As I’ve noted before in other articles, not all Offer In Compromise packages are evaluated in the same places. Express Loans, Disaster Loans, 504 Loans, and 7a loans are all serviced independent of each other. Of course, when the same policies are put in the hands of different people, they get interpreted differently. For example, I never had the SBA ask a borrower to sell their 17 year old boat until yesterday. Apparently the express loan people are sticklers, because no other office has EVER asked for that. They also did something else that drives me nuts: they asked for 50% of the loan amount.
When an office asks for an arbitrage percentage of the loan it annoys and baffles me. If they want 50% of the money, why don’t we all just do away with the paperwork and just ask everyone for half the loan amount? You could eliminate most of the staff, and unfortunately guys like me would be rendered fairly useless too.
Asking for a set percentage of the loan is shortsighted (in my opinion) for a few reasons:
– When someone owes a large amount, say like $1 Million, applying a arbitrary minimum percentage automatically disqualifies most borrowers. If someone can come up with $200,000, wouldn’t it make sense to take it if that’s truly the most they can afford?
– Asking for a arbitrary minimum means that they are not actually taking the borrowers financial situation into consideration. The whole idea of a settlement is for the SBA to recover what they can rather than get nothing. Settlements should be based on the borrowers situation, not some made up percentage that has no basis in reality.