The Ox and the Ditch: FAQ - What Can I say to Borrower?
This is a special series of blog entries in which we provide some quick answers to lenders' frequently asked questions (FAQ). Two things should be kept in mind. First, none of these questions can be answered in a vacuum. Questions should be considered with a thorough review of the file and an interview with appropriate loan officers. And secondly, many of the questions are worth revisiting from time to time because subsequent events will impact the answers.
FAQ #11 – What can I say to the Borrower?
Oral Communication Tips (Best Practices):
- Attitude – Be calm, cool and factual
- Truth – Stick to the truth, keep your statements fair and in good faith
- Loan Documents – Know your loan and do not contradict
- Notes – Take written notes, but be careful since they might be read in court
- Power of Two – All conversations should include at least 2 lender personnel
- Disclaimers – At the beginning of a conversation, state clearly that you have no authority to bind the lender and the call is merely to collect information
- No Threats – Never threaten a criminal complaint or civil suit
- No Oral Agreements – Make clear that all agreements must be in writing and you will follow up with a written agreement for their review
- Stick to Your Business – Only make statements within the scope of the lender's business – never suggest ways for the borrower to run or improve its business, i.e., avoid statements such as "you'd make more money if …"
- One-Sided Deals – Avoid suggesting structures that solely benefit you. A decision that solely benefits the lender may come back to haunt you
- Do NOT record conversations
To read the entire Tough Times FAQ series, please click here
