Mike Russell On Avoiding Foreclosure And Reclaiming Stability

 

Foreclosure can feel like an overwhelming and inevitable outcome, but it does not have to be like that. Kevin Shortle interviews Mike Russell, founder of the non-profit Hope 4 Hardship which helps homeowners avoid foreclosure. They dive into the practical strategies Mike’s organization observes to guide people through financial hardships that could cost them the ownership of their home. They also explore how this particular approach aligns with the note investment industry and its potential for national growth. Do not miss this insightful discussion about turning challenges into opportunities for change.

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Mike Russell On Avoiding Foreclosure And Reclaiming Stability

Introduction And Podcast Overview

I’m here with another episode for you. Thanks, as always, for reading the show and recommending it. If you belong to a meetup group, real estate investment club, note investment club, or anything like that, please recommend the show. If you do like the show, please give me a nice five-star rating on there. It is helpful and allows me to bring on great guests like we have for you.

Before I introduce our guest, let me tell you this. When you have a show and you do enough episodes, at some point in time, you do start to get emails from people saying, “So and so should be on your show,” and that sort of thing. A lot of times, it’s not a right fit. I got an email introducing our guest and that was probably the fastest one I’ve ever responded to and said, “Yeah, I want to get him on.”

In the note business, as you know, a big part of what we do when it comes to non-performing loans is to help people stay in their homes. Nobody gets in the business I’m in. Nobody gets to note investing to foreclose on somebody. We would much rather work with people. The problem always becomes that most people in that situation have never been in that before, and they lack knowledge of what to do. They have a tendency to clam up and not do anything. That’s the worst thing that someone can do.

I was interested in a new nonprofit that our guest has launched here. I think it’s great because I think it will help people. They start to realize that lenders, or note buyers in my case, are not the bad guy. We want to work with you, but we have to hear from you to do that. That’ll be a big topic that we’re going to talk about.

Before we jump right into that, I want to thank my sponsors, Noteworthy. Noteworthy is a national event for the note industry and we’ve got an event scheduled for Phoenix, Arizona coming up in 2025. I should have that date at my fingertips and I don’t, but I will keep you posted on that date if I find it here. It’s going to be in February, in Phoenix, and we’re going to have some sponsors there. It’s going to be a good time. We’re going to start posting all of those things out as well.

If you’re in the industry, great. It’s a good event to network and meet other people. We’ll have some vendors there as well. If you are new to the industry and you want to get more involved, see what else is out there, interact with other people who are making money in the business, it’s a great thing to get to too. I’ll have discount codes and everything else for you so that it’s very reasonable for you to attend that event in February with Noteworthy. Thank you, Noteworthy, for that sponsorship.

Let me introduce my guest here. Michael Russell is an award-winning Century21 agency owner and broker. He’s been through not only ups and downs in real estate but also ups and downs in life financially. He came back and is now giving back through a newly launched nonprofit entity called Hope 4 Hardship. It’s designed around helping people avoid foreclosure by educating them on what they can and cannot do. I think it’s a great service. Michael, welcome.

Thanks. I appreciate it. I’m honored to be here.

I love the service. Obviously, you heard what I said at the beginning there, but has that been your experience, too, where you have people who are in trouble and they, they don’t know what to do, so they say, “I’ll just avoid it,” and that becomes the worst thing that they can do?

Financial Struggles And The Human Condition

Sure. It’s the human condition. This is what happens when we fall into financial struggle. The entity that is actually our biggest ally is the one we avoid. That’s a basic human condition. It’s fear-based, I think. People are afraid to talk to the very entity that is threatening our livelihood and our housing. They don’t pick up the phone and call. That’s the reality of it. That can go on an extended period of time. I think it’s human condition stuff.

If anything I’ve learned in my life, it’s that if you stopped paying your mortgage, there’s a tremendously strong possibility that you stop paying a whole bunch of stuff before that. Typically, your mortgage is the last bill you stop paying except for your cell phone. I think that the inalienable truth here is that if you are facing foreclosure, you have other pressing issues in your life that make it challenging for you to focus and compartmentalize on the problem of your housing.

