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Issue 061 August 2012

For Mortgage Origination Professionals



Why Should CRE Care About Google Search?


FEATURE ARTICLE Eight Habits & Traits of Successful Mortgage Originators


Mandate or Agenda? What's behind the CFPB's anti-broker sentiment?

Up 50 Bringing The Rear The LIBOR scandal

And needs an asset depletion income qualification loan‌ BofI federAl BAnk cAn do thAt.



Issue 61


August 2012

Eight Habits & Traits of Successful Mortgage Originators Dave Gallegos


Publishers Robert Pegg David Pegg MANAGING EDITOR Stewart Mednick


Why Should CRE Care About Google Search?



32 6

Center Stage with Hometown Lenders the niche report The Niche Report talks with Chief Operating Officer Eric Tishaw

Linda Day Harrison asdf


Associate Editor Cathy Johnson

Predatory Lending brian Mahany mortgage trainer Refinancing and personal guarantees.

What Do You Read? ralph lovuolo, Sr. president mortgage motivator When are you going to take time to learn every facet of the mortgage industry?

Realtor速 Marketing Secrets doren aldana mortgage marketing coach Secret #2: Help your Realtors速 generate buyer leads. August 2012


ACCOUNTING MANAGER Shawna Ingram Advertising Director Jessica Grizzle Advertising sales Hilary Bateman Production Manager Henry Suchman


from the editor's desk


Production Assistant Dawn Exner

Online Lead Generation

Cartoonist Martin Bradford


man on the hill


Keeping up with the Jones


advertiser DIRECTORY



COLUMNISTS & Contributing Authors Doren Aldana Martin Andelman Dave Gallegos Linda Day Harrison Chris Jones Ralph LoVuolo, Sr. Brian Mahany Chaibia Sarhrou Marc Savitt

pg 41 pg 41 pg 41 pg 42 pg 42 pg 42 pg 43

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From the editor's desk

I would be remiss if I did not make mention of the Summer Olympics taking place in London. The event is a once in four years activity that is the most watched, the most participated, the most trained for and the most secure sporting event in the world. It is a spectacle that has created visions, memories and headlines for over one hundred years. When someone mentions the Olympics, my first mental image is that of top notch athletes competing in an elite venue and setting records or standards for future generations to aspire to achieve and exceed. Twelve years ago I was originating mortgages as a junior associate at a small brokerage after just leaving a large national bank’s origination team. The benefit of working as part of a team of ten people in a small office is that we could watch the Olympics in the office as we researched the best rates and yield spreads for our current book of business. One day, as we were watching track and field and a new record was set, the owner yelled out from his office, having watched this event from his private TV. He said, “You guys should close loans like this guy runs!” Wow. How arrogant, was my initial thought. I mean, these athletes fully immerse their lives into this sport. They wake at five in the morning to train and train again in the evening. They eat a controlled diet, and they watch films and learn their completion. Why would the owner say such a thing; there is no comparison…. I was not a top performer then. I was junior and blinded by a big pay check. I wanted that nice car. I wanted that big deal. I wanted to buy drinks for my buddies at the bar and look rich to impress. I was NOT an Olympic athlete of my trade back then. It took years of learning, competing, training, and marketing before I started to reach an elite level of performance paramount to an Olympic athlete. It took years to even begin to understand the off-the-cuff remark blurted out by a cocky business owner actually made sense and even became a mantra to my future performance… “Perform in your trade like an Olympic athlete.” Yes, you need to dedicate, wake up in the morning with an action plan, train for the customer meeting, diet with rate research, and achieve that world record with a stellar closing that rewards you with a gold medal hug from your clients, and the Olympic record of client referrals. Run your business like an Olympic athlete, and you will be a champion as well.


Stewart Mednick




Why Should CRE Care About Google Search? by Linda Day Harrison


elieve it or not, so many of the blog posts I write come from actual conversations had with property managers, leasing professionals and brokers that I engage with daily. Today I had mentioned to a colleague that I utilize Google Alerts on key phrases and terms about properties or other subject matter to see that Google has found it! It is my own double check of Google Search. In one particular case, I mentioned that one of the alerts I was tracking produced zero results. That was a red flag and warning to me about this particular search and I was watching it. I was shocked because if you are marketing a property in the right places using the right methods, your goal is for that property or company to be found by Google, which in turn helps your customers find you as well. The end goal is to be on page 1 of Google Search. Yes, that is what I am saying, page 1. If you are not on page 1, there is a slim chance your property, listing or company will be found, hence the goal! Think about it, 10

August 2012

how many times do you go to page 2? Here is my take on why as professionals, charged with marketing various assets and properties, it is our job to be sure, when we search, our client or property DOES come up in Google Search, and I do not mean page 1,345,678, I do mean on page 1! I am a property professional by trade and I am not someone who drank the Google kool-aid and I am not talking about anything high tech, it is common sense, which is exactly what SEO (Search Engine Optimization) is about. I am trying to simply remind folks in property management or leasing that each and every single inch of real estate is unique. That is the first lesson of understanding the common sense of SEO and how it can apply to your success in marketing real estate and making sure you and your properties come up on page 1 of Google Search. What that means is that if you dig deep enough into the recesses of your creative mind you can create or fashion a phrase or term, or name or address or feature that can act as your headline and/or URL in whatever property, company or asset you are marketing.

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Once you have created the theme or name or headline, that name must be locked to that property like a heat seeking missile. Make sure every opportunity, flyer, listing site, email subject line, Tweet, Facebook post, Google+ or Linkedin status, has that same headline or name. Make sure your headline is a unique descriptor for the property and is a search term or keyword phrase that is already used in Google Search, along with your unique words. Do not become oblivious to URL links. Notice them and work with them so they do the heavy-lifting for you.

So how do you do that and what are some choices? Well the first thing is to prove that your headline or keyword phrase is viable and logical for that particular scenario. Simply pose as a customer you are targeting and search for your subject matter. For instance, put yourself in the customer’s shoes and actually do a Google Search to find the property. In other words, what would be searched to find you or that property? If your property is office space, it is not okay to just say office space, but to add more to it. Remember, you want to stand out from the crowd and be as accurate to what someone would really search for about that property. For instance: ~geography ~zip code ~submarket ~neighborhood ~size ~floor ~building type ~use type (medical for example) ~near XYZ Once you type in that phrase or term, what comes up? That is exactly what your customers or end-users see as well! If your post or headline or marketing campaign is well crafted and is unique to your property, space, client or company, and you have a variety of online presence, your customers WILL find your property and you will give that client the most exposure possible. Remember, Twitter, Linkedin, Google+ (especially) are open to the public in search. If you use other companion tools like, (newsletter of your Twitter stream) or you belong to open groups or if you have a Google+ page for your business or property, all of that content is open and in the web media stream. It is also being picked up by others who “Share” it and make your message move even more through the

stream. That is the name of the game and that is why you want to keep your headline consistent for that particular campaign. Of course, if the headline is not working, you need to adjust. Just keep trying different combinations until you find what works best for that audience.

Do you want new business or no business? Now if you turn the tables around to the building owner’s side, the most important point I want to make is to the property owner who is looking to hire a property manager or leasing agent or broker and to the property manager or broker who wants new business!! How well can you find the property manager or leasing agent or broker? Just do a Google Search. If they are doing their homework and doing some basic SEO and outreach, you will find them. If not, that should be considered a red flag because, depending on their property type, the customer is not going to find their product when they search! Also, it means they have not set up a Twitter site, website, Google+ page or Linkedin profile, nor do they contribute to sites appropriate for their property segment type. Those are huge Bozo, no-nos. In other words, if multi-family, there are places where apartments would be marketed and there are sites for retail, office, industrial, land, etc. when doing your research into what firm you wish to hire, find out what sites are being used and check to see how well they present those

How we see it

properties. Have they included thorough information with appropriate keywords, keyphrases, images, maps and other elements that make your property stand out. How reachable are they via email, cell, office, skype, Twitter, etc.? Today brokers, managers and leasing agents MUST use every tool in the drawer to market a property and there needs to be an awareness that the internet provides complete transparency to what you are really doing when promoting properties for sale or lease. As a broker, if you tell your clients what your marketing entails, it should be fairly evident when the client tries to search. That can also be the way to stand out in presentations for new business. If you do a good job and use common sense tactics to attract Google to your content, it will be very evident.

