January 2008

Issue 007 January 2008 TheNicheReport.com

13

What's Next?

The best is yet to come.

Jumbo 16 Super Lending and Originating Millionaires aren't afraid to borrow.

26 Mortgage Industry Under Attack: HR3915 A detailed synopsis.

on 32 Spotlight Searchmy loan.com Tom Sato answers our questions.

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CONTENTS

16

Issue 007

January 2008

Super Jumbo Lending and Originating

NICHE REPORTS NONPRIME

pg 39

PRIME

pg 40

ALT–A

pg 41

COMMERCIAL

pg 42

HARD MONEY

pg 43

CONSTRUCTION

pg 44

Millionaires Aren't Afraid to Borrow MICHAEL A. COVINO President of Luxmac / Covino and Company

FOUNDER & PRESIDENT Robert Pegg robert@nichereportonline.com

13

Why it Makes Sense to Market to Apartment Complexes karen deis Mortgage and real estate training specialist.

Your ticket to unlimited leads.

22 26

32

the niche report Tom Sato answers our questions.

36

What Next?

Phil hawkins Downey savings bank The best is yet to come.

Mortgage Industry Under Attack: HR3915 herbert thomas president of thomas law firm, p.c.

A detailed synopsis.

January 2008

Tip of the Month STEWART MEDNICK MORTGAGE BANKER AND REVERSE MORTGAGE SPECIALIST AT AMERICAN MORTGAGE CORPORATION Shout out and be heard.

EDITORIAL/CONTENT MANAGER Kristen Moser kristen@nichereportonline.com ACCOUNTING MANAGER Shawna Ingram shawna@nichereportonline.com SALES MANAGERS Jason T. Buff jason@nichereportonline.com Kim Campos kimcampos@nichereportonline.com Kim Lawson kimlawson@nichereportonline.com

DEPARTMENTS

09 10 45

6

Spotlight on Searchmyloan.com

CO-FOUNDER & PRESIDENT David Pegg david@nichereportonline.com

NOTE FROM THE FOUNDER CALENDAR OF EVENTS LENDER & RESOURCE DIRECTORY

DESIGN Plumbline Studios, Inc. Eric Ball PRINTER / CIRCULATION MANAGER The Ovid Bell Press, Inc. CONTRIBUTING AUTHORS Michael Covino Karen Deis Phil Hawkins Herbert Thomas Stewart Mednick

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Published monthly by BODA Publishing, LLC 6016 Alderdale Place, Haymarket, VA 20169 Phone: 540.657.2632 Fax: 703.991.2362 Email: info@nichereportonline.com www.TheNicheReport.com

SUBSCRIPTIONS This publication is intended for real estate finance professionals. If you are a mortgage broker, lender, loan officer and you do not currently receive The Niche Report, please send your name, company name, and address to subscriptions@nichereportonline.com.

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If you have a comment or question about an article or editorial published in The Niche Report, or if you have a suggestion for a topic you would like to see featured in a future issue, please send an email to kristen@nichereportonline.com.

THE NICHE REPORT POLICY The information and opinions expressed by contributing authors and advertisers within The Niche Report do not necessarily reflect those of BODA Publishing, LLC employees and should not be considered as endorsed or recommended by BODA Publishing, LLC.

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NOTE FROM THE FOUNDER

So now that we have 2007 behind us and made all those good-intentioned resolutions for the New Year, we can focus on making 2008 a better year for ourselves professionally. It’s time to make a fresh start – revisit marketing techniques, focus more on our networks for new and repeat business, expand our portfolios of lending products and niches by continually educating ourselves about new products out there. Now is the time to put your plan into action.

Begin by educating yourself on the reality of this market and the changes ahead for our industry. Following up on the synopsis of HR 3915 from our December issue, this month attorney Herb Thomas, President of Thomas Law Firm, P.C. out of Dallas, Texas provides us with an in-depth analysis of the Bill and its potential impacts on our industry. The more educated we are about this legislation, the better we can deal with it.

Pick up the tools in front of you and use them. To get you started, we’ve launched a monthly feature simply titled “Company Spotlight” which is an interview-style article that will allow our readers to gain knowledge and insight into a company that helps us, as mortgage originators, do our job. This month our spotlight is on SearchMyLoan.com.

Check it out on page 33. It’s an excellent tool for loan originators to help save time and frustration when looking for a loan program that fits your client.

Think about expanding your client base. In her article, Karen Deis discusses the huge opportunities of marketing to apartment complexes to attract first time homebuyers and other real estate investors. On the other end of the spectrum, Michael Covino provides us with an overview on lending and originating super jumbo loans, including successful marketing techniques for obtaining affluent borrowers.

Stay focused on success. Our monthly columnist, Stewart Mednick, is looking for your feedback on what has worked for you as a loan originator – marketing techniques, business development strategies, etc., with the idea that we can and should learn from each other. Check out his column and give him a ‘shout-out’.

You gotta love Phil Hawkin’s article, “What’s Next?” Believe me; it will definitely speak to your heart as a mortgage originator. It’s a bold article with an optimistic outlook in this world of mortgage industry pessimism. I hope it inspires and motivates you as it has me.

Finally, I just want to welcome our new readers from California who may be reading their first issue of The Niche Report as a result of our expansion this month. We are happy to be there.

Robert Pegg Founder & Publisher

TheNicheReport.com

9

CALENDAR OF EVENTS

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CREF / Multifamily Housing Convention & Expo, Orlando, FL. Visit www.mbaa.org for details.