 

In my experience over 30 years in this business, thankfully, I’ve never had a foreclose on anybody but I’ve had to threaten it. The only reason I had to threaten it was because they wouldn’t respond to anything else. It finally gets down that road where it’s like, “I guess we’ll have to start the foreclosure process and at least that will get them to call.” They call and find out that we’re not the bad guy. There are solutions that we can provide. Maybe not all of them are 100% optimal for you, but it’s better than going through the foreclosure process and there’s a lot of things. I also agree with you a lot.

When I do state of the industry addresses for this industry, I’ve told people for years, it’s a buildup when somebody gets to a point where they’re not making their mortgage payment. I always look at a precursor as it starts with credit card debt. We see credit card debt go up, we see the delinquencies on credit card goes up, then I look at automobiles, same trajectory, and then I say, “Mortgages are next.” That’s the next domino that’s going to fall if this trend continues. You concur with my thoughts on that.

Let’s paint a scenario here. What I do is I buy performing notes and non-performing notes. The non-performing notes we buy some come from banks and some come other from private lenders. When banks go through this process, banks are now selling the non-performing assets because it’s typically, as you know, through Fannie Mae, without getting caught into all the details of that. Fannie Mae sells these in bulk versus foreclosing on people nowadays. I think they’re doing a better job since the Dodd-Frank act of making people aware by promoting through banks that you better work with these folks. The notes that we end up buying, they’ve already been past 90 days. Sometimes, they’re a year past due.

Finally, they’re sold. We purchase those notes at a discount, obviously. What we try to do is reach out to the people and let them know that there’s some solutions there. If someone were to find you or one of my clients, because I teach this on a national basis, which I think you know, if I’m teaching somebody, is it something where we can direct them to Hope 4 Hardship where maybe a third party can talk to them and maybe there’s a solution there? They still look at us as the bad guy lender. Maybe if talking to a nonprofit that’s a third party that says, “They do have solutions, you need to talk to them. Is that something that you see?”

Absolutely. That’s something I would absolutely adore if we create a relationship like that. I I’ve been in and around the real estate business like you for many years. My whole adult life since nineteen, I’ve been doing this and owned and operated a real estate firm. Where this started for me was observing the human behaviors and emotions related to the real estate transaction. You have people who are elated, first-time home buyers, people leveling up, and real estate investors doing well. What stuck to me was the sad emotions that come in real estate. Death, divorce, and disaster are common causes for selling real estate.

I’ve worked for Freddie Mac, Fannie Mae, and multiple banks, and over the years, I have sold thousands in the downturn of foreclosed assets. I’d have to go out there and witness lockouts where a box truck shows up with a sheriff and two movers and they knock on the door and say, “You have an hour to take anything you want and put it in the truck. We’ll store it for 30 days and then we’re changing the locks when we leave.”

Those things always stuck out to me, but what made me do this was my own personal experience with them. I faced foreclosure. Corporate bankruptcy, personal bankruptcy. I had to short sale some properties. The collateral damage that ripped through my family as a result of that lasted the better part of a decade. The only reason I’m here is because of my own personal turnaround, both financially and in life. What keeps me around is the reward I get by bearing witness to and playing a small role in the turnaround of other people.

Witnessing that in people and being able to play a role in someone’s life where they can end up in a better position than I could have is tremendously rewarding to me. It helps my healing process over the course of my life. That kind of work that you’re talking about is exactly what I do. I think you’re right. A third party without an interest in any fashion, but to help someone turn their lives around, there’s a truth in this.

There’s no bank in America that wants to foreclose on a property, and there’s no homeowner in America who wants to be foreclosed on. Those are truths nationwide. There’s no reason that an organization like mine can’t come in. If I’m being honest, what the vast majority of the work I do is I help people get out of their own way, because that’s what we are when we face these problems. We are largely in our own way.

No bank in America wants to foreclose on a property, and no homeowner in America wants to be foreclosed on. Click To Tweet

I will say that 80%-plus of the people that I communicate with this was avoidable. This was avoidable through a better, stronger, healthier decision-making paradigm. Are all these people ready to acknowledge that? No. That’s where I find great joy. I like helping get people from a place of denial. To a place of accepting reality and taking proactive actions to take the steps. I would be honored to do that.