Verify and test your search campaign efforts. Don’t believe everything you search! Test your searches in different browsers and on different computers. Mix it up. The browsers and systems today are social content driven and insidious as they remember what we read, visit and do, that often times your searches are tainted with your history and your search is not really accurate to what a real visitor experiences in search. It is vital that you do the search on another machine or ask a colleague to search for your terms and phrases so you are not receiving friendly search results based on your history. In other words, test, test, test. Whether it is a website and unique URL for that property or inclusion on the top multiple listing sites, your property has to be found in the most appropriate and logical Google Search. As brokers, managers and leasing agents, our simple test of any solution we use is to do a Google Search. If you want to market your firm, yourself or your property, it needs to be your total and complete goal to come up on page 1 of a Google Search. The question I ask you is how many times do you go to page 2? If your answer is never or once in a while you understand what I am saying. It is vital today that you market to Google. If you do not market to Google you are not marketing online for search and today it is where most people look first when they want absolutely anything and everything, including their next commercial real estate transaction or site selection or hiring the next broker or property manager. Linda Day Harrison, CPM, CCIM is an author on the topics of commercial real estate and property management. You can follow Linda’s tweets on Twitter.


August 2012

Eight Habits & Traits of Successful Mortgage Originators by dave gallegos


s a twelve-year owner/branch manager and Colorado Regional Manager for Fairway Independent Mortgage Corporation (the eleventh largest correspondent lender in America), I get to meet loan officers from all over the country. Some are very successful, but many more are just average, which I define as those originators that after a solid year or two – or more – in the business, can never seem to break above a three loans a month average or 30-40 loans a year, even during extreme rate or purchase markets. Based on the research I’ve done, I think it’s safe to say too many originators fall into that category of fewer than 3 units a month. The successful originators seem to all share a few common traits, such as drive, systems, and discipline etc. But there is more to it than that. So I set out to discover what keeps these few top performers successfully producing year in and year out, and enjoying a successful and lucrative career. After careful research and observation, I have recognized eight habits and traits all these successful performers have in common. 1. They Have a High Level of Drive - Plain oldfashioned desire and a healthy self-image are key traits of the best performers in any industry. Before LO Comp, the 1 -3 loan a month performers still did okay financially, and we all know why. With the changes in compensation these folks are now being pushed to higher levels of performance, and it can be a difficult, if not

impossible, transition. If drive and self-image aren’t where they need to be, then no amount of support, training, and accountability can change that. The top performers always have their motor on high. They are always asking for the business, and “no” just means “not yet” to them. They never fail; instead, what they tried didn’t work. If they can’t get business from a Realtor, they determine that the Realtor is simply making a mistake, or the LO believes they have yet to show enough value. If the customer picks a different lender, the loan officer goes back to the drawing board and analyzes what he or she can do to get a better result next time. Competitiveness, drive, ambition and a healthy self-image count … big time. 2. They Maintain Systems and Disciplines Everyone talks about them, everyone wants them; few companies possess them, and sadly even fewer originators have the time or skill to develop them. The best performers follow a strictly defined sales process with a sales funnel to keep clients moving forward in their system. They are scripted with professional sales presentations and templates that are used consistently at every step. There are defined standards and systems for file quality so the customer experience is predictable. The best underwriters follow strict checklists to do their work, and the best loan officers typically do as well. They originate in a very proactive working environment, rarely needing to request more documentation. Their goal is to originate loans that will be clear to close on the first submission. They know that reactive work cripples their productivity. They master a database or CRM system and never let anyone or anything fall through the cracks. The ball is never dropped. They don’t have stacks of post itnotes, or the famously ineffective yellow legal pad that has 40 or 50 pages of one-line notes going back who knows how far. There are no stacks of Realtor business cards sitting on their desk wrapped in rubber bands, as if some day they are going to go through them. Every call is returned in a defined time frame. There is a follow-up plan and discipline that makes sure every possible opportunity is maximized. This can be easily accomplished with a disciplined, determined approach to leveraging a system with a strong database, CRM tools and calendar process. By simply never missing another opportunity, I’ve seen loan officers add 2 loans a month to their average production. Woody Allen

is quoted as saying “80% of success is showing up.” I couldn’t agree more. 3. They Follow a Business Plan - It seems pretty obvious that a plan of some kind would help most people achieve a better result. Yet ask the average originator what their business plan is, and you get a blank stare, or a very unconvincing explanation of what they are trying to do. I believe this is a result of the holdover from LO Comp, where before the new rules, a good-sized government loan could make your month. Closing one loan used to pay – and sometimes still pays – entirely too much income for any one person to dedicate themselves to executing a specific business plan. Management’s direction and the loan officer’s business plan can usually be summed up in 5 or 6 words: “Just go get another deal,” or “Just go get another Realtor relationship.” Not what anyone would call a plan. The best performers follow a work plan and measure their results against that plan. They adjust and adapt so that the business is not running them, they are running their business. They don’t sell the loan rate and terms because their plan always includes unique selling propositions or USP’s; they are never a commodity. They never resort to the “we have great service,” and “we are always available to take your call” selling system. They have bulletproof relationships with a select group of agents that refer them exclusively. 4. Product Discipline – they don’t try to do every loan - I suppose one could say that having no business plan might include no product discipline, and I would agree with that – except when I meet that slightly above average performer who is still trying to be all things to all people. Now, I have nothing against any of these specialty programs (Reverse, 203K, 203ks, statesponsored etc.). I do believe it takes a commitment to becoming excellent at your craft, to be able to deliver the best borrowing experience for the clients. After all, they are picking up the tab. And doing one reverse mortgage a year will never make you an expert. The best performers would never consider doing a loan they can’t do 5 times a month, which likely eliminates these specialty loans. They like to use the assemblyline analogy. Ford isn’t trying to build Mustangs at the Explorer plant. They refer out those loans they can’t excel at. 5. Everything Is Measured - If you can’t measure it, you can’t improve it. Ask an originator how many


leads, credit report pulls, appointments, pre approvals, contracts and applications, and closings he or she has in a specific time period. Your average performers may be able to tell you the closings number, but they’ll respond with “about 2 or 3 deals a month,” or “between 25 and 30 deals a year.” Most of the best performers know their numbers exactly. They know who their top referral sources are and they rank them. They can also tell you how many Realtor prospecting calls and past client calls they take in a given time period. They track ratios because they know they must if they want to excel. We all know why professional baseball tracks every possible statistical measure of performance. Now I’ll concede that an originator’s company has a lot of input on this subject. If they don’t measure anything except closings, then they don’t set a very good example for the LO. The best performers either find a company that will monitor with them, or they simply take it upon themselves. It’s just too important to ignore. 6. Well-Managed Processing, Underwriting and Closing - This is another trait of the company rather

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than the loan officer – who likely has little, if any, input into how these departments are run. However, the best performers move on if they can’t effect the change they need. The best performers know they must have a positive confident attitude when in front of new referral partners. And that’s tough to do if you know back at the office you are going to have to put out fires for the rest of the day. It’s easy to promise excellent service when you have complete faith in your ability to deliver it every single time. Top producers have studied their business, and they know what it takes to turn over a 100% process-able closable loan file. Good loan officers are smart, and they know it is possible to beat the loan condition deadlines, to get the closing figures and documents to title 3 or 4 days early, and it’s even possible to have the wire at the title company the day before the loan is closing. The top producers show up at closing and take a bow. They never have to make excuses or apologize. 7. They Want Accountability - This is where the company has to be responsible, because if there are no standards, then there are no standards to be met. We are hearing more and more about companies instituting minimum production standards. The average performer fears this kind of talk, but the true professionals see it as a challenge to improve and grow. After all, most got into this business because the reality of a fixed salary income was not going to be the conduit to whatever dreams they had when they joined this dynamic industry. Companies could and would do more to help the loan officer grow by having actual prospecting standards, minimum production standards, file quality standards, and so on. You are either growing, or going backwards. Top producers always set up their own accountability, but mandated company standards make it easier for everyone. They appreciate company and management systems that represent high standards, and a management team that is committed to holding its teams accountable for results. 8. Cultural Match Between the Originator and the Company - The top performers trust the company, and the company trusts them. They both do what they say they will do, and both make a full effort to live up to the commitment they make to each other. Both the loan officer and the company typically have a long-term commitment to excellence and both strive to grow and improve. Top producers care about the company profitability as much as their own, and vice-versa. There is always a shared commitment to the type of service the customer gets, and

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the value proposition the company promotes. Reputation is important to both parties. Ignoring a cultural mismatch is like staying in a bad marriage. No one is happy; everyone merely tolerates one another, and no one is getting what they want. Worse, no one is having fun. Interesting observation: 4 of these traits are loan-officer specific and 4 are company specific. Those are the eight habits and traits I see over and over again. One other thing I’ve noticed is that the average performers never seem very excited or passionate about their job. I like asking loan officers if they love what they do, just to see the reaction I get. It’s sad how many don’t love this business, but stay in it anyway. I believe with the right attitude, tools, and environment, you can love this business. And I always say life is too short to spend time with people you don’t like. If that’s true, then spending time in a job you don’t love is a recipe for unhappiness, a generally unsatisfying career, and ultimately, failure. So, can the average performer become a top producer?

