This recent (well done) LinkedIn article by Chris Nichols reminded me of the power and usefulness of the loan modification strategy in retaining valuable loan relationships. While most of us may associate loan modifications with Trouble Debt Restructuring (TDR) they are also used widely as a defensive mechanism to retain desirable credits. A loan modification is simply a 1- 3 page document executed by the borrower that modifies specific terms of the original note and or mortgage.
The basis of the argument is that it is much more cost effective to retain existing credits (even with renegotiated rates) than it is to acquire new commercial members. We know many of you have experienced pressure on your portfolios as banks ramp up production post-recession. The pro-active retention strategy outlined in the article will reduce portfolio runoff and solidify relationships with existing members.
Chris Nichols/Community Bank Data
One of the many services provided by our Doc Prep team is the preparation of modification documents for any Lucro prepared loan doc set for a nominal charge ($250 or less). Turnaround is usually 1-2 days.
Feel free to give Jim or I a call to discuss this or any other Lucro service.