It’s simple. There are retention and non-retention options when you fall behind on collateralized debt in America. Whatever it is, car, boat, house, collateralized debt the lender wants to assist in either helping you retain the asset or helping you in a non-retention option. I’m well-versed in all of those, and that comes from my experience in and around real estate for 30 years. This stuff’s relatively simple to me. It’s not to the average consumer. I can’t stress it enough. What I like doing is seeing the turnaround in people, which is tremendously rewarding to me.

I want to ask you about this. Of course, you’ve got the Hope4Hardship.org website. It looks pretty darn easy to navigate. The phone numbers are readily available. I do think on something like this, you have to keep it absolutely simple. You have it under a nonprofit. I’ve read on there that if someone’s in trouble and they need help, they can go to the website or call the phone number and talk with someone. There’s no cost to that.

My nonprofit will never charge you for anything in this assistance.

That’s easy. That’s something that I think people would be or should be open to doing. It would be a great resource because I think we’re aligned with this because we do workouts with people all the time. The conversations that you or your staff at the nonprofit would have would probably generally go down the line of inquire what the person’s thinking about what they’re looking to do and then starting going down a list of services. Could you give us a scenario like that?

Application Process For Financial Assistance

It all starts with, “Tell me a story.” That’s the most common thing I say is, “Tell me a story. Tell me what’s going on with you,” to get me a better idea of what it is. It becomes a function of a simple intake process. Every lender will offer an application for assistance in some fashion. They’re all different, but they’re all similar. It’s a simple function of income, assets, and expenses. That’s what this application is.

You put that together along with supporting documentation, which is typically a couple of months of bank statements, some recent pay stubs or any other whatever your income source is, collating that data and submitting it into the lender. Most of the people I meet have tried this. There are certainly some that were like me at my worst, two years of unopened mail on my dining room table. There are those people in the world for sure.

A lot of people have open some of that mail and tried the assistance. I’ll tell you, the most common thing about assistance application is missing documentation. The lender, believing rightfully that it’s not their job to chase the consumer, they don’t either notify them or they notify them once and the consumer misses it.

What my team and I do is every three business days is we touch base with the bank looking for a status update. “Is everything okay? Is the documentation complete?” What I’ve learned about these assistance applications is they need to be certified complete by the lender in order for them to send it to underwriting to review the application and then spit out results or a decision letter letting the consumer know, “Here are your options for either retention or non-retention.”

It’s the sticktoitiveness. It’s staying on top of these guys regularly, which I think most consumers don’t do. They fill out an application, they send it in. I don’t even know if I’ve ever submitted an application that wasn’t missing documentation in some fashion. They always are. They want an additional thing, or there’s a transfer into the bank account from another bank account ending in these four digits. “Okay, now we need that bank,” whatever it is.

As you know, it’s not a forensic audit, but they I think over the years, banks have gotten better at reading and assessing and identifying the specifics of the applications. That’s where it starts. The goal is get to a decision by the lender, where they then put out some options for you and then it’s consulting over what those options are and which ones are the best ones based on my experience.

You’re a lot more proactive than I was imagining. This is above and beyond a phone conversation of what your options are. This is you guys actually directing them and saying, “Here’s what we got to do,” putting together a plan and then reaching out to that lender. That’s incredible. Even the follow-up on trying to provide that information to the lender so the lender can assess it, such as, “Here’s what we can do. We can do a forbearance, or maybe we can do a temporary loan mod to lower your payment. Was it a rough patch of life and now you’re working again?” That’s what you meant by the story, obviously, like, “What’s the scenario, so we know what to work with?” A hardship letter, as we know it.

Things happen. As you said, job losses, medical bills, divorces. These things happen. That’s great. That’s going above and beyond. I didn’t realize it went that far. I think in our industry, and if you haven’t tapped into our industry because it’s still considered a niche, even though it’s a multi-billion-dollar industry, it does fly under most people’s radar. The great thing about being private note owners is that we are the bank.

