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10 Tips For Calling Banks For Distressed Deals

By
Education & Training with WeCloseNotes.com Inc

I've noticed several current posts on a few other websites where a few note investors were looking to call banks directly to track down note deals.  I've been doing this since 2008 and I thought that I would lend some knowledge and tips on what we have done to build a large database and close a ton of bank direct deals.

1).  It's a numbers game.  Keep in mind that 80% of sales are made after the 5th contact and this is so true with bank asset managers.  You have to expect to call and email several times to make contact.  My numbers over the years are 50/14/4/1.  50 calls will lead to 14 contacts.  This in turn leads to 4 NDA (Non Disclosure Agreements), which leads to 1 tape/deal.  

2).  Don't waste time.  I don't waste time calling Citibank, Chase, BOA, Wells Fargo, US Bank or the rest of the largest institutions.  They are looking to sell in large pools ($50 Million or greater) and the discounts aren't the greatest.  I also don't call on Monday's or Friday's.  Tuesday, Wednesday and Thursday are the best days as long as its between 10 am - 12pm and 2 pm to 5pm their time.  Sometimes calling the 3rd Thursday of the month after 5pm works well as they are often working after hours to prepare for end of the month/quarter reports and their assistant or gate keeper is gone for the evening.  

3).  Variety is the spice.  I use a variety of sources when building my lists to call and email.  Laneguide.com is inexpensive at around $150 year to pull lists of banks doing business or located in a specific state.  Using the Asset Manager search function, I can pull around 800 names, emails and contact info for the top 12 states that I buy notes in.  I will also use Linked In as a resource by searching for Special Assets (5800+ names) and Secondary Marketing (7800+) professionals at the banks that I'm calling and emailing.  I'll connect with these individuals or send an inmail with a short request and this has lead to specific lists from mid size to regional banks that very few people end up seeing.  I'll also jump on the State of Texas Savings and Mortgage Lending website and download a list of licensees doing business in Texas which results in an additional 2700 companies (names, phones, addresses and emails) that are either licensed mortgage bankers, servicing companies or mortgage companies.  They may not always have something each month, but following up each month with an email leads to regular deals through drip marketing.   I will also use Scotsman Guide to track down commercial deals or portfolio lenders who will have defaulted notes clogging up their warehouse lines.  

4). Follow up, follow up, follow up.  I stated earlier that 80% of sales are made after the 5th contact.  Expect that and turn those numbers in your favor.  If you follow this formula, eventually you'll have asset managers emailing you with deals each month.  First, I like to send an initial email out on Tuesday morning to the database which results in a 12-20% open rate.  Second, I'll follow up with a duplicate email to those that didn't open my first email on Thursday afternoon at 2pm.  This results in another 7-10% opening it.  Third, those that open my first email, I'll start calling these asset managers and either speak to them or leave a voice mail.  Always, always, always leave a voicemail and your phone number twice along with a short message.  Less then 10% of first messages are returned the first time.  So I expect to make 50-100 phone calls in a day.  75% won't have anything immediately, but will eventually have something on their books that they will be looking to move at some point.  Forth, I'll cross reference these individuals on Linked In by searching for the bank name and special assets, secondary marketing or credit risk desk.  I'll reference that I left a message and often leads to responses as well.  Fifth, I've also found that around 30% of these asset managers and mortgage bankers are using their emails in their social media profiles of some sort.  I'll regularly upload my asset manager emails into a custom audience and get somewhere between 20-35% of them with Facebook profiles that I can market to as well with customized ads, videos or other marketing.  Six is to just follow up each month with at least another 1-2 emails until I've branded myself into their mind as being the one to call when they've got something.  Every month I'll get several responses that "I've been getting your emails for months and now I've finally got something to send you."  You can also use Distressedpro.com to narrow down your targets bank by evaluating which banks have higher reserves and default rates, but I often find myself (and others) spending too much time looking at numbers and reports instead of taking action with the shotgun approach.

5).  Stick in the middle.  I mentioned earlier that I don't waste my time calling the largest banks.  I also don't bother calling banks with less than 10 branches.   Usually, the smallest banks are too strict on their underwriting or can't afford the haircut.   Also, I don't bother calling banks in the fast foreclosure states like TX, GA, AZ, NV or NC.  These banks will either want too much for their distressed debt or know that they can get top dollar taking the deal all the way through foreclosure.  Regional banks in multiple states are often the best targets to get tapes.

6).  Ask for referrals.  The secondary marketing space is a small arena and often times asset managers are moving from bank to bank.  I've often received new tapes from new sources by asking my contacts if they know of anyone else selling.  I especially ask if I see that they've worked at a different institution by reviewing their Linked In profile.  This has also often worked in reverse where asset managers from other banks are calling me after being referred by one of my asset manager contacts.

7).  Commercial and Residential.  Often times regional banks will have different individuals handling different portions of their commercial or residential portfolios.  If I don't have luck with one asset manager I ask if they know the other portfolio managers on the residential or commercial side of the bank.  This has often worked out well as I get introduced to deals that others don't see.

8). Foreclosure Lists Are Hot Leads.  I'll use foreclosure lists in my local markets to identify smaller banks who are foreclosing on assets.  I use these addresses as my foot in the door when calling/emailing asset managers with a specific deal.  My goal isn't to get the asset I'm emailing about, but to use it as a warm lead to get on the asset manager's list of defaulted notes all across the country that they are dealing with.  Sometimes I'll even get the asset I'm calling about or be able to put in an offering as a back up offer if they don't sell the asset at the foreclosure auction.

9).  Foreclosure attorneys.  As I mentioned above in using the foreclosure lists, I'll also call the attorneys handling the foreclosures for the smaller banks as a possible back door into the bank's asset managers.  This won't work with the large foreclosure mills, but it has often lead to a conversation and introduction to other banks and hedge funds who are either foreclosing or looking to move the distressed debt faster.

10).  Bar tabs.  Early on, I couldn't afford the expensive tickets to the large mortgage banking and servicing conferences.  So what I did was go to the hotel or convention centers and hang out at the bar nearest the convention.  My bar tabs were often a lot cheaper then the cost to attend, but I would often end up making some great connections and get invited to after hour dinners and parties and often waltz into the the meetings on day two and day three when the registration crew was a lot lighter.  My bar tabs would always end being worth their weight in gold later on.

Calling banks for notes can be a very profitable endeavor.  But it is work and marketing over and over and over again.  Calling or emailing once won't get you much of a response and some educators will say that it can't be done or that you are too small an investor for banks to waste their time with you.  I've bought many deals from banks where I was cherry picking individual assets and they were glad to move something instead of nothing.  Rarely do banks ask for proof of funds on the front end as long as you are speaking their language or know what you are looking for.   Make sure to take the time to have an up-to-date executive summary on your company and what you are looking for along with making sure to have your vendors, servicing company and attorneys lined up to help overcome questions that an asset manager might have as to your ability to close or follow through with the deal.  Its a small community and if you rinse and repeat what I say to do, you'll have success that very few take the time to work to achieve.  

Comments (1)

Mick Michaud
Distinctly Texas Lifestyle Properties, LLC Office:682/498-3107 - Granbury, TX
Your Texas Lifestyle is Here!

Great list.  I used to consult for FreddieMac's IT department in Dallas.  I wrote the BPO system for their California operations so I was right next to the REO department.  I so wish I had kept in contact with that group.  I was there in the late '90s.

 

Feb 12, 2017 06:09 AM