CFD 453 – AHP: Debts, Chaos, and Cashflow

April 12th, 2018

Jorge P. Newbery is on a mission to help Americans crushed by unaffordable debts.

He is Founder and Chairman of American Homeowner Preservation LLC and AHP Servicing LLC. AHP crowdfunds the purchase of non-performing mortgages from banks at big discounts, then shares the discounts with struggling homeowners. AHP Servicing LLC will bring social responsibility and a willingness to do the right thing to an industry often devoid of caring, compassion and basic human decency.

A 2004 natural disaster triggered the financial collapse of Newbery's former business, leaving him with $26 million in debts he could not pay. Newbery rebuilt himself through AHP, sharing what he learned from his challenges to help families at risk of foreclosure stay in their homes.

He authored Burn Zones: Playing Life's Bad Hands, in which he chronicled his rise and fall; Debt Cleanse: How To Settle Your Unaffordable Debts For Pennies On The Dollar (And Not Pay Some At All) to help families resolve their unaffordable debt; and Stories of the Indebted sharing the struggles faced by everyday Americans burdened by debt. He speaks regularly on debt, housing, and finance.

Podcast Highlights

Who is Jorge Newbery?

Jorge dropped out of high school because he found it unchallenging and wanted to open a business instead. He ran a record company out of his parent’s garage where he discovered a weakness of his to get bored easily. Jorge is a great entrepreneur but not a great manager, he usually leads the charge when it comes to a new business.

Being able to understand the difference between what we do well as entrepreneurs and what we don’t do well is critical to long term success.

After a brief stint as an Olympic level bike racer, Jorge became a loan officer and eventually went on to start his own mortgage company. He began buying property and within ten years of buying his first property he had over 4000 units across the country.

A natural disaster struck an 1100 unit property that Jorge owned, and that set into motion a series of dominoes that lead to him being $26 million in debt. This situation inspired the creation of AHP. He thought that if he could share what he learned as a debtor with families that were suffering in the 2008 crisis, he could really help people. 1 in 2 homeowners are more than 25% underwater in the mortgage. The housing crisis is far from over.

What lesson did you learn by not going through bankruptcy?

People file bankruptcy because they are looking for a solution. They are overwhelmed by debt and uncertainty, but the reality is that debtors have rights that are just as justified as creditors. Many of those rights debtors just don’t exert.

Creditors often make mistakes including big banks, that can allow you to challenge them. Today’s bankruptcy laws are not very favourable to debtors, oftentimes it’s better to just stop paying the debts rather than declare bankruptcy.

Don’t declare bankruptcy, wait for your debt to be sold to someone else and deal with it then when it could be one tenth the amount.Does capitalism have to be evil?

The short answer is no, despite the way Wall Street works. The elite have advantages that the majority do not, but it’s not capitalism at work that causes the issues. The wealth gap is growing rapidly between the elite and the rest of the population, but at some point it will be bad for the elites as well.

AHP is about making their program accessible to everyone, someone can invest with a minimum of a $100 and everyone gets the same terms no matter the dollar amount. No one loses in this set up, except maybe the big banks.What’s next for AHP?

Almost every state in the country requires you to have some sort of license to be able to speak to homeowners. AHP is in the process of becoming a licensed Mortgage Servicer which will allow them to service the loans they buy but also service other loans from other investors.Reference: Burn Zones: Playing Life's Bad Hands, Jorge Newbery

Jorge’s Takeaway

The biggest thing is to take that first step. Then the second step, then the third step. List the steps and take the first one. Don’t look all the way to the finish line, work on getting through the first mile. Break it down into achievable bites that get you closer to your goal. Looking at all the things you don’t have is the wrong approach. Focus on what you have right now and push forward with that. Along the way get help from people in areas that you need. Focus on your strengths, and when there is a weakness hire someone who is great at it. Find out what you’re good at and then maximize that.

Links:ahpfund.comThank you for listening! If you enjoyed this podcast, please subscribe to the show on iTunes!

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