Well, the good news is people change all the time. They quit using tobacco (I did). They drop 40 pounds. They start exercising. They improve their relationships. In other words, they make changes to their environments, build new habits and develop new traits. It’s true for people in their personal lives. I’ve also seen people change in loan origination. Average performers can become top producers, but I must qualify that answer. They must be committed to the outcome and paired with a company that shares the same values, and provides the systems and framework necessary for success.

Dave Gallegos is the regional manager for Fairway Independent Mortgage Corporation, a $3.3 billion correspondent mortgage lender. He is a 15-year industry veteran and owns and operates offices in the Denver Metro Area. You can contact Dave via e-mail at daveg@fairwaymc. com, or 303-347-7575.

How we see it


August 2012

online lead generation

7 Facebook Timeline Marketing Tips to Grow Your Business


ome marketers complain about the endless changes Facebook keeps making, I look at every change as an opportunity for more marketing ideas and strategies that can help grow my business. If we think of it this way, we will be more excited about every change Facebook makes, and recognize how we can monetize it while the rest of the crowd is still complaining and mourning about it. Growing up in Morocco, I used to always hear my grandmother say, “Waking Up Early is Gold.” Until I started studying marketing, I thought she meant waking up early in the morning. The meaning of the proverb really applies to marketing. Those who understood the ins and outs of Google at a very early stage, before the rest finally woke up, have made empires out of their businesses... all from being early adopters. Marketers who saw the opportunity on Facebook ads when they first started have made fortunes online when the ad costs were pennies. This group did very well before everyone else started jumping on board, making Facebook ads more competitive for everyone. Don't get me wrong here; Facebook is still a baby compared to Google, and believe it or not there are many people who still have not awakened!


August 2012

What I’m trying to say is that you need to jump on board as fast as you can. Facebook is still making changes and updates to its platform. You can still be an early adopter as long as you pick up on the changes and turn them into opportunities to grow your business. The Timeline itself is no longer new, but Facebook is still testing and adding new features. I wanted to highlight and share some tips and tricks of using them to our advantage: 1) Promote Your Posts: Studies show that only 16% of your fans will be able to see your posts on their newsfeed. Basically, the rest of the fans you spend time, energy and probably money on will not be exposed to your messages. Now, for pages with over 400 likes/fans, Facebook has an option for administrators to promote posts to their fans and friends of fans using the “Promoted Posts” feature. This will give more visibility to your posts and help you get more fans to your page since it also gives you exposure in front of your fans’ friends. Facebook will suggest a budget for your post ads, and whatever budget you decide to go with, that’s what you will end up paying for the lifetime of your ad (up to 3 days after you create your post) if you don’t stop running or change it.


Real Estate Marketing That Works

online lead generation Facebook will also give you an estimate of how many people will see your post once it’s promoted. There are some exciting things about this feature I want to point out: • Your ad will show up in the newsfeed: Unlike regular ads, promoted posts don’t show up on the right side of Facebook where all paid ads are showing. This is a very good advantage. Since people don’t generally like being sold to, they tend to have a resistance against paid advertising. Having your ad show on the newsfeed like any regular post made by your prospects' friends or family will make it more likely to be seen and clicked on. • Very few restrictions: If you have ever used Facebook ads, then you probably suffered from the fact that you are very limited to what you can and can’t say on your ad. With the new promoted posts, you don’t have to go through the pain of creating your ad very carefully, waiting for it to get reviewed, and then having it disapproved because your image was not a good match with your message or for other (sometimes seemingly unknowable) reasons. • You can promote all post types: You can promote status updates, videos, pictures, questions, events, etc. • You can target your promoted posts by location and language: If you’re promoting an open house or a live seminar in Las Vegas, there’s no need to pay for your post to show to fans and their friends in other locations. When creating an ad that you’re planning to promote, make sure to keep this in mind: a) What is your message? What are you promoting – an open house, live seminar for Realtors, teleseminar? b) What action do you want the users to take? Do you want them to register for a webinar, call your office for more info, visit your website, or simply like, comment or share your post for more fan engagement and page exposure? c) Make use of images and videos. By using a video or an image in your promoted post (same for regular posts), you will get more real estate on the newsfeed that helps your post stand out and gets you more response. 2) Schedule Your Posts: There are many third-party applications you can use to schedule your Facebook posts in advance. However, I’ve been always skeptical about using these apps with Facebook, especially knowing that Facebook used to penalize posts made by third-party apps by not giving them enough visibility. You can now schedule your posts within 24

August 2012

Facebook. Just create your post and click on the hour icon, and Facebook will walk you through the process. Once created, your scheduled post will disappear from your timeline and will only appear at the time you scheduled it to show. However, if you need to see or edit your scheduled posts at any time, just click on “Edit Page” from your admin panel and select “Activity Log.” You will be able to change the time, publish immediately or just cancel the post. 3) Pin and Highlight Important Posts: Here are some great tools to showcase posts to your page’s visitors. • Pin Feature: This allows you to bring a past post to the top of your page and keep it there for up to one week so that your page’s visitors can see it when they land on your page. You can be very creative about the posts you want to pin to the top of your page. A good idea is to pin a video testimonial from a buyer or referral partner, or pin a video of you welcoming new visitors to your page... including a call to action for them to like your page, for example.

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online lead generation • Highlight Feature: This will not bring your post to the top. Instead, it will give the post extra space to make it stand out from other posts and grab visitors ' attention to it. 4) Create Milestones: This feature allows you to showcase some of your successes, important accomplishments in your career, etc.… People love stories, so make your page tell them a story when they’re scrolling down your timeline trying to learn more about you. 5) Watch Your Insights: Facebook does the heavy lifting for you by collecting all of the information you need to know about your fans ( gender, age, location, language spoken) and their level of engagement to your page), and show you where your traffic is coming from (other social media site, your blog, YouTube video etc.). This is just the tip of the iceberg of the information you can get from Facebook insights; I would need a whole article to cover it. The good thing is that Facebook does it all for you, for FREE!! All you have to do is understand these insights and what they really mean to your business. Use them to identify what works and what doesn’t, to give a better experience to your fans and get better results with your Facebook Marketing. 6) Maximize Your Timeline Cover: This generously large real estate is the most important part of your page. A recent eye tracking study showed that visitors look at the timeline cover more than any other content on business pages. The timeline cover replaces what used to be the “Default Landing Tab.” Be very strategic on what you put on it because that will be the first impression a visitor will have of your brand. You can change the timeline cover as often as you want. Posting a picture of a happy family in the new house that you helped them buy, for example, is a great way to show your visitors what you do using social proof. You can also use that picture to tag your buyers. This will help you gain social proof and extra exposure to the buyer's list of family and friends which may lead to more business for you. The timeline cover has a lot of restrictions. For example, you can’t include any calls to action, contact information, prices or rates, etc. However, you can use everything I just mentioned as the image description people can see when they click on it! 26

August 2012

7) Use Your Business Page to Build Your List: We all know how important the list and the relationship with the list are to any business, You can use your Facebook Business Page as a lead-capturing tool by creating a custom tab that has an opt-in form where the visitor is enticed to leave their information (name, email, phone number) in exchange for a FREE Gift. (See image from a Loan Officer’s Page.) You can also connect the form to an autoresponder to automatically follow up with your prospects with an email sequence that was previously set up. There are many low-cost to free autoresponder tools you can use; just do some research to see which one will work best for your business.