There’s a servicing company that collects the payments. They’ll be the ones to send out 30 days late, 60 days late, 90 days late. At 90 days late, they come to us and say, “What are we doing? We send out a demand letter. Are we getting an attorney to initiate foreclosure?” That’s where our trajectory starts to go where we guide them in this. I could easily see a service like yours being in a demand letter from these servicing companies, say, “You can talk with us or if you prefer to talk with a third-party nonprofit organization on this, here’s their information as well.” With us, unlike you’re dealing with banks, we are the bank, as they said. We make the decision. You don’t have layers of bureaucracy and all that to get to.

It’s basically I paid or my readers have paid their hard-earned money to buy this loan. They want to get their money back. They want to, obviously. They’re still a profit motivation for that, but we also, ultimately, want the person to start paying again. How do we get them to that point? We can make decisions a heck of a lot faster than trying to go through any organization where the frustration’s always who’s the decision maker. It’s like, “Where do we get to the decision maker going through the bank with us?”

We’re right there. We are one step away from the servicing company to make that decision. We had the homeowner financial assistant program, which I’m sure you’re probably familiar with. It’s still only available now in a few states, but again, it’s one of these great programs that the government created. They sunk $10 billion into it, but how many consumers knew about it?

We got so many people through that mass half program, but they ran out of funding. It was relatively simple. Towards the end, they pay up to $50,000 in arrearage. That changed. That’s what I look to do. I like to be a positive inflection point in someone’s lifeline where I change the trajectory in a positive way. That isn’t always who I was. That’s why it’s important to me. I enjoy it. If it’s a portfolio note, your options are supremely limited. For most portfolio notes that I deal with, I end up talking to a VP at a bank or something, and he is like, “Yeah, you got options. Reinstate it.” It is about how that goes.

Retention And Non-Retention Solutions

If it’s out in the secondary market, you get so many bites at the apple. The most beautiful thing in the secondary market is a partial claim mortgage, where they’ll take the arrearage, tack it onto the backend at 0%, no payments due until either the maturity of the original note or you sell the property, of course. However, that timeframe appears to be limited. You can only be so many months. Three hundred and ten days seems to be the sweet spot with most. If you’re less than 310 days behind, they’ll entertain it. It’s a balancing act.

 

How would a consumer know any of this stuff? It would never happen. It’s a unique blend. Obviously, I conjured up a lot of experience being in this business my whole life. Personally, I got to a place where paying it forward became important to me. This happens to be the useless information that’s in my brain that I can use to help people pay it forward to maybe turn their life around.

You as a bank, too, you don’t want to foreclose. You as a bank or any bank, what they prefer is that they resume their normal payments. They turn things around and they resume their normal payments. That’s what everyone prefers. A lot of these people absolutely can do that. Most of these hardships are temporary in nature but that arrearage is scary. When your mortgage statement used to show up with $1,321 due at the top right-hand corner and now it says $27,865, you’re tapping out.

Any bank prefers to turn things around and resume their normal payments. It is what everyone prefers. Click To Tweet

It’s demoralizing. It’s something the consumer thinks about 24/7. It affects every aspect of their life. How could it not? It’s always there hovering over you.

The hardest thing, I think, for any human being to cope with is uncertainty and these things are riddled with that.

We buy performing notes and as smart investors, of course, we’re hoping for best case scenario, which is we never have to talk to the borrower. We never have to talk to the servicer. Everybody pays. It’s good. Worst case, we have to prepare for it. Worst case scenario is they stop paying and what do we do? Many of the loans that we buy now, property values have gone up tremendously and there’s a ton of equity on that.

I look at it and go, “There’s no way you’re going to end up with this house in a foreclosure sale,” because if they were smart, if they were informed, they’d sell this house before it gets to the foreclosure sale. Walk away without a foreclosure, walk away with some capital and move on with their lives. Sometimes I’m sure you’ve had to tell that to clients as well and say, “Your best option, sell your house. You got all this equity absolutely. Swap out, move along. Save your credit. Save all these other things.”

To my knowledge, never in the history of real estate has this happened before because of this unreasonable, frankly, and unrealistic appreciation schedule that we’re on in real estate values. I’m not recommending this. You can literally not pay your mortgage for three years, sell and walk away with a bag. That has never happened in real estate. If you don’t pay your mortgage for 2 or 3 years, you have negative equity historically. Nowadays, that happens. A lot of these people end up having to sell their property. There are no retention options. The non-retention options, it’s a small list. Bank assisted is beat in lieu of short sale. Nothing is in short sale anymore. I think we had two short sales in 2024. Going back ‘08, ‘09, we’d do 100 a year.

