Mortgage stress can happen at any time to good people. The usual culprits are illness, accident, divorce, separation, and job loss.
But is there any reason to do anything about it if you hear about it?
It’s a good question, many financial specialists have their own problems and don’t want to be tied down with a past client in financial trouble who won’t make them any money. However, it pays to help your client, for a few good reasons:
- Mortgage stress ends. And a client will remember you didn’t bother to assist them at a low point. Happy clients are happy referral ports for your business and referrals are gold for you.
- If your client’s mortgage falls in arrears, and worse, defaults, this could mean the loss of trail income. Better to be ahead of the game and assisting your clients to keep their mortgage payments going before it’s too late.
- Your client will likely find another broker for their future (successful) loans if you weren’t there for them in a tough moment. Better to keep a client for as long as you can than to lose them.
How you can help your client
Be a conduit of good information, let the client know to:
Contact their credit provider
Encourage your client to contact the bank quickly. Credit providers are set up under their codes of practice and legislation to provide active and helpful hardship departments who are at the ready to hear your client’s current situation and come up with a short-term plan. Encourage your clients not to bury their head in the sand and avoid the bank’s calls, emails, and texts. The quicker your client contacts the credit provider the better, because hard situations are always worse in your head when you are avoiding them.
Provide paperwork to prove hardship quickly
Encourage your client to provide everything the bank needs quickly. The bank can only provide support if your client is willing to help themselves. If the bank asks for proof of hardship (via a statement of financial position, recent bank statements and recent payslips) encourage your client to get these back to the bank quickly.
These documents can sometimes seem onerous to complete so if your client needs a bit of help along the way, and you have time to provide it, it will come back to you in spades. If you haven’t got time to assist them at least encourage them that it’s a great idea to get this information back to the bank quickly because it will help them enormously in the long run.
Provide a personal handwritten statement of hardship
Encourage your client to write a handwritten statement of exactly what’s going on. It’s surprising the number of times we have seen that when a client writes out a heartfelt statement of what is going on for them the bank responds in kindness; with interest reductions and freezes, debt reduction or waivers and fee relief.
We put together a case for a client with all the required financial information to prove hardship and the most heartfelt handwritten statement of their current circumstances and the bank waived the client’s debt of $44,000 entirely.
Be kind when talking with the bank
Encourage your client to be kind. Banks are made up of people and to get the best outcome for your client’s situation will require them being kind, patient and helpful to the person at the bank you are dealing with.
Always tell the truth
Encourage your client to be absolutely honest with the bank. Sometimes it’s hard to be honest when the chips are down because admitting what’s really happening to you means its real and that is frightening. But honesty is the best policy when dealing with the bank because they will find out the truth in the long run anyway and it’s so much harder to help dishonest people.
Provide evidence of illness, unemployment, divorce
Encourage you client to provide anything that will assist the bank approve hardship. If your client is currently sick, encourage them to seek a doctor’s letter to verify this. If they have lost their job, provide a Centrelink statement showing Jobseeker or JobKeeper payments. If recently divorced, suggest they provide court documents.
Give the bank hope that things may get better
Encourage your client to let the bank know they will be actively seeking a new job, or that their illness is being treated and will hopefully improve by a date in the future, or that once they are through that tricky separation or divorce things may settle down again. This gives the bank something to work towards with you client, a financial future they can both be hopeful about.