There are few things to remember when marketing on Facebook. You need to connect with people on a more personal, human level; after all, you are on a social networking site. Also, keep your posts simple, entertaining and relevant for people to like, comment and share. CHAIBIA SARHROU is the founder of CS SOCIAL MEDIA, an Online & Social Media Marketing company specializing in direct response marketing techniques in the Real Estate and Mortgage Industries. She regularly speaks to sales teams educating them on monetizing their social media and online marketing efforts. She does this by implementing simple, yet sophisticated strategies that are ready for anyone to use, but many seldom do. If you have any questions or need help with your social media and online marketing please visit and send us your questions.

Predatory Lending Refinancing & Personal Guarantees

by Brian Mahany


fter the mortgage meltdown in late 2007 and 2008, many small community banks suddenly found their commercial loan portfolio was undercollateralized. The better banks gave borrowers plenty of notice that they would be requiring additional collateral – often in the form of personal guarantees and mortgages on the borrower’s residence. Some small lenders, however, literally gave no warning and just shoved paperwork under the borrower’s nose at closing. Borrowers in those situations are often left with just two options – pledge their personal assets, or have the note called then and there. Commercial loans are not subject to the strict regulatory enforcement structure surrounding residential loans. Home loans, on the other hand, must comply with a whole alphabet soup of federal regulations, including RESPA, TILA and others. We believe that when a lender suddenly forces a commercial borrower to sign personal guarantees and pledge personal assets, the lender must

comply with these state and federal laws. There doesn’t appear to be much case law on this novel approach to predatory lending, but we feel with the right case, a good argument can be made. Presently we are litigating a case against a small Wisconsin bank in which we claim that the bank forced a 90-year-old woman to co-sign and guarantee her daughter’s business loans, knowing that the business was already in default. Of course, the mother was never told this nor did anyone explain the documents she was being asked to sign. Shortly after signing, the bank called the daughter’s note and is currently attempting to take the mother’s property. In another case we are following, a small savings bank told a business borrower on the day his note was due that he needed to sign a personal guaranty. Having no choice and not understanding the paperwork presented, he signed. Even though he never missed a payment, the


bank called the note shortly after securing the additional collateral and is now foreclosing on his home. Of course, the banks in these cases deny wrongdoing. The Wisconsin case involves the mother’s farm and not a residence, but in both cases, the banks sought to secure commercial debt with personal property and did so with no advance warning. Congress passed RESPA – the Real Estate Settlement Procedures Act – which requires lenders to give homebuyers a number of disclosures well before the closing. The intent of the law is to avoid nasty surprises and confusion. Not showing papers or making disclosures until the day of closing to borrowers results in undue pressure. Similar to RESPA, Congress also passed the Truth in Lending Act in order to prevent nasty surprises on the day of closing. Although these laws do not apply to commercial transactions, we believe that once a bank or mortgage broker requires a borrower to pledge his or her home and personal assets, then TILA and RESPA should apply. In addition to federal violations, there are state-specific remedies available in many states, as well as common-

law fraud and breach of fiduciary duty claims that can be brought. We are presently looking for customers of small and medium-sized banks who forced commercial borrowers to sign guarantees without warning and on the day of closing. To us, that is predatory lending.

By Brian Mahany; comments and questions are welcome. The fraud lawyers at Mahany & Ertl help many victims of bank fraud, predatory lending and predatory foreclosure practices. If you think you may have a claim, give us a call. All inquiries are kept in strict confidence. For more information, contact attorney Anthony Dietz at adietz@ If you have an immediate concern, please contact the author, attorney Brian Mahany, at brian@ or (414) 704-6731 (direct). Mahany & Ertl - America’s Fraud Lawyers. Offices throughout the United States.

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What Do You Read?

When are you going to take the time to learn every facet of the mortgage industry?

by Ralph LoVuolo, sr


hat are you doing?” “Don’t rush me, please.” She countered. “Well, why is it taking you so long to get through the door? I don’t see anyone in front of you.” “I’m looking at the menu. And if you push me too hard, I’ll waste a lot of time with the waitress and have her repeat everything here. Why do you think it’s here? For their health, or yours? Go a little slower, please.” She was nice about it. I was just a bit anxious because I knew what was coming inside those doors. “Ok. Well, after you read the menu, you can let me know what I’d like. But after all the times we’ve been here, I can’t imagine there will be anything to pull me away from my favorite oysters.” I went in the door, through the entranceway, and what wafted into my whole being was the mellifluous odor of crabs boiling in a special sauce, overdone with garlic. My senses were delighted, snapping just like a live crustacean. Sawdust on the floor, tables covered with heavy paper, nothing fancy at all. Fancy is so far from this place that the last fancy thing they did was allow a prospective bridegroom

to have his bachelor party here. Not in the back room, but right out front. The only attendees besides the actual men were crabs – dead ones. The kind that grow in the ocean and back bays of the waters off the Atlantic coast. And oyster crackers, the kind you can only get in the Philadelphia region. Hard crackers about the size of a quarter, round like a ball, toasted. Oh my God, with horseradish on them it is heaven. Or broken in an oyster stew. Oh, memories are sometimes so cruel. It was a Friday night, and my wife and I were going out to dinner. Nothing fancy, just a local place that serves great oysters on the half shell. Maybe you don’t like them, it is an acquired taste, but smothered with cocktail sauce and tartar sauce, a special mixture of mine, I’m betting you might overcome your reluctance. The lady standing at the podium greeted me with an accustomed grin, knowing what would follow. “So how are you tonight?” A familiar greeting made easier only because of the time we’ve spent together over the years, here at my favorite restaurant. “I’m great Sara, but what’s important to me is how YOU are? It’s not important how I am. I’m hoping that you’re really great tonight, cause I’ve had a fabulous week and I’m looking to share it with


you and your wonderful staff. Is Lisa here? Can we sit at one of her tables? Christina is reading the specials, just like every week. Is there anything that’s not on the specials list I should know about?” Almost every week I go to this restaurant. Almost every week the conversation is exactly the same, word for word. Familiarity is not strong enough a word. But the staff, especially Sara, almost always seem to enjoy it. “I’m not sharing that with you, you’ll have to ask your wife. What do you think she’s reading it for, her health?” “Ralph, anything for our most loyal customer.” “Sara, you flatter me, but I accept it. I know its not true, but what the hell, I love to hear it.” After Christina came through the door herself, loaded with information, she did what she is great at: letting me know what she had read. I really could not do without all the banter, but having her read the specials is an unimpeachable way to be informed. She reads, I listen. She reads more, I listen more. She is like a machine, able to repeat exactly what she has read. What a talent. I struggle with every word. Dyslexia has been my devil since I was old enough to read even one word. It was so much worse in high school and college. But reading is a fundamental need that we too often avoid, like it was some curse, some way to contract a disease that will destroy life as we know it. But reading is a must in this fast-paced world. You text don’t you? You send emails too? You read websites, Twitters, LinkedIn, Facebook updates? Words with Friends? So, here are a couple of questions for you. Serious questions. Questions that are meant to tax your mind. Make you think. And with a thought, I hope it will cause you to take some action that you probably haven’t before. What do you read? What do you read? What do you read? What do you read?