February 5 CREF / Multifamily Housing Convention & Expo, Orlando, FL. Visit www.mbaa.org for details.

February 6 CREF / Multifamily Housing Convention & Expo, Orlando, FL. Visit www.mbaa.org for details.

February 7 Housing Forecast / Pending Home Sales Index released by the NAR.

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February 20 Commercial Lending Indicator released by the NAR.

February 25 JANUARY 8 Housing Forecast / Pending Home Sales Index released by the NAR.

January 24 December Existing-Home Sales released by the NAR.

February 3 CREF / Multifamily Housing Convention & Expo, Orlando, FL. Visit www.mbaa.org for details.

10

January 2008

January Existing-Home Sales released by the NAR.

February 26 California Association of Mortgage Brokers (CAMB) 2008 Sales & Marketing Conference, Anaheim, CA. Visit www.cambweb.org for details.

February 27 California Association of Mortgage Brokers (CAMB) 2008 Sales &

N?8KË PFLI E@:?<

Marketing Conference, Anaheim, CA. Visit www.cambweb.org for details.

February 28

California Association of Mortgage Brokers (CAMB) 2008 Sales & Marketing Conference, Anaheim, CA. Visit www.cambweb.org for details.

February 29

California Association of Mortgage Brokers (CAMB) 2008 Sales & Marketing Conference, Anaheim, CA. Visit www.cambweb.org for details.

MARCH 6

Advertise it monthly in The Niche Report.

Housing Forecast / Pending Home Sales Index released by the NAR.

MARch 11 Send us

a request for subscriptio Maryland Association of Mortgage info@nichereportonline.com.

Brokers (MAMB) Conference & Exposition, Baltimore Convention Center. Visit www.mamb.org for details.

march 12 Maryland Association of Mortgage Brokers (MAMB) Conference & Exposition, Baltimore Convention Center. Visit www.mamb.org for details.

WHAT'S YOUR NICHE? Advertise it monthly in The Niche Report. `e]f7e`Z_\i\gfikfec`e\%Zfd

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WHY IT MAKES SENSE TO MARKET TO APARTMENT COMPLEXES Your ticket to unlimited leads.

BY KAREN DEIS

I

have a friend who manages 12 apartment complexes. He has tracked the turnover rates of tenants and year in and year out, 62% of the tenants move after one year.

Another 28% move out after the 2nd year and the remaining percentage live in the complex 3 years or more. His statistics are backed by a survey conducted by apartment managers all over the US. One more statistic before I bore you to death…the National Association of Realtors® in their annual report called Profile of Home Buyers and Home Sellers says that over 40% of all home purchases over the last ten years have been made by first-time home buyers. What’s more, almost 70% of them RENTED before buying their first home.

Bottom line: If you want to get your share of the firsttime homebuyer purchase business – apartment complex marketing is your ticket to unlimited leads.

Why? Because once you have the apartment addresses, the addresses never change – but there is a constant turn over of tenants – so you are always marketing to new people.

However, not all complexes are created equal. Here are some tips before you buy a list or spend your first marketing dollar!

Choose apartment complexes near your office.

First-time homebuyers want you to hold their hands thru the entire purchase process. They want to meet with you face to face. If you market to complexes that are located too far away from your office, you won’t have much success in getting them to meet with you.

The Internet is your friend.

Want to know which apartment complexes are located near your office? How much they charge for rent? How many units? Bedrooms and amenities? Would you like a map showing the directions from the complex to your office?

While not all complexes are on every website, check out each of these websites and you’ll find almost everything you need to know before you choose which ones to market to…

• ApartmentGuide.com • ForRent.com • Apartments.com • Move.com

How much are they paying for rent?

First time homebuyers will pay 50% for a mortgage payment than what they pay for rent. For example, if paying $1000 in rent, they will pay a $1500 mortgage payment, including taxes and insurance. Be sure you have properties with sales prices and mortgage payments that will fit with this formula.

Beware of a couple of traps here. Some apartment complexes are rent-subsidized but you would never know it thru your research on the web. I personally sent thousands of post cards to one apartment complex (with absolutely no phone calls) only to find out that while the advertising stated the rents were $750 per month, most of the tenants were actually paying $400 per month.

Don’t chose complexes with high-end rent rates either.

These are people who can afford to buy a home but have chosen to rent luxury apartments instead.

How to check for vacant units?

One of the reasons your marketing will fail will TheNicheReport.com

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because a high number of units are vacant. No one is going to tell you either! You will need to visit the place yourself. Hop in your car and drive around between 8 to 9 pm. Check to see how many cars are in the parking lot; how many lights are on in the units.

Is there “stuff ” on balconies? Spend about 30 minutes observing the activity around the complex. If you find a high percentage of the units vacant, you will be mailing to nobody!

How unhappy are the tenants?

Apartment complexes, where tenants are not happy with management, should be the ones you market to first (providing they meet the mortgage payment requirement).

You may have already heard complaints from clients who have lived in certain complexes.

Another resource is www.ApartmentRatings.com. It’s a site where tenants can “rant” about problems they have experienced. Not all complexes are listed, but if you find tenants who are unhappy online, or hear about them thru the grapevine, don’t waste another minute. These are the people most likely to move.

Words of Wisdom Don’t assume that everyone who lives in an apartment complex is a first time homebuyer! Mix your marketing messages. Offer How to Invest in Real Estate; Buying a Vacation Home or Commercial property seminars!

Once you have the addresses of each unit, consider this your own private gold mine.

Why? Because the addresses never change – but the people who live there do – so you are constantly marketing to new people.