 

Short sales aren’t realistic. These people are able to sell, maximize return on the asset by leveraging demand, because it’s not challenging to get a distressed asset. Everyone’s an investor now and gets 75 people to walk through the house and the bidding goes up $80,000 over ask and all of a sudden, someone’s walking away with $196,000 in cash, more money than they’ve ever had in their life, yet they have a three-year history of nonpayment and more. It’s amazing to believe that that’s possible, but that’s happening every day.

We don’t like that as lenders that wants to do anything. If we peel it back, there’s definitely that and people do find out sometimes about that. They also have to realize you’re paying some money. You’ve got to keep an attorney on retainer or something because a lender’s not going to just sit back and fold their arms and go, “I guess we’ll have to wait three years. We’re going to be filing things.” There’s a cost to that. I think if people realized, “Let’s exhaust everything that we can do with the lender,” because it’ll be cheaper. You’re not paying an attorney.

Especially on our side of the business, we don’t need to lawyer up per se if the servicing company gets the person talking, whether that’s with them or whether that’s with you and then engage in the conversation. We don’t have to lawyer up and go through all that expense and everything else. I mentioned to you, I had a file foreclosure. That cost me money. They have to hire somebody who is costing them money. Typically, what happens, we come to a resolution. It’s like, “How about we cut that part out of it and talk with us so we can come to some resolution here?”

I was talking to an attorney. There are only three major law firms in Massachusetts that these banks hire to do foreclosures. He said, “Believe me, I don’t want to do this.” Apparently, in Springfield, the newspaper charges the bank $5,000 for the three public notices. I said, “Are you kidding me?” He said, “No one else does it.” It’s ridiculous. No bank wants to foreclose it for reasons like that.

For those who don’t realize what he was saying there, when you go through foreclosure, there’s a process. Some states are judicial, some states are non-judicial. Most states do require that you publicize the foreclosure notice for a period of time in a paper of general circulation. Sometimes, that paper of general circulation, apparently out in Western Mass, they figured out, “I guess you have to do it, so we’re the only one in town that does that.” That sounds like an opportunity. Somebody create a little publication out there.

If a consumer acts faster and whatever and they and they work with a company like mine, because the consumer’s the one who pays that $5,000 if it doesn’t get foreclosed on and they do eventually fix it. That’s rolled into their note.

That cost is passed on.

If they wait too long and allow it to get to that that pass the Soldier and Sailors into the actual foreclosure proceeding, and then they save it, tacking that onto their principal balance is the bottom line.

As a reminder, I’m talking with Michael Russell. He’s an award-winning Century21 agency owner and broker and also has recently launched Hope 4 Hardship. You can check out the website Hope4Hardship.org. If you’re a lender or private node investor, I think it’s worth taking a look at the site, seeing what services they offer. I think it’s something that could be very helpful.

I think there‘s a certain percentage of people, but there is still a little bit of resistance to talking to the lender or the servicing company, the ones that have been sending them demand letters to pay. There’s a little intimidation there. They know more about this. This is more educational. I’m impressed that you helped them put together packages and paperwork to send to the lenders. That’s above and beyond what I would’ve thought for a no-cost service like that. I think to do the actual follow up with them is great. When did you start this program?

2018.

It’s been a little while now.

For a while, it was whatever. I’m just a guy. This is simple to me. There are about 85 notices of intent to foreclose recorded in Massachusetts Land Court every week. I always bought this data from the Warren Group or somebody and back in 2010, there was 750 a week. It is about at the lowest I’ve ever seen it. I communicate with fifteen people a week. I’m able to get in touch with fifteen people a week and at least begin the process. Part of my struggle is they tap out. They get started. Part of the deal is that I try to be an effective communicator upfront is, “I can’t do this alone. I need you to do this with me.” It becomes challenging sometimes to keep them engaged in the process, because, along the way, it’s that missing documentation thing.