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According to a recent study by the National Endowment for the Arts, not much of anything. According to that study, for people between the ages of 15-24, the DECLINE in reading literature was 55% over the twenty years between 1982 and 2002. it makes me wonder why Amazon is so popular – but they’ve seen the statistics, and that’s what drives them to get into other businesses. So the question is asked again. What Do You Read? Why do we read? C.S. Lewis once asked this question of his students in college. I found a blog site that offered the following response. I read to gain knowledge… According to an online research site, http://www. 81% of the population feels they have a book inside them. 27% would write fiction. 28% would write on personal development. 27% would write history, biography, etc. 20% would create a picture book, cookbook, etc. 6 million have written a manuscript. 6 million manuscripts are making the rounds. Out of every 10,000 children's books, 3 get published. --Jerrold Jenkins. 15 May 99. Who is Reading Books (and who is not) 58% of the US adult population never reads another book after high school. 42% of college graduates never read another book. 80% of US families did not buy or read a book last year. 70% of US adults have not been in a bookstore in the last five years. 57% of new books are not read to completion. --Jerrold Jenkins. Most readers do not get past page 18 in a book they have purchased. I really enjoy challenging you. It makes my creative juices flow. I’m always finding things that should make you

folks feel inadequate. So, how about it? Reading is what you need to do to learn. Many times I’ve told people that I have three sales principles: 1- Give away information 2- Ask for business 3- Be persistent Even with all of the things I’ve learned over my lifetime, I still hold these principles as absolute truths. All sales centers around these three principles. But how can you give away the right information if you have no basis of reference? How can you give away what you don’t have? Knowledge is what I’m talking about. Knowledge of ways to help those you would like to refer business to you: the Realtors, financial planners, builders, insurance brokers, attorneys and CPA’s. How to help them make more money, be more effective, make a better impact into their market, advertise better, market better, be more organized, understand the ways the computer can change their lives, target market their services, and on and on and on. But you can’t give away what you don’t know. And the only way for you to learn what you need to know is to learn what you need to know… by reading. I never want you to sell rates, programs and points. That is a complete waste of time. You need to convince people that you can be a valuable asset to their sales effort. That you can help them generate more business. But you can’t give away what you don’t have. Oh, wait a minute, I already wrote that. Well it was so good, I wrote it again. I’m in the middle of training a group of salespeople that have never really had anyone like me in their lives. They’re learning a lot, but it is not without a little angst on both parts – or in my native language, agita. (Agita: Heartburn, acid indigestion, an upset stomach or, by extension, a general feeling of upset. The word is ItalianAmerican slang derived from the Italian "agitare" meaning, "to agitate.") This week, we’re doing a book report on one of the first motivational books I ever read, The Greatest Salesman in The World, by Og Mandino. It was one of the things that changed my life. It can change yours – because in many cases, what you’re doing ain’t working. So what should you do? Change – and the first thing you need to change is yourself. And one of the first things about yourself to change is to READ! Ah, but there’s the rub. “Profession,” I say. Boy, do I

have nerve! Profession, ha! To most of you, it’s just a job. A place to plunk your butt every day, get info spoon-fed to you, and hope that you’ll make money to spend on a Friday and Saturday night with your main squeeze. Well, life doesn’t work that way. Life is hard, and earning money takes work. If you’re lucky, maybe you’ll actually earn enough to be able to retire by the time you’ve reached the age of reason. What age is that? Well, for most of you, that will be about 80 years of age. When are you going to take what you do seriously enough to learn every facet of the mortgage industry? What do you know about secondary marketing, warehousing, funding, payoffs, PMI and much more? And what do you know about generating business other that what your first boss taught you? What magazines do you read and what papers do you spend time perusing for hints to make the lives of your potential clients more pleasant? What websites do you visit regularly to learn new ideas? Christina and I often discuss my articles. But if you didn’t read this one, you’ll have nothing to discuss with your co-workers, spouse, significant other, child, parent or friend. So read. Read everything you can get your hands on. I do and I’m really dyslexic. Seriously so.

Ralph LoVuolo is Sr. President, Mortgage Motivator, a consulting firm on the cutting edge of the mortgage business to help people achieve their true potential. LoVuolo Sr. is one of the founding fathers of the New York Association of Mortgage Brokers and a two-term president. Additionally, he served as Parliamentarian for six years on the Board of Directors of the National Association of Mortgage Brokers. LoVuolo, Sr. can be reached at, or visit him at

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Realtor® Marketing Secrets Secret #2: Help your Realtors® generate buyer leads!

BY doren aldana


ine times out of ten, a Realtor’s main priority when they get a listing is to go out and promote that listing, and sell it as fast as possible. After all, like you, that’s the only way they get paid – when the deal closes. So obviously they’re going to want to put together a marketing plan with this objective in mind. Perhaps they will start mailing some Just Listed flyers, set up a “Take-One” box, put a For Sale sign on the lawn, place an ad in the Real Estate Weekly newspaper, etc. And in most cases, everything pertaining to their marketing initiatives, whether it is print ads, postcards, flyers or open houses, is driving traffic to their cell phone. Unfortunately, by driving all the inbound inquiries to the cell phone, Realtors are unwittingly enslaving themselves to an electronic leash that tows them around by the nose 24/7. If you’ve ever had a face-t0-face meeting with a Realtor you know what I’m talking about – you’d be lucky to go five consecutive minutes without being interrupted by an inbound email, text or phone call on their “Crackberry” or iPhone. They're like crack-addicted 32

August 2012

rats – they only last a few minutes until they need their next fix! This obsessive, compulsive, over-reliance on the cell phone causes them to be “busy” but not necessarily “productive.” With that in mind, let’s circle back to the Realtor’s primary challenge: they don’t have enough qualified buyer leads for their listings, and without enough buyer leads a property is often slow to sell and, of course, they have a delay in getting paid. The bottleneck in the whole equation comes down to buyer leads. If they can just increase their buyer leads, the Law of Large Numbers will work in their favor to increase the chances of selling the property, and in many cases, attract additional buyer and seller clients as well. But until and unless they have enough quality buyer leads, that property could be on the market for months. If you’ve been talking with your Realtors lately, you know that it can be a real challenge getting these properties sold quickly at the right price. So here’s the bottom line: if you don’t bring them a unique solution to help sell these properties faster and for top dollar, they’re going to continue losing precious sleep (and dollars) because they aren’t getting paid until those darn listings sell. And some

of your Realtor friends are going to have skinny kids and skimpy bank accounts because they’re not getting paid for months on end. With that said, how can we deliver real, valuable, workable, proven solutions? Here are the TOP 4 most effective strategies for generating buyer leads: Strategy #1: Withholding Price. This is perhaps the most controversial of the four strategies. Realtors typically are very resistant to withholding price on their listing promotional materials. However, if they'll actually put this strategy to the test, in many cases it can increase their buyer lead generation by over 200%! Here's how it works: STEP 1: Take your Realtor's default listing ad or For Sale sign and remove the asking price. STEP 2: Then add a headline that says something like, "Get free instant property info by text message. Text "Buy124" to 79564 to receive more info including price and financing options." Then of course each listing would have a unique text code so all the buyer has to do is enter the property code and then they instantly receive a text message with more information on the property including price. NOTE: Every time someone requests property info via text message, you and the Realtor just generated a hot new buyer! Now you can follow-up via telephone on behalf of your Realtor to see if they need help getting pre-approved with a mortgage and/or if they'd like assistance from a top-notch buyers' agent. If they're already pre-approved, you can ask them if they'd like a "free, no obligation costof-borrowing analysis" to ensure they are getting the best mortgage with the best rates and terms available. Strategy #2: Withholding Financing Option. So in this case, you would disclose the asking price upfront but you would include something like this in the call to action: "Get free instant property info by text message. Text "Buy124" to 79564 to receive more info including financing options." In most cases this won't generate as many buyer leads as disclosing the price, but will usually pull better results than the typical Realtor ad. Strategy #3: Offering 24-hr Free Recorded Tips. This strategy can be used in combination with any of the other strategies to improve results. Here's how it works: STEP 1: Activate your own 24-hr Call Capture Hotline. You'll understand why in step number two. You can get a hotline for as little as $20 per month – they're not expensive. Find my recommended vendors at: www.

STEP 2: Record a selection of "free consumer tips" that can be made available to people when they call your 24-hr hotline. These tips should answer common questions people have when it comes to buying a home or securing financing. Once these audio tips are recorded, you now have a series of marketing assets that work while you're not working. All you have to do is just set it and forget it! STEP 3: Add your "free consumer tips" recorded messages to your Realtor's listing promotional materials. This will add additional "buyer bait" to their advertising, thereby increasing the chances of buyers calling in for more info. When a buyer calls in to listen to a recorded tip, you just generated a hot new lead! Here's an example of what your tips might look like in the actual ad:

Strategy #4: Offering Free Reports or Consumer Awareness Guides. These are informative guides that educate the homebuyer on mistakes to avoid and important information to ensure a stress-free home-buying experience. Here's an example of what this might look like on the back of your Realtor's Just-Listed Card:


Now let’s get into how this is going to benefit you, the mortgage professional. I’ve already alluded to some of the benefits, but here’s the essence of it. You’re going to partner with a Realtor because you know the Realtor’s biggest challenge. No matter where you are, no matter what market you’re in, their perennial challenge is generating enough quality buyer leads for their listings, so they sell them faster and for top dollar. If you can help them do that using this "Call Capture" and "Text Capture" strategy, boosting their buyer lead generation on every listing they have, and on top of that, pre-qualifying and pre-approving every buyer lead, that’s a huge advantage for them. Thanks to you, they’re going to get more buyer leads, pre-screened and pre-qualified so they don’t have to sift through all the gravel to find the gold nuggets. And what if you offered all of this to your Realtor for FREE? How’s that for a unique value proposition!