Karen Deis, was in the mortgage and real estate business for 28 years and in 2000, sold all of her companies to train loan officers and agents full time. She has 7 training websites with the most popular being www.LoanOfficerTraining. com (download free marketing materials) and www.

MortgageGirlfriends.com. Email Karen@KarenDeis.com.

How to Obtain Addresses When I initially started marketing to apartment complexes, I hired a college student to drive around, write down each address and enter them in an Excel spreadsheet. While you can use the same technique yourself, it takes a lot of your time if you wish to do this yourself—or a lot of money if you hire someone to do this for you. However, we have created a unique system where we can get you the address list of most apartment complexes in the US (regardless of the number of units) for a flat fee.

What should you send them?

Post cards and more post cards. A letter with an envelope will never get opened and it will cost you more money. The headline you use must catch their attention. “When your lease is up, do you know where you are going to live?” is one that I have used consistently and has generated a huge response. Oversized post cards that measure at least 5 x 7 or 8 x 10 are recommended. Use colors like orange or bright green so they stand out. Save money with a bulk-mailing permit because remember, you are mailing to just one zip code.

TheNicheReport.com

15

SUPER JUMBO LENDING AND ORIGINATING Millionaires Aren't Afraid to Borrow.

BY MICHAEL A. COVINO

O

â&#x20AC;&#x2021; ver the past few years, the luxury market â&#x20AC;&#x2021; has expanded both geographically and demographically. Twenty years ago, there was a different ethic in borrowing, millionaires were less likely to borrow on their primary residences than they are today. A majority of the affluent paid cash for their homes. Today, superstar athletes and young executives are entering the ranks of the affluent much quicker then ever before and are requesting super jumbo mortgage services early on in their careers. In the professional arena, the rookie athlete or the second year player has a limited amount of income

during the early years of their careers- exactly the time when these young millionaires need a Mortgage Broker- before they begin making $9 million to $12 million a year.

Wall Street and the economy have minted new millionaires at a rapid pace, and none of these millionaires are afraid to borrow to attain the lifestyle they desire now rather then later. I would say that this is the most significant difference with the buying habits of the millionaires in 2007 compared to their counterparts 15 to 20 years ago.

Today’s millionaire seeks immediate gratification and welcomes the use of leverage to facilitate that gratification in the form of luxury real estate.

This creates more opportunities for you, the broker, to include super jumbo loans in your conforming and conventional product mix.

While successful brokers are making good money within a particular niche, they would be wise to welcome the super jumbo borrower and large loans. You do not need to avoid this business because of not knowing what to do or what is needed to execute the request. Granted, it requires more expertise in the how to’s of dealing with the conditions of the affluent borrower and the high priced collateral property. However, the extra effort with developing this expertise, along with new ways of marketing the business, will result in substantial financial rewards.

Although you are not going to do a large volume of super jumbo loans in any given month, you can always call on an expert in super jumbo lending who will show you how to help make your commission.

Super jumbo loans are an ideal

way to enhance the revenue side of the mortgage brokerage business. If you can do two, three, four or even five super jumbo loans annually, whether it be a purchase transaction or a refinance, it is going to result in revenue that falls right to your bottom line.

GEOGRAPHIC EXPANSION OF AFFLUENT COMMUNITIES Geographically, affluent communities are springing up across the country, where traditionally, none have appeared in the past.

Second-tier cities are attracting the affluent, and are creating a much broader base of high-end homes and more business for the Mortgage Broker. Twenty years ago, Orlando was a vacation destination rather then a large business center. It is not uncommon today to find primary homes in Orlando emerging in the $5 million to $10 million range.

This was not the case 20 years ago where homes in this price range were only found in and around metropolitan cities such as New York, San Francisco, Los Angeles, Dallas, Chicago, and Boston. Second homes are proliferating in both warm and cold weather climates in the $3 million to $6 million price range.

ISSUES IN DEALING WITH THE LARGER LOAN When working with super jumbo loans, you will inevitably have to deal with different types of evaluations. Included in these evaluations are the following: Difficulty In Comparing Luxury Residential Properties:

• The comps often exceed 10%.

• The mileage between comps often

exceeds the industry standard of one mile.

• Luxury residential properties do not sell as frequently as do other properties (therefore, marketing time often exceeds six months) and they tend to be outside of the dominant value range for properties in their neighborhood.

The Financial Profile Of The Borrower:

• The financial profile of today’s millionaire is more complicated and convoluted than that of the conventional borrower.

• Affluent borrowers traditionally derive their income from several sources.

• Income may be sheltered or not easily traceable.

• Credit issues, resulting from complications of a business nature, can appear on the borrower’s credit reports.

TRANSLATING ONE GOOD LOAN INTO ADDITIONAL BUSINESS Affluent borrowers, or their business agents or representatives, are often opinion leaders in their personal and/or business communities. Their referrals for additional business and revenue often conform to the core business of the brokerage shop. When the CEO of a company or the head of a particular affinity group is pleased with your brokerage services for the luxury home he or she owns, they will often allow you to solicit their affiliations , members or employees. In that regard, you can get many referrals over long periods of time from having properly serviced such an opinion leader.

The high net-worth borrower and his professional alliances usually

TheNicheReport.com

17

deal with other opinion leaders or high net-worth individuals whom you will be able to market to in the future. Delivering good service and products to high net-worth individuals will also open doors for you to network with real estate agents of high-end properties as well. The best way to be introduced to luxury real estate agents is at a closing table where you, the broker, provided the mortgage services on the transaction.

