in Chicago. I am working on the Motel and hope to come up with an offer.
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