How we see it

You can pre-approve those prospects so that when they make the offer, the Realtor has more control over the quality of the transaction – with success-certain financing in place. This will ensure the property sells on time. Everyone in the transaction is going to be happy. You can even go to a new Realtor you’ve never worked with before and offer them all of these unique advantages for free, provided that, when they set up a listing, they allow you to pre-qualify all the buyer leads. For example, you would invite them to give you just one of their best, most appealing listings that they want to sell fast and ask them to allow you to integrate one or more of the above four strategies into their marketing campaign. You would also recommend ways to promote that listing in other neglected and/or underused media that the Realtor hasn’t already tapped into. As buyer leads start coming in for each listing, you can now follow up using a magnetic calling script to find out if they got all their questions answered, to qualify them as a motivated buyer and, ideally, to get them pre-approved for a mortgage. And here’s the cool thing. Regardless of whether they buy that initial listing or another Realtor’s listing, when it comes time to buy a home they're going to need a mortgage! By using these four lead-generation strategies, you will be able to get your Realtors emphatically eager to work with you so they can get more buyer leads for their listings. As they market their listings using these best practices, you will be able to turn every listing they promote into a little 24-hour lead machine, filling your pipeline with a steady stream of red-hot purchase leads. How cool is that! In my next article, I’ll reveal why it pays to partner with top-producing Realtors, and the six critical criteria for qualifying them so you don't waste your time with the wrong people! Stay tuned … Doren Aldana is considered by many to be the nation's leading Mortgage Marketing Coach and recently won the "Best Industry Service Provider" award at the 2012 Canadian Mortgage Awards. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free online workshop on "How to Turn Your Realtors' Listings into a Flood of Red-Hot Mortgage Leads," visit: www.


August 2012

Man on the hill

Mandate or Agenda? What’s behind the CFPB’s anti-Broker sentiment? BY marc savitt


ven before the CFPB went "on-line" on July 21, 2011, their skeleton staff was hard at work – not only shaping the agency, but also crafting a more simplified approach to curing the age-old perception of "consumer confusion." The National Association of Independent Housing Professionals (NAIHP) has been actively involved with the CFPB since day one and has met with the agency on 13 separate occasions, including a private meeting with Director Richard Cordray. Until recently, we found them eager to accept advice from industry experts in order to “get it right.” Elisabeth Warren, whose brainchild became the CFPB, never officially carried the title of Director. However, as the President’s “special assistant,” she was the CFPB's de-facto leader. Despite Warren’s reputation as anti-mortgage broker, validated by her 2007 Boston Globe op–ed on YSP, I found her to be receptive to an open dialog about brokers and YSP. In fact, after we discussed a 2010 independent study conducted by Harvard University, which specifically stated brokers weren't responsible for the mortgage meltdown or housing crisis, Warren appeared to be changing her thinking.

Warren’s determination to simplify disclosures, especially the new GFE/TIL, was welcome news to both industry and consumer groups. During the first of several industry roundtables held to discuss prototypes of the new disclosure, she stated more than once, “If we make up-front disclosures simple enough for borrowers to understand what they’re getting themselves into, then there’s no need for excessive regulations.” The CFPB under Warren treated all segments of the housing industry with respect and focused on solving problems, not pointing fingers. However, today’s CFPB is a much different agency. Over the past few months, CFPB Deputy Director Raj Date, has been engaged in a full-scale attack on mortgage brokers. Speaking to The Greenlining Institute Conference in Los Angeles on April 20, 2012, the Mortgage Bankers Association in New York on May 7, 2012 and the American Bankers Association in Orlando on June 11, 2012, Mr. Date was quoted as saying, “Let me give you an example from the mortgage bubble: the yield-spread premium. Too often it was the case that mortgage brokers were paid more to give borrowers a worse deal. If a borrower could qualify for a loan at, say, 6 percent, a broker might juice that rate from 6 percent up to 8 percent. As a result, the most important, most visible person in the mortgage process for many borrowers – the mortgage broker – had a financial stake that was confusingly and perversely in direct opposition to the interest of the


Man on the hill consumer himself. If people are paid to treat customers poorly, it shouldn’t be surprising when they do. The Federal Reserve Board and then Congress took important steps in this area, and it’s our job at the Bureau to propose and finalize regulations that end these practices. We’re working hard to do just that.” Based on his remarks, it’s clear that Mr. Date came to the CFPB with a preconceived notion about mortgage brokers. His characterization of mortgage brokers is without merit, as numerous, well-respected independent studies have vindicated mortgage brokers. Perhaps Mr. Date is confused about who developed the exotic loan products that helped create the housing crisis. These were the same entities that made the underwriting decisions and placed consumers in loans with little regard for their ability to repay them. Mortgage Brokers don’t underwrite or approve loans. As to his negative comments about yield spread premiums, according to the Federal Reserve Board’s written answer to the NAIHP lawsuit, wholesale and retail YSP are the same! On at least three occasions, NAIHP hand-delivered two studies to the CFPB. One study was entitled, “The Pricing of Subprime Mortgages, by Mortgage Brokers and Mortgage Lenders.” This study, conducted by Georgetown University in 2005, examined over one million subprime loans. The study concluded mortgage brokers saved consumers an average of 1.13% on their annual percentage rate (APR). Brokers, who had been accused for years by consumer groups and some in Washington of taking advantage of minorities, were finally vindicated. The study revealed minorities saved up to 2% on their APR when using a broker. A second study by Harvard University, “Understanding the Boom and Bust in Non-Prime Lending,” blamed relaxed underwriting, excess liquidity and risk layering, along with regulatory and market failures, as some of the factors that created the mortgage crisis. Mortgage brokers and mortgage bankers were specifically exonerated. What’s most interesting is Mr. Date previously worked for Capital One and Deutsche Bank. Both institutions had a large footprint in subprime lending. Some might recall, in April 2006, a top trader at Deutsche Bank AG wrote an email to his employer and questioned some of the mortgagebacked investments Deutsche Bank was selling to global investors. He said the securities that were “underpinned by home loans from subprime giant Ameriquest Mortgage were, quite simply, crap.” Where’s Mr. Date’s outrage about his former employer? These practices were major factors in our global crisis. Speaking of Ameriquest, I wonder if Mr. Date is 36

August 2012

aware that a certain member of his regulation writing team is married to an individual who boasts on LinkedIn that she was a “Key member of the product development and implementation team” for the former subprime giant. Ameriquest, who was NOT a broker, agreed to a $325 million settlement with the Attorneys General over predatory lending practices. Based upon Raj Date’s apparent bias against brokers, I’m concerned the proposed changes to loan originator compensation, as well as other expected rule revisions, have already been internally finalized and will further disadvantage mortgage brokers. I won’t pretend some mortgage brokers weren’t involved in some unethical practices, but implementation of the 2008 SAFE Act took care of the bad actors. Since federally chartered banks are exempt from the SAFE Act, with the exception of the national registry, many who couldn’t qualify for a license on the broker side have found employment with the banks. The Dodd-Frank Act (DFA) mandates certain rules and regulations must be in place by specific dates. Many in government and the financial services industry believe more time is needed to ensure the CFPB has sufficient time to “get it right” and avoid harmful unintended consequences. However, a recent lawsuit filed by Judicial Watch has revealed through discovery emails that suggest the CFPB is using the DFA mandates to fuel its own agenda. In a February 6, 2012 email to his staff regarding his recess appointment, Director Cordray stated, “the fact that this appointment is for two years (and in some conceivable circumstances it could be shorter) does matter in one important respect… This time period should give to each one of us, and not only me, a fierce urgency to accomplish the work we are doing together.” After Raj Date’s recent comments toward mortgage brokers, NAIHP called for his resignation. Even if his allegations were true, which they’re not, what was the reasoning behind them? Hasn’t there been enough of the blame game? Raj Date owes mortgage brokers an apology and needs to start showing them the respect they deserve as LICENSED mortgage professionals. Marc Savitt is the President of the National Association of Independent Housing Professionals. Previously, he served as the 2008-2009 President of the National Association of Mortgage Brokers. He also held the positions of NAMB’s Presidentelect, Vice President, Director, Chairman and Founder of the Consumer Protection Committee, and was awarded NAMB’s highest honor, Broker of the Year.