SUCCESSFUL MARKETING TO THE AFFLUENT BORROWER Marketing to the affluent borrower is different then marketing loans below $1 million, and the underwriting, as expected, is much more thorough. When improperly underwritten, these loans carry a large risk for both the lender and the broker under repurchase agreements.

Lenders who have entered the luxury market in an imprudent fashion have incurred tremendous losses and delinquencies. Many of the investors who go into the super jumbo market, only to exit quickly, do so because they often treat the underwriting process similar to the conforming loan process.

Conventional, conforming lenders have historically come into this high-end market for only 12 to 30 months, and then exit when they begin to experience large losses.

For example, an 80 percent LTV is adequate collateral coverage. It may be a wonderful LTV when the exposure is connected to a home priced between $300,000 and $400,000. However, an 80 percent LTV is very high for loans above $1 million. Starting a foreclosure 18

January 2008

procedure with a borrower with an 80 percent LTV, who is often professionally protected via his accountants and attorneys, is likely to drag on and accrue costs beyond collateral value. Lenders should never want to be in that position with a super jumbo borrower. In super jumbo lending, the collateral is the booby prize.

The luxury home is often difficult to acquire via foreclosure, and it takes a long time to sell and market the property as REO (realestate owned). The real prize for your lender should be loan performance and the ability to put a great deal of money to work at an above-mark yield, and have it perform with delinquency rates comparable to A paper conforming portfolios.

It is important for the broker to recognize that a good super jumbo lender will treat the business of underwriting, both the income and collateral aspects of the file, differently than the underwriting of a conforming loan. While collateral is important to the lending equation, it is not nearly as important as the credit underwriting and income analysis.

Part of developing an expertise for the super jumbo loan market comes from looking at the borrowerâ&#x20AC;&#x2122;s career and the sector of the industry influencing the income.

With the millionaire, the payment or debt repayment history is not as important as the likelihood of continued success in the borrowerâ&#x20AC;&#x2122;s chosen profession.

If you are going to originate these large loans, then getting them bought in a very thin secondary market is a skill that you, as the broker, must develop.

A perfect example of how a super jumbo underwriter must look towards the likelihood of continued success of the borrowerâ&#x20AC;&#x2122;s chosen industry is apparent from the delinquencies experienced during the savings and loan crisis of the late 1980s, through the overnight closure of many banks by the Resolution Trust Corporation (RTC). The building sector, home builders, developers and commercial developers went into a depression for three years, and liquidity to the industry was cut off overnight. They lacked the mechanism to finance and complete projects. People with triple A credit histories became sub-prime borrowers in a matter of months because of the instant transformation of their industry and the drying up of available credit and financing (very similar to the dot.com executives of recent history). People suddenly had problems paying bills and operating their businesses, whereas before, there were no problems.

LOOK TO THE ECONOMIC CONDITIONS As noted, certain types of industries, from time to time during certain economic conditions, are in need of service. Currently, Wall Street firms are laying off people or already announced that there will be a reduction of year-end bonuses or no annual bonuses at all. Those people affected by layoffs or bonus cuts, as well as individual investors who have seen hundreds of thousands of dollars evaporate from their holding, are all potential super jumbo refi candidates.

Doctors are traditionally a good

sector for super jumbo loans. They usually have substantial incomes in both good and bad economic times, and often, have very little or no time to handle their own personal affairs.

Business bankruptcy attorneys, or workout attorneys specializing in loan workouts, are another good source. Many high net-worth individuals were recently hit with margin calls and have to make good on them, leaving them tight on cash to pay taxes.

Construction financing is another excellent area to service.

Many luxury homes under construction need end loans.

Executives in the technology sector began building their large dream homes only to find their stock accounts severely depleted as a result of market deflation. They need some creative financing at this point.

WHERE TO FIND YOUR MILLIONAIRE CLIENTS Surface In Circles And Groups Where The Affluent Congregate

• Charity functions; certain types of sporting events, including professional golf and tennis tournaments; social events, country clubs and polo matches.

• Luxury automobile, yacht and private airplane dealerships.

• Professional services, such as law and accounting firms.

• Seminars and trade shows.

Attending a trade show, in connection with large heavy equipment, for example, is the perfect venue to meet large contractors in need of financing for current or future projects.

Read And Review Announcements In The Press, Print And Internet For High

Net-Worth Individuals Who May Be In Some Form Of Transition

• The sale of business.

• The sale of a home usually means purchasing another home.

• Retirement announcements: Selling the family home to relocate to a different geographic location, while attempting to keep the same luxury amenities.

• Obituaries: The estate will oftentimes need some financing and a large home may be involved.

• Bankruptcy filings, lien filings: Government lien filings are very important. The affluent borrower will often have problems with taxing authorities and require immediate cash, and, as a result, will use their estate homes.

• Divorce proceedings: Divorce translates into the splitting up of matrimonial assets, which, in turn, creates a need and opportunity for financing.

• Professional athletes: Read the sports section of your newspaper and network with the athlete’s business agents early on. Read current events or use the Internet to learn the name of an athlete’s business managers and agents.

Discover where and when the player is being traded, and contact the agent handling the trade.

FISHING FOR WHALES The affluent mortgage borrower who needs a large sum for a purchase or refinance should be easy to catch, if you plan and prepare properly. If you are fishing off the dock using bread crumbs, you are likely to catch an abundance of little sunfish. To catch large fish, you must row your boat out to the middle of the lake

where the water is deep. You use a down rigger and go for the big fish congregating on the bottom of the lake. You will not catch as many fish as you would while fishing off the dock, however, the ones you do catch will be far larger and more rewarding then the abundant sunfish. The reward will be greater.