That missing documentation is tremendously common. Part of my struggle is when a notice of intent to foreclose, the Soldier and Sailors Act is recorded, it becomes public record. Everyone under the sun is chasing these people. I wouldn’t disparage what anyone’s doing, everyone’s got a business model but from where I’m standing and from what I’ve seen, it’s vastly people, in my opinion, who are seeking to capitalize on what they perceive to be someone else’s misfortune.

Those companies are their attorneys, “You should file bankruptcy right now,” which is one of the worst experiences I ever went through. It’s document prep companies. For people who can’t pay their mortgage, “Pay us $1,000 a month and we’ll do this modification package for you”. I can safely say that I’m the only guy around who will do this for nothing.

Is this for Massachusetts?

Expansion Plans In Rhode Island And Florida

Massachusetts and Rhode Island and Florida will be next.

That’s where I am. I think it’s needed everywhere. The expansion of this is probably to figure out the different foreclosure laws and such, or a matter of bandwidth.

I’m a big believer in people process, product. People, process, product. Anything scalable. The details of the state, you got to start with that thing that I said. No bank wants to foreclose, no homeowner wants to get foreclosed on. Those are absolute truths across the country. The rest of it to me is just details.

I think there’s a definite need. I wish it was national. Maybe at some point, it’ll get there.

I’m coming.

I think this would fit into our industry perfectly. Because again, there’s less paperwork on the consumer end, less bureaucracy getting to getting to us. I do think the third-party nonprofit is an easier call to make for somebody in trouble than maybe calling the lender or the attorney who sent the letter.

It’s because they are inundated with contacts, postcards, door visits, calls, texts, so they don’t trust anybody. The lender goes in that bag. You’re right. You are mislabeled as the bad guy when you are the one that wants the resolution as much as they do. You do. There’s no question. Banks want this resolved as much.

Lenders are often mislabeled as the bad guys when they are the ones who want resolution as much as their clients do. Click To Tweet

Closing Words

Same thought as banks. We’d much rather get the payments going then and forget and don’t want the property. If we can do that, we’re all happy. That’s awesome. I think it’s a great service. I enjoyed the conversation. I hope that you can expand. If someone wants to talk with you about expansion, maybe that’s a possibility, too, what’s the best way for them to reach you?

Call me (508) 501-9214. Call me anytime. Absolutely.

Very good. If you have notes up in Massachusetts, Rhode Island and coming next, Florida, check out the website. It’s Hope4Hardship.org. Maybe you know somebody who’s struggling with a loan up in those areas. There is a source to help them out. All they got to do is visit there, make the phone call. I look forward to hopefully expanding that. If there’s things I can help you with in Florida, like I said, I’m right here.

Yeah, I’ll definitely be in touch.

Part of my give back, I’m doing a presentation for the University of Central Florida coming up on November 20th, 2025, everybody, and that’s open to the University of Central Florida alumni and students. There are a lot of good charitable organizations and things like that of people who come and attend those events. This will be an interesting concept for them to hear about. Excellent. Thank you so much. I appreciate you being on, Michael. I wish all the success in not only this, but of course, the real estate that you do with Century21, one of the first companies I got my license with way back also.

Let me ask you, is that accidentally a Celtics hat?

No, this is a brand, actually.

No, it’s not. It’s a Celtics hat. Knock it off. Come on. It’s Celtic Green.

I’ve got to get my other color one here. I’ve got to reach over here for that one.

You can’t be a Heats fan. Come on.

I started wearing these. I do these tip of the days when I walk around and then and I started wearing these hats and now everybody recognizes me with these hats on. I’ve got about ten of them here,  different colors.

Good stuff. Thank you.

It’s good talking with You all. Thank you, everybody, for reading the show and, as always, for recommending somebody else. Don’t forget our sponsorship over at Noteworthy. It’s NoteworthyUSA.com. We got an event coming up in Arizona in February 2025 and I’ll be giving you more information on that, including a discount code, so it’s going to be easy and affordable for everybody to get out there. I’ll be out there in person, probably speaking about six hours during the event. If you read the show and you like the way I teach and my mannerisms in teaching this business, you certainly want to come out and see that as well. Thanks, everybody. I look forward to putting another episode together for you real soon.

 

Important Links

• Noteworthy
• Michael Russell

 

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