keeping up with the jones

Backed into a Corner How are you going to come out fighting? by chris jones


wo weeks ago I broke my leg. It wasn’t a clean break, where you cast it and that’s that; no, it was a crushed tibial plateau, complete with plates and screws. Three-month restricted mobility. I’m doing a lot of sitting around. For those of you that follow this space, you know that physical presence is my secret weapon. I get deals by being in places, in person. It’s old-school, I get that, but that’s what works for me. Unfortunately, now, that’s not really an option. I can’t go anywhere for an entire month, and for two more months, only with stiff limitations. So my main marketing vehicle is out of commission. It strikes me that this isn’t that different a situation that many of us find ourselves in. Whether it’s a technology that is superseded or a loan program that disappears, or a broker that packs it in, we can often find ourselves in a position where we have to radically change what we do and how we do it. How do we recover from changes of that nature? How do we come back? I have three ways, so far. Take them for what they’re worth. 1. Get clear. One of the hardest parts from this leg surgery has been my head’s fuzziness and it has been hard to

concentrate. The odds are that you won’t have this problem quite the way I have, but even if you’re not hopped up on pain meds, when a major industry shock happens it can be hard to retain a clear sense of what you need to do. Step back, get some clarity. If the program is gone for you, is it gone for everyone? If that particular marketing tactic is out, is it out for the competition as well? What was it about that program that appealed to people? What can you use in the new product mix to replace it? Remember, your business is not selling FHA streamlines (for example). Your business is mortgage loans, or even broader, your business is helping people with their home loans. If you were doing it well with one program, you can do it with another one. Take a step back. Get clear on what it is that has really happened, and assess what your capabilities still are, focusing on what you can do, not what you can’t. 2. Consider all the options. There was a fellow I worked with that had been in the mortgage business for years. He was excellent at what he did, and had a huge base of loyal clients. Then the industry changed and threw his normal marketing tactics out the window. He found that he didn’t like doing mortgages anymore. But he was wise enough to step back and consider what it was about the business that he liked. He realized that one of the vehicles


keeping up with the jones he used to deliver value to his clients was gone, but that he still had others. It was the clients themselves that he enjoyed, not the mortgage loans. He retooled his business as a credit-repair specialist and makes a decent living helping most of the same people he was helping before. This may be an extreme example, but I think it serves a purpose. I’m laid up here and can’t go to the meetings I once did. Those meetings were a major source of referral business. So those are out; now what do I do? Well, time to consider all the options. I have long neglected my online resumes on Facebook and (especially) LinkedIn. Time to spend some time there. I can’t hang out at the local pub, but I can hang out in virtual places where I will meet people I wouldn’t have otherwise. The interactions are largely the same. The things I enjoy - talking with and helping people - haven’t changed. So I have to go about doing it differently. So what? In each of our careers there are going to be moments when we should step back and consider all the options. Without sounding more alarm bells than I did a couple months ago, there exists the real, serious possibility that the entire mortgage industry will be nationalized. If that happens, are you ready? Do you have a plan for working at the equivalent of the DMV? Do you have ideas about where you might go and what you might do? Likely, it won’t come to that. But every day we face that same cataclysm in smaller ways, on a broker level and a personal one. Consider all the options. Be open to the idea that it’s not what vehicle you use to serve people, but that you serve them at all, that is the core of your business. 3. Take microscopic action. In the face of shock, in the presence of a completely new business landscape, it’s easy to panic and try to do too much at once. It’s like a basketball team that gets down by ten or twelve in the middle of the fourth quarter. The team starts jacking up three-pointers and pressing on defense in an attempt to come back, instead of sticking with what they do well and

keeping their heads. They miss a couple shots, give up a couple layups, and before they know it they’re down twenty and the game is over. You see it all the time. You can’t come back all at once. There’s no such thing as a ten-pointer. To win, you have to be willing to do the micro work that incrementally pulls you back into the game. This is hard to do when the crowd is screaming at you and it feels like the world is caving in. Believe me, I know this. The last time I was in the hospital I was two weeks old. I’ve never even had stitches. Now I have a major joint reconstruction and I’ll be setting off metal detectors in airports for the rest of my life. I can’t even get out of bed on my own. The temptation (I feel it) is to rush back, try to make everything the way it was immediately. But this is courting disaster. I have to take micro action, concentrate even harder on the tiny actions that make things better over time. Sleep. Rest. Do only the exercise that will make the joint better. Don’t pretend that I can go back to being on the job twelve hours a day, especially not at first. When we have a major event in business, we need to concentrate our actions on the micro actions, those things over which we have the best control and in which we have the most skill. For every business this is different, but all of us can figure out what those critical actions are. Call two people for referrals. Just two. Send out one email. Write three personal letters. “Shore up your base,” to use a political term. Don’t worry about the cash-flow for October. Just do what you can do today. And when you’re done, you’re done. Sufficient is the day unto the evil thereof. You can’t grow tomatoes faster by really wanting them to grow. These things happen on their own time. Maybe there’s a fourth here, somewhere; a part of the others. A good friend of mine calls it “sitting chilly.” Relax. None of this is permanent. The one that is most calm in the face of a storm is the one that will see the way out of it. No matter what the event, no matter how terrible the disaster – and my friends, we’ve seen some disasters over years – we are going to get through it. We’re going to come back. See you on the basketball floor. One of these days. Chris Jones, branch manager with City First Mortgage Services, is a nine-year industry professional in brokering and banking, with a background in financial services, national politics and Main Street entrepreneurialism. He is the author of the forthcoming book, The Six Channels of Marketing, available in January. Chris lives in Lehi, Utah, with his wife, Jeanette, and their eight children, and can be found at www., or (801) 850-3781.

center stage

center stage with hometown lenders The Niche Report talks with Eric Tishaw, Chief Operating Officer of Hometown Lenders the niche report

Eric Tishaw is the Chief Operating Officer of Hometown Lenders. With over 12 successful years in the business, an MBA, and a lifetime of working in and around the mortgage business, Eric understands exactly what it takes to be successful in this industry. Eric Tishaw is committed to helping the Loan Originators and Mortgage Branch Managers at Hometown Lenders realize their fullest potential by utilizing and sharing the skills he has learned and the best practices he has observed throughout his career. First, tell us a little about Hometown Lenders. We started out over 12 years ago as just a small group of friends who wanted to originate loans together and have fun doing it. Over the years our small company grew, mostly by referrals from our AE’s and other employees, and pretty soon we had branches all over our state with some really great people who are still here with us today. It didn’t take long before we grew to be the largest lender in our state, and then one of the largest lenders in the Southeast.

As we grew, we invested in our company and in technology, and we also got very good at supporting all of our branches that were spread out all over the South. When we made the decision to become a retail branching operation, it was a logical growth progression as well as a natural extension of our abilities and expertise. We were able to scale up our systems to meet the requirements of operating a high number of retail branches in multiple states. During our growth, we never lost sight of the fact that we’ve always been a family-oriented business and that our people are what’s most important to us; any of our partners will tell you that. We know what it’s like to have to generate business by beating the streets for referrals and watching marketing costs like a hawk. We work very hard to provide the best platform possible for our people to be as successful as they want to be, and we make them look like champions to their customers and referral partners. How has Hometown Lenders been able to thrive in a time when most of its competitors have closed up shop? Well, we started out with a unique philosophy that wasn’t popular or shared by anyone else in the industry at the time….we were very selective about who we hired.


center stage For most companies, it was just a big volume grab, and they were hiring anyone who could bring them additional production. The problem turned out to be that a few bad apples spoiled their bunch, so in order to protect the company they had to overcompensate by implementing policies and restrictions that effectively put training wheels on the good folks. Some major companies got shut down because of the poor quality of the loans being produced by some of the bad hires they made. We took a different approach, and it paid off. I personally travelled to meet everyone we hired (or didn’t hire) in person to see if they were a good fit with us, and to get a gut feeling regarding the quality of their loan production and personal character. Our position was that we would much rather have a branch that does less volume but fits well within our culture, so that we didn’t lose sleep at night over their loans, rather than have big shops that might originate questionable loans. The outcome for us was that we were able to grow at a consistent, measured pace with both big and small branches and achieve a level of success that was based on a solid foundation of top-quality branches and producers. From there we were able to invest in and support our branches, and then let them do what they do best – close loans. We’ve noticed your company is growing at a remarkable rate – what’s your secret to success? We strongly believe that it’s not enough to recruit good branches and then just hope they work out. We firmly believe that recruiting AND retaining is our top mission. This market is way too competitive to be good at recruiting only. If you don’t have a strong value proposition, your good people won’t stick around long, and your turnover costs will go through the roof. We are good at recruiting, but we genuinely enjoy developing and growing great branches. We developed this strategy years ago, and it has

“The year I started doing the Lender Letter and the eWeekly Economic Update, my business DOUBLED. Thank you for your excellent products and service.”