To begin fishing the waters of the affluent borrower, you must be inclined to learn who the players are and where they congregate. You will need to enter into new territories, while putting forth the effort to locate the affluent borrower in need of your services. This means continually networking in areas where affluent borrowers inhabit. Be savvy and read the news and current events. Analyze what sector of upwardly mobile affluent borrowers will need financial services because of current financial trends.

The basic axiom of the mortgage business is the harder you work, the more money you will make. A good mix will complement your conforming, conventional business with an occasional large loan where you can earn substantial fees. If you adjust your business to cater to the high-end sector, the rewards will increase three-to-four-fold above your normal time investment reward ratio, and you will inevitably meet new and interesting people.

Michael A. Covino is President of Luxmac/Covino & Company, which specializes in JUMBO loan financing. Email Michael at mcovino@luxmac.com, phone him at (914) 703-6400 ext. 310, or you can visit his website at www.luxmac.com.

TheNicheReport.com

21

WHAT NEXT? The best is yet to come.

BY PHIL HAWKINS

A

m I the only guy who knew this wasn’t going to last forever? With 20 years experience in this industry, I’ve seen markets heat and cool with regularity. The only variable has been degree. So, just like the Talking Heads, I ask: “How did I get here?” and…what next?

First, let’s get one thing straight; there is no single bad guy. Or, more accurately, we’re all to blame. Up and down the food chain, we all contributed to this mess. This downturn in prices would have upset any market, regardless of the existence of neg-am adjustables, or greedy wholesalers, or the EE-VILE mortgage broker (punching bag of the press and general public). Home valuation declines hurt any market; when the value of the collateral declines, the value of the underlying financing declines with it.

I do not want to spend an inordinate amount of time chewing over the blame-game, but I do have to first set the record straight as it concerns the reputation of mortgage brokers which has suffered unfairly:

1.) The vast majority of mortgage brokers are honest, well-meaning, competent professionals. And we did only what we were being asked to do; sell what the wholesalers gave us to sell. They sent hordes of reps into the field to solicit loans that investors sold them, and home buyers obviously wanted. Remember the million-dollar road show that New Century paraded around the country? My God, what compelling inducement. Decision One placed not one, but 5, that’s 5 reps in Fresno, CA insuring that the company 22

January 2008

would be able to keep weekly contact with virtually all mortgage brokers in our market, and it all worked.

Com-Unity placed underwriters in larger broker offices to underwrite on-the-spot! They gave us product to sell, and we did so!

2.) The problem with mortgage brokers is that too many of them, while mostly well-meaning and honest, did not know what they were doing. The state of California, in it’s infinite wisdom, has created two avenues one can pursue to enter the business of selling home loans; one, is get a real estate license, find an employing broker, and go to work. Second (and this is where the problem lies), is fill out some forms, lie that you have a $50,000 net worth, and VOILA! You’re a mortgage broker! Then, you can hire more people who know nothing, and you’re a Mortgage Company. Get rid of the Consumer Finance Lenders License for SFH financing and you will solve most of the problems emanating from bad mortgage brokers. Licensing requirements in other states needs to tighten as well.

3.) Last, but not least, one of the biggest misconceptions of the unwashed masses is the issue of rebate to mortgage brokers. Someone tell me why a mortgage broker should be forced to sell his or her product at wholesale prices? Is there any other retail industry that does this? No. I am not going to defend rebates as something that helps the borrower reduce closing costs. Although it indirectly does, the main role of a rebate is to compensate the mortgage broker. There, I said it. The vast majority of the rebate money goes into the pocket of the broker, and that

is 100% fair! The average mortgage broker should be making about 2 to 3 points per file, depending on the complexity of the transaction. We charge the borrower one to one-and-a-half points, and get one to one-and-a-half points on the back from the wholesale lender. The borrower pays a RETAIL INTEREST RATE that is about ¼ to ½ percent higher than the WHOLESALE INTEREST RATE. Why is this bad? Where is the bad guy in this scenario? It’s been described as “Steering the customer to higher rates JUST to get the kickback.” Or (and this is an actual quote from a recent Forbes magazine article on CNNFN.COM) “…(Mortgage brokers) are being paid a bribe to stab the poor home owner with higher rates than he would otherwise be able to get”. Huh? So, we mark up our interest rates to retail, and we’re suddenly thieves? My mechanic marks up the parts he puts in my car, EVERYBODY marks up from wholesale… so, why is it a crime for the mortgage broker to do the same? We get an average of 2 to 3 points on a file, while the average real estate agent gets 5 to 6 points to fill out a listing agreement, put it on MLS and negotiate the sale. I realize real estate agents are pros too (cough, cough), but why is it NO ONE vilifies them for taking up to 6% of a home owners money, while the mortgage broker is the epitome of evil in the world? WHERE is the National Association of Mortgage Brokers in this debate?

Alas, I digress.

For those of you who think the wholesale/ mortgage broker business arrangement is dead, think again. There is too much money in it to die. Yes, many companies will go away, and just like the savings and loans of yesteryear, there will be fewer of them, and the landscape will change, but we are here to stay.

It’s too easy to set up a wholesale company; the cost efficiency is too good for the industry to go away.

There will be new regulations, and we will have to fight off the overreactions from lawmakers, but we are here to stay. And for an honest, experienced mortgage broker, the best is yet to come. You are going to see business return in a stampede that will make everyone smile again.

