Franklin Credit Management Corp., the Jersey City third-party mortgage servicer, has expanded its operations to include Face-to-Face Home Solutions, a door knocking division that tries to reach delinquent borrowers.
Gordon Jardin, Franklin Credit's chief executive, said the unit was started from scratch earlier this year as part of a broader repositioning of the company, which now offers underwriting, due diligence and asset valuations. Franklin had been a subprime lender that $54 billion-asset Huntington Bancshares, in Columbus, Ohio, inherited from its 2007 purchase of Sky Financial Group.
The company currently services 32,000 loans, most of them second mortgages, worth more than $2 billion. "We are definitely actively involved in trying to find ways to maximize the returns to Huntington on that portfolio," Jardin said in an interview.
Franklin's strategy had been "to maximize cash flow," Jardin said, while Huntington's strategy now is to work out the loans. "I think most companies are trying to determine what their strategy should be," he said. "It's too early to determine how well the performance of loans will be if we modify them," under the Obama Administration's Home Affordable Modification Program.
Franklin "has had the beginnings of some success" is reaching delinquent borrowers though it is too early to tell if the contact rate is better than the industry average.
Roughly 50% of delinquent borrowers have no contact with their servicer before a home goes into foreclosure. "That's frustrating, because you do have a legal contract, you have an agreement with the borrower and why they can't make a payment often is unclear," Jardin said.