Skip Trace

Skip tracing is the process of locating a borrower who cannot be reached at their known address, phone number, or email. The term comes from the phrase "skipping town" — when a person leaves their last known location without providing updated contact information. For mortgage note investors, skip tracing is an essential step in the workout process because you cannot negotiate a loan modification, discounted payoff, or any other resolution if you cannot find the borrower.

When Skip Tracing Is Needed

Skip tracing typically becomes necessary in these situations:

• Hello letters return as undeliverable. Your first outreach after acquiring a note is returned by the post office — the borrower has moved.
• Phone numbers are disconnected. The numbers on file with the servicer are no longer active.
• The property appears vacant. A door knock or drive-by reveals the property is unoccupied, and neighbors have no forwarding information.
• The borrower is deceased. The original borrower has passed away, and you need to locate heirs or the executor of the estate.

On many non-performing loans, the borrower has been out of contact with the prior servicer for months or years. The contact information in the servicing system may be outdated or incomplete from the moment you acquire the note.

Skip Tracing Methods

Credit header searches are the industry standard starting point. Credit reporting agencies sell header-only data — the identifying information at the top of a credit report (name, known addresses, phone numbers, employer) without any account details or credit score. This data is available to creditors and their authorized agents under the Fair Credit Reporting Act.

The Skip Trace Workflow

A systematic approach maximizes your chances of making contact:

1. Pull credit headers. Request header data through your servicer or a permissible-purpose data provider. This gives you the borrower's most recently reported address and phone numbers.
2. Cross-reference with public records. Check county property records, voter registration, and court filings for the borrower's name at the new address. Confirm you have the right person.
3. Attempt contact. Call the updated phone numbers and mail a hello letter to the new address. If the borrower answers, document the conversation and proceed with your workout strategy.
4. Expand the search. If initial attempts fail, search for relatives, neighbors at the last known address, or emergency contacts listed in older servicing records. Family members often know how to reach the borrower.
5. Door knock the property. If the collateral property is within reach, a physical visit can reveal whether someone is living there, whether it is vacant, and whether neighbors have useful information.
6. Engage a professional. For high-value notes where the borrower remains unfindable, hire a licensed skip trace investigator with access to restricted databases.

Legal and Compliance Considerations

Skip tracing must comply with federal and state laws governing borrower contact:

• FDCPA rules. The Fair Debt Collection Practices Act restricts when and how you can contact borrowers and third parties about a debt. You cannot disclose the existence of the debt to third parties (such as neighbors or relatives) when attempting to locate the borrower.
• Permissible purpose. Accessing credit header data requires a permissible purpose under the FCRA. As the note holder or servicer, you have a legitimate business reason — but document it.
• State-specific restrictions. Some states have additional privacy and communication requirements. Your servicer should be aware of and compliant with these rules.

Why Skip Tracing Drives Returns

The difference between a note with a reachable borrower and one with an unreachable borrower is often the difference between a profitable workout and a lengthy, expensive foreclosure. A borrower you can reach may agree to a loan modification, discounted payoff, deed in lieu, or short sale — all of which typically produce faster, higher returns than foreclosure. Skip tracing is not an optional step; it is the foundation of every borrower-engagement resolution strategy.