To Wit: FNMA (“A” paper) rates will go down to the 3.5 to 4% range in the next 2 years. Housing prices will settle to the bottom at about that time, and average wages will increase enough to somewhat

equalize the market and the pent-up demand will explode. For those of us left standing, it will be heady times again.

I know, you’re still shaking your head over my first statement; Rates are going down to 3.5 to 4%. I can prove it.

Recall your college Macro Economics class about economic cycles. (Stay with me on this... force yourself ) In a normal market, long-term debt securities yield higher than short-term securities.

This is called “The Yield Curve”. In a normal yield curve, everything is chugging along in equilibrium.

Supply is equal to demand, GDP grows at about 2 to 3% annually and things are going smoothly. In an overheated economy, the yield curve inverts as the overheating begins to cool, meaning more people are selling short-term securities than are selling longterm securities, and yields are higher on the short end than long end. Well, never mind, just go get a long-term chart of yield curves over the last 30 years, and you will see a trend; EVERY TIME AN INVERTED YIELD CURVE CORRECTS, RATES PLUMMET IN THE SUBSEQUENT TWO YEAR PERIOD. In simple terms, we go into a recession.

And it’s already started. See http://money.cnn. com/2007/11/21/markets/bondcenter/bonds/index. htm?postversion=2007112112 for confirmation.

Also, see http://www.smartmoney.com/onebond/ index.cfm?story=yieldcurve to go back to 1978 for a monthly look at yield curves, and then find the declining mortgage rate periods and the lights will come on. This morning, November 21, 2007, the 10-year note is yielding below 4%. Six months ago it was yielding over 5%. The yield curve went inverted in January of 2006 and did not correct until July of 2007. The trends of past years are repeating, predictable as the sun rising in the east.

The good times are 2 years away, granted, and this severe downturn will flush out the lazy, the incompetent and most of the dishonest. Those of us left standing will be smiling again. With less competition, it will be much easier to make a substantial honest living.

You heard it here first.

Phil Hawkins is employed with Downey Savings Bank and lives in Fresno California.

TheNicheReport.com

23

MORTGAGE INDUSTRY UNDER ATTACK: HR3915 A detailed synopsis.

BY HERBERT THOMAS

N

ew predatory lending legislation, HR Bill 3915 entitled “The Mortgage Reform and Anti-Predatory Lending Act of 2007”, threatens your future by punishing the mortgage industry and Wall Street for causing the subprime meltdown in 2007 and the large number of potential foreclosures in 2008.

Your future may depend upon your understanding of this threat and your actions to eliminate the portions of this Bill that threaten the future of the industry. I will explain to you what the threats are and their impact on the mortgage industry, if enacted.

HR3915 (“HR3915”), which amends the Truth in Lending Act, was passed on November 15, 2007 by the House of Representatives by a vote of 291-127. HR3915 must still pass the US Senate and then be signed by the President before it becomes law.

I. What are the Three (3) Major Attacks against the Mortgage Industry and Wall Street?: Attack Number 1: HR3915 creates liability and strict penalties on mortgage brokers for violations of a newly created duty of care standard to borrowers and establishes a national licensing system to identify mortgage originators and hold them accountable for violations of the law.

Attack Number 2: HR3915 eliminates or restricts yield spread premium compensation to mortgage brokers in certain situations.

Attack Number 3: HR3915 creates liability and strict penalties for mortgage bankers, investors and Wall Street securitizers for violations of newly created specific underwriting standards.

II. How will these Three (3) Major Attacks Impact Your Future in the mortgage industry?:

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January 2008

1. Impact of Attack Number 1: Duty of Care Standard and Liability of Brokers Will Result in Uncertainty and Increase Risk of Litigation.

Mortgage Brokers are being unfairly targeted and HR 3915 is not necessary. Most of the predatory lending circumstances have been corrected by market forces. The ability to make loans identified as “predatory lending” have disappeared and been replaced by FHA loans where safeguards are in place to prevent predatory lending abuses. The subprime meltdown in 2007 and the large number of potential foreclosures in 2008 was not the result of predatory lending practices but the result of the “prefect storm”.

A. Circumstances under which loans were originally made: • Borrowers made poor choices of loan programs to pay the least monthly rate, less cash upfront and enabled get the most house available.

• Rapidly increasing real estate prices.

• Historically low interest rates.

B. Change in circumstances that strained loans: • Declining real estate prices.

• Increasing interest rates.

• Increase in monthly payment due to interest rate adjustments.

• Restrictive underwriting criteria preventing refinancing creating strain which resulted in failed mortgages.

C. Corrective market forces are already curing the predatory lending abuses: • Over 200 mortgage companies have imploded, many of which were subprime companies.

• Secondary market has stopped buying loans that are deemed “predatory”.

• Warehouse lenders have pulled their lines of credit on

subprime lenders.

• Credit underwriting criteria has tightened to eliminate the Subprime market and severely restrict the Alt-A market.

• Mortgage pool ratings and values have dropped thus punishing the Securitizers/assignees on Wall Street for investing in such mortgages.

2. Impact of Attack Number 2: HR3915 will eliminate Yield Spread Premium in certain circumstances.

• It presents a threat to the future of the mortgage broker industry.

• It could force mortgage brokers to become mortgage bankers.

• Elimination of Yield spread premium on Nonqualified loans.

• Difficulty in determining a Qualified Mortgage from a Nonqualified Mortgage with the threat of liability if the determination is later challenged.

• Borrower can finance origination points and closing costs and the broker can receive compensation under certain circumstances.

• This change in doing business may or may not be as agreeable to the borrower who may elect to borrow through a retail mortgage banker instead since yield spread premium does not have to be disclosed.