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been very successful for our branches, so naturally we are very proud of that. We have been able to be a catalyst for some significant growth, and we have uncovered some amazing talent. We’ve seen some other companies trying to copy our approach recently, but we really enjoy the process – and I think that is the real difference. We don’t do it because it sells well, we do it because we are good at it and we enjoy helping our branches grow. We’re helping them become champions, and they are helping grow their company to a whole new level. We have several different models for success in this industry, and we work with our branches to apply the one that makes the most sense for them. We have taken branches that were doing five loans per month and turned them into production powerhouses that close over 200 loans a month. What’s your outlook on the industry? We are very optimistic about the future and the continued turnaround of our industry. We would love to see government regulators take a step back and let the free market pick the winners and the losers. We’ve seen a few signs that they may be easing up a bit, and we are particularly encouraged by the recent barriers to entry that have been put into place, such as licensing regulations, compliance measures, and higher net worth requirements. Overall, we are very confident that the industry is heading in the right direction, and we feel that Hometown Lenders is well positioned to emerge as one of the industry’s new leaders in retail branching. What else is Hometown doing that other companies are not? Well, I don’t know that no one else is doing this, but one thing we feel very strongly about is our companysponsored mission to help selected villages in Guatemala. Mission Firefly ( is a 501C that we created to fulfill what we believe is our greater calling in life. We enjoy giving back, and our people enjoy the opportunity to be a part of a great mission. Everyone in our company is welcome to go on trips with us, and it gives us a chance to break away from business now and then to focus on what’s really important in life. That’s probably not the answer you were looking for, but I think it ties in with what really sets us apart from our competitors – we believe that it’s our people that make us different. It sounds cheesy but its true – no other company has our people, and they are what makes Hometown Lenders great.


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August 2012


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BRINGING UP THE REAR - continued from page 50

What should also be more than obvious is that this scandal cannot be borne at Barclay’s alone because if that were the case, it wouldn’t accomplish anything. One bank misreporting its borrowing rate wouldn’t make any difference, right? They throw out the top and bottom four, remember? So, why would you bother lying if your buddies at the other 15 banks weren’t going to do the same? Answer: You wouldn’t. But, somehow… we’re not sure yet whether others are involved. And that’s because – well, because we’re dumber than a box of rocks, that’s why. Or, at least that’s the only reason of which I can conceive. Nothing else makes any sense. Barclay’s traders have apparently been fudging their LIBOR reporting since 2005 in order to up their profits, and hence their bonuses, and that’s the next “you’ve got to be kidding me” moment in this scandal. Who designed this system of asking traders to self-report a number that affected their bonuses? Was it a small child? And why would it only have started in 2005? Do you see what I mean? This isn’t just a scandal… it’s an exposé into absolute stupidity. Who thought this system would work? Everyone on that list needs to be hospitalized, because they could hurt themselves crossing the street or tying their shoes. And yet, the BBC reported: “… the rigging of LIBOR may have pushed attitudes at the highest levels to the point of disgust.” Seriously? They knew how this whole reporting system was set up and what it affected, and yet they figured everything would work out just fine? What could possibly go wrong? And these are the masters of global high finance… the smartest guys in the room, as it were? Now it’s come out that both US and UK regulators, the Federal Reserve and the Bank of England, have been aware since May 2008 that all the banks, not just Barclays, may have been under-reporting their borrowing costs to the BBA's LIBOR committee. All the banks “MAY” have been underreporting their borrowing costs? Maybe? It MIGHT have happened? They’re not sure? I don’t know about you, but I can handle finding out that global banking is a cartel. I can handle finding out that the whole world is basing its most important numbers on what some trader in London says on the phone every morning. But, I hate it when people treat me like I’m four years old.

When I heard that JPMorgan lost two billion unexpectedly I thought… wow, someone should invent a product that protects against things like that happening. Maybe like an alarm clock sort of thing… the alarm goes off after you’ve lost one billion. And finding out that Bernie Madoff stole $60 billion showed me that we don’t actually have regulators. Because if we had regulators, he would have been caught after stealing, I don’t know… say $30 billion? And, first Wells Fargo’s and now HSBC’s money laundering antics made me realize that we’re talking tip of the iceberg once again. The Senate's Permanent Subcommittee on Investigations’ report that accused the British bank of having a "pervasively polluted" culture pretty much said it all. So, finding out that said moneylaundering problems were flagged by regulators for nearly a decade barely made me sick. But, let’s stop kidding ourselves, shall we? I mean, some people are saying that the banks have learned to operate like organized crime. I think that’s giving organized crime way too much credit, because it’s become abundantly clear that if anything, organized crime learned to operate the way they do… from the banks. How much longer until we all wake up to the fact that we’ve got a problem here? I think the ugly truth is… we won’t, because we’re fundamentally okay with all of it. We just want a piece of the pie… our own kickback. Because our bankers aren’t from another planet, they are a reflection of us… what we’ve become. We used to wage war on poverty; now we attack poor people. We used to care about our country; now we only care about ourselves. We’ve lost eight million homes to foreclosure in this country, and about as many jobs, but we’ve lost a lot more than that. In truth, we’ve lost our humanity… our empathy… our dedication to our common good… in our children’s future. The homes we’ve lost are just pocket change.

Martin Andelman is a staff writer for The Niche Report. He also writes an almost daily column on ML-Implode called Mandelman Matters, and publishes a Monthly Museletter. You can follow “Mandelman” on Twitter. Send your responses to



Bringing Up the rear The LIBOR Scandal BY MARTIN ANDELMAN


kay, so now we all know what LIBOR stands for, right? It stands for “Lying in Between Other Reporting.” But that’s not even what I found to be the amazing part of this latest in a long line of banking scandals. That Barclay’s Bank was lying about something… well, that aspect hardly even raised an eyebrow in this country. It was like, “Big bank caught lying about interest rates,” and most everyone in the U.S. barely paused to yawn. That, I thought, was nothing short of hysterical. We’ve reached a point in this country where we don’t expect bankers to be doing anything less than whatever they can get away with in order to come out on top. It was like the story could have been mentioned at the very end of the nightly news. “Oh, and one more thing… Lindsay Lohan was arrested for drunk driving again, and yet another big bank was caught lying about something. And that’s the news, we hope you’ll have a pleasant tomorrow.” Roll credits. LIBOR, the London Interbank Offered Rate, is

considered to be an extremely important benchmark interest rate used in the financial markets. LIBOR is used to calculate payments on literally hundreds of trillions of pounds/dollars worth of financial contracts all over the planet. It’s so important that the methodology for calculating LIBOR is highly scientific… banks self-report their number… in other words, they use the honor system, if you will. Here’s how it works. Every day someone at the British Bankers' Association (“BBA”) picks up his or her phone, calls 16 banks and asks each one how much they are paying to borrow money. Each banker contacted provides a number. They then throw out the bottom four and the top four and take an average of the numbers that remain. So, LIBOR is supposed to be the average interest rate at which 16 giant financial institutions based in London can borrow from each other. It should be easy to see that no one polled in this situation would ever provide a higher number than absolutely necessary, as that would signal that their institution isn’t considered to be on solid ground. So, that reporting bias has always been built in to the published rate. - continued on page 49


August 2012




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