When the hot housing market imploded, the business mix at a consumer credit counseling company in Reno took a radical turn.
"In this market we've always been busy with credit," says Shawn Morris, who with Cornell Gonzalez owns Reno Credit Builders. "But people are now interested in saving their home. They spill their hearts out to me daily."
Currently, the company finds loan modification makes up 70 percent of its business, while credit repair runs second at 30 percent, he says.
Each week Morris takes up to 40 phone calls and takes on nearly all of the callers as clients.
Credit repair remains important for some potential buyers, says Laurie Bethell, a real estate agent in Reno with Chase International.
"As an agent, you want to get them pre-qualified first," she says. "And if their credit isn't that great, it doesn't take that much time to improve it."
But most of Reno Credit Builders' customers are digging themselves out of an existing loan.
Kyle Krch, broker at Krch Realty, began connecting people with Reno Credit Builders a few months ago. The realty firm solicits short sales, in which a lender agrees to accept a discounted payoff from a borrower who can't sell a home for enough to pay off the full loan. Many sellers, Krch says, wanted help to avoid selling short.
"If there's a way to help them we will, even if there's nothing in it for us," he adds.
People hire Reno Credit Builders to negotiate with the lender holding the mortgage, Morris explains. That gets tricky when the bank has handed off the mortgage to a servicing company.
The mortgage holder needs to provide a credible hardship letter and personal finance documents. Once negotiations begin, says Morris, the company follows up with daily calls. On average, it takes 60 to 90 days to complete a loan modification.
Reno Credit Builders charges a flat fee of $1,500 for the service. An upfront consulting fee of $75 is non-refundable. But clients pay the remainder only after they've agreed upon new terms with the bank.
During nearly a year with the company, Morris says he's seen just three loan modifications fail to get approved and says the success rate tops 90 percent.
"A year ago, no one was really doing them," he says. "Up until a year ago, there was no need for modifications. That all changed when the subprime market fell out."
Reno Credit Builders faces no shortage of work.
"Short sales will be around for another four or five years," says Krch.
"We're a little overwhelmed," says Morris. "I'm here from 7 a.m. to 10 p.m. We're looking to hire."