3. Impact of Attack Number 3: HR3915 will halt the recovery of the mortgage industry by further reducing Liquidity in the Primary and Secondary Markets.

• Risk of litigation to secondary market and Wall Street securitizers and potential loss of investment will cause uncertainty and cut off the source of funding the secondary market and ability to make loans.

• The burden of creating the presumption of qualified mortgage or qualified safe harbor mortgage is difficult.

• This Bill will retard liquidity in the secondary market and thus reduce availability and affordability of credit to borrowers.

• Return of liquidity to the mortgage market is critical to recovery of the mortgage industry.

• Major efforts are being made now to increase liquidity and access to credit in order to allow refinancing and prevention of massive foreclosures, such as Hope Now [freezing Interest for 5 years on certain ARMs], FHASecure, and private efforts with major lenders and servicers to modify existing loans.

• Liquidity is critical to the mortgage industry but will be crippled again by the Bill.

III. A summary of the major provisions of HR3915 are: 1. Liability of mortgage originators for violations of a

newly created duty of care standard to borrowers. Each mortgage originator is prohibited from and liable for: • Reasonable Ability to Repay Standard. Steering any borrower to a residential mortgage loan that the borrower lacks a reasonable ability to repay, in the case of an initial loan, • Net Tangible Benefit Standard. Steering any borrower to a residential mortgage loan that does not provide the borrower with a net tangible benefit, in the case of a refinancing, or • Predatory Lending Characteristics Standard. Steering any borrower to a residential mortgage loan that has predatory characteristics or effects (such as equity stripping, excessive fees, or abusive terms) or • Qualified Vs. Nonqualified Mortgage Standard. Steering any borrower from a qualified mortgage to a nonqualified mortgage; or • Abusive or Unfair Lending Practices Standard. Conducting any abusive or unfair lending practices that promote disparities among borrowers of equal credit worthiness but of different race, ethnicity, gender, or age.

• Liability for Violating Any of the Above Standards. The maximum amount of any liability shall not exceed an amount equal to 3 times the total amount of direct and indirect compensation or gain accruing to the mortgage originator in connection with the residential mortgage loan involved in the violation, plus the costs to the borrower of the action, including a reasonable attorney's fee.

• Establishes a national licensing system to identify mortgage originators and hold them accountable for violations of the law.

A national mortgage originators licensing/registration system is already developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators and is a good system that 40 states have signed up to join. Using it to enforce arbitrary standards such as the “reasonable ability to repay” and “net tangible benefit” is an inappropriate use if this registry. It is structured to: [1] license mortgage originators of private mortgage companies with minimum loan originator standards required. [2] Register mortgage originators of federal banking agencies but no minimum standards are required. Loan originators of Federal banking agencies shall be registered as registered loan originators with the Nationwide Mortgage Licensing System and Registry and furnish employee's identity, fingerprints for submission to the Federal Bureau of Investigation, personal history and experience, receive a unique identifier. A nationwide mortgage licensing system and registry shall be established for the residential loan originators that provides a uniform license application and a comprehensive licensing and supervisory database, facilitates flow of information regulators, increases TheNicheReport.com

27

accountability and tracking of loan originators, simplifies licensing process, easier borrower accessibility to information on loan originators, unique identifier, fingerprints for a State and national criminal history background check, personal history and experience, personal credit report. The minimum standards for loan originator include: no loan originator or similar license revoked in past 5 years, no conviction, guilty plea or nolo contendere plea of a felony during past 7 years, completed a pre-licensing 20 hour education course, passed a written test with score of not less than 75 percent correct answers, annual continuing education course of 8 hours.

2. Elimination or restriction of Yield Spread Premium compensation to mortgage brokers.

• Elimination of Yield Spread Premium on Nonqualified Mortgages. No mortgage originator can receive from any lender any incentive compensation, including yield spread premium, that is based on, or varies with, the terms (other than the amount of principal) of any loan that is not a qualified mortgage • Retention of Yield Spread Premium on Qualified Mortgages.

The ability to pay yield spread premium on qualified mortgages does not seem to have been eliminated.

• Restricted Ability to Finance Points and Closing Costs on Nonqualified and Qualified Mortgages. A borrower may finance any origination fees or closing costs and the loan originator may receive fees or costs (including yield spread premium) if, any only if, full and clear disclosure to the borrower, does not vary based on the terms of the loan or the borrower's decision about whether to finance such fees or costs.

• Liability for Violation. The maximum amount of any liability shall not exceed an amount equal to 3 times the total amount of direct and indirect compensation or gain accruing to the mortgage originator in connection with the residential mortgage loan involved in the violation, plus the costs to the borrower of the action, including a reasonable attorney's fee.

3. Liability of mortgage bankers, secondary market and Wall Street securitizers for violations of a newly created minimum mortgage loan standards.

Mortgage Bankers shall be prohibited from and liable for: • Reasonable Ability to Repay Standard making a loan that the borrower does not have the ability to repay, 1. Upon a reasonable and good faith determination based on verified and 2. Documented information according to its terms, and all applicable taxes, insurance, and assessments.

3. Based upon the borrower's credit history, current income,

28

January 2008

expected income, current obligations, debt-to-income ratio, employment status, and other financial resources, fully-indexed amortization. or, • Net Tangible Benefit Standard on a refinanced loan, the borrower did not receive a net tangible benefit, 1. Upon a reasonable and good faith determination based on verified and documented information.

