by Matt Elerding
I have found that mortgages resulting from failed marriages are among the most difficult to deal with. I write approximately 50 “Divorce Loans”’ a year, about one a week. I have a handful of attorneys with whom I have developed close working relationships. In turn, they have entrusted me with their clientele in need of a “divorce” type loan. The other loans of this type come from past clients who are returning to me after their marriage has gone awry. Frequently, we are removing one of the spouses (from the mortgage) which, until recently involved a “‘cash out”’ refinance in order to buy out the spouse’s entitled equity. However, in today’s environment it is often a liability that the remaining spouse has agreed to take on.
The options are typically pretty limited. A spouse rewrites the loan in his name and buys out her portion of the equity in the process (or visa-versa). Often the family home will be sold because neither party can afford it on their own. As a result, both husband and wife will take their portion of the equity and buy their own, smaller place.
I used to have major reservations about making a commission on a loan that someone is doing out of necessity as opposed to desire. But I eventually realized that this is a loan that has to be done regardless of how difficult it might be for those involved. Therefore, I recently started sending regular monthly e-mails to all the attorneys in my database. Not all of them deal with family law but I have found that there is a tight network among attorneys and if you stay in regular contact with them, your name will eventually rise to the top of the list as the “go to loan officer” for these types of mortgages.
Additionally, I have a “Gold Group” that I have created within my database. This is the “cream of the crop” in my database of Realtors, past clients, attorneys, prospects and others. These are the folks that represent the lion’s share of my business. On a monthly basis I send them a concise update of industry news, current rates and emerging trends. Occasionally, I will include some unique elements that my Gold Group may not be aware that I am able to offer; such as my experience with divorce loans, for example.
Of course, there are other steps you can take to develop this niche, such as:
- Hosting a divorce seminar to inform Realtors and attorneys of the options and your expertise
- Writing an article on “Mortgage Loan Options for the Recently (or soon to be) Divorced,” for your local newspaper
- Offering to make presentations at local attorney group meetings.
- Appearing on a radio program to highlight mortgage-related trends, including key considerations involved in divorce situations.
- Writing an article for attorney association newsletters.
- Preparing a brochure on “Don’t Lose Your House in the Divorce,” for distribution in attorney offices, mediation centers and other appropriate locations.
I approach each divorce loan with heightened sensitivity and a sympathetic understanding that the client simply wants to compete this necessary task so that they can move on with their life. It is a rather delicate balancing act when you’re working with both parties. You want to be careful not to divulge too much information to either person lest you receive a very angry phone call from the other half stating that you should have not said what you said. The best advice I can offer is to be sensitive to the situation. A divorce is usually one of the most intimidating and demoralizing processes a human being will endure. It is emotionally exhausting, financially taxing, physically draining, and mentally overwhelming. As lenders, we need to be sensitive to this obvious fact.
Matt Elerding is leader of The Elerding Team, Vancouver, Wash.