2. “Net tangible benefit” does not exist if the costs of the refinanced loan, including points, fees and other charges, exceed the amount of any newly advanced principal without any corresponding changes in the terms of the refinanced loan that are advantageous to the borrower.

• Presumption that Standard is Met: Qualified Mortgage or Qualified Safe Harbor Mortgage. If the loan is a “qualified mortgage” or a “qualified safe harbor mortgage”, then “ability to repay” and “net tangible benefit” are presumed is exist.

• Definition of Qualified Mortgage. A “qualified mortgage” means a mortgage with: 1. An APR no more than 3 percentage points of the yield on securities issued by Sec of Treasury with comparable maturity periods or 2. An APR not more than 175 basis points over the most recent conventional mortgage rate or it is a FHA or VA loan.

• Definition of Qualified safe Harbor Mortgage. A “qualified safe harbor mortgage” means 1. Income verified and documents, 2. Underwriting process based upon fully-indexed rates and 3. Takes into account taxes, insurance and assessments, 4. No negative amortization, 5. Payments fixed for at least 5 years, 6. APR of variable rate mortgage does not vary more than 3 percent above rate index, 7. Debts over income does not exceed a certain percentage [to be determined by regulation] and 8. Any other requirements later established by regulation.

• Liability of Mortgage Banker for Violation of Standards.

The liability to the mortgage banker for violation is a civil action against the mortgage banker for the rescission of the loan, and such additional costs.

• Ability of Mortgage Banker to Cure to Avoid Rescission. A mortgage banker shall not be liable for rescission if, no later than 90 days after the receipt of notification from the borrower, the mortgage banker provides a cure.

• Liability of Secondary Marker and Wall Street. The liability any assignee or securitizer for violation is a civil action against the assignee or securitizer for rescission of the loan and such additional costs as the obligor may have incurred as a result of the

violation, including a reasonable attorney's fee.

• Ability of Secondary Market and Wall Street to Cure to Avoid Rescission. No assignee or securitizer shall be liable if 1. No later than 90 days after the receipt of notification from the borrower that the loan violates, 2. The assignee or securitizer provides a cure so that the loan satisfies the requirements or 3. The assignee or securitizer establishes a policy against buying residential mortgage loans other than qualified mortgages or qualified safe harbor mortgages, the policy is intended to verify seller or assignor compliance, exercises reasonable due diligence to adhere to such policy in purchasing residential mortgage loans, representations and warranties that the seller or assignor is not selling or assigning any residential mortgage loan which is not a qualified mortgage or a qualified safe harbor mortgage.

IV. Conclusion The 3 Major Attacks of HR Bill 3915 threaten the future of mortgage brokers, mortgage bankers, secondary market assignees

and Wall Street securitizers by subjecting them to liability for violating difficult and burdensome “reasonable ability to repay” and “net tangible benefit” standards and eliminating certain types of Yield Spread Premium. This unnecessary legislation will cause the liquidity in the mortgage industry to shrink and the recovery to halt. The US Senate needs to remove the 3 Major Attacks from HR3915, and if it does not, then the President needs to veto this bill.

Herb Thomas is President of Thomas Law Firm, P.C., Dallas, Texas, a company providing automated online mortgage licensing technology and services for mortgage brokers and lenders in all 50 states. For more information see http://www. thomas-law.com Mr. Thomas is a Juris Doctor and member of the State Bar of Texas. He has over 17 years of state and federal mortgage licensing experience as well as 35 years of tax, corporate and real estate law experience. He may be reached by telephone at 214-692-7611 and by email at hthomas@ thomaslaw.com. Thomas Law Firm, P.C. is the premier mortgage licensing firm on state mortgage licensing.

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COMPANY SPOTLIGHT

SPOTLIGHT ON SEARCHMYLOAN.COM Tom Sato answers our questions.

BY THE NICHE REPORT

W

elcome to The Niche Report’s very first “Company Spotlight”. Company Spotlights will be monthly interview-style articles that allow our readers to gain knowledge and insight into a company that helps us, as mortgage originators, do our job.

This month we are proud to spotlight SearchMyLoan.com, a company that created and hosts an extensive search engine used by loan officers looking to place their loans with a wide variety of wholesale lenders. I met Tom Sato from SearchMyLoan.com at the NAMB West Conference in Las Vegas this past November and I was immediately captivated by his demonstration and expertise of their product. Being an originator, I tried to grill Tom about crazy scenarios all the while peppering him with question after question. I was so impressed by his answers I invited him and SearchMyLoan.com to be our very first Company Spotlight.

So without further adieu…

Give us a description of service(s) that Searchmyloan.com offers.

SearchMyLoan.com is a loan search and pricing engine that solves one of the fundamental problems a loan officer faces today…Which lender will fund my loan?

Finding an appropriate loan in today’s market is like looking for a needle in a haystack. Hundreds of lenders have exited the market. There are literally thousands of loan programs loan officers have at their disposal but keeping track of them is a nightmare. Originators are constantly being bombarded with fragmented information and have to rely on their memory, read detailed guidelines, look through multiple lender Web sites one at a time, or wait for account executives to return their calls. On average, an originator can spend two to five

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January 2008

hours researching a single loan! Building efficiencies into a loan officer’s daily regimen was a critical mission of the SearchMyLoan.com team.

The SearchMyLoan.com solution gives originators access to lender guidelines on both the wholesale (broker) and correspondent (banker) channels. All guidelines are updated on a daily basis. A user can search detailed and complex loan scenarios such as foreign national programs (visa types), special occupation incentive programs (teacher, police officer, etc.), pre payment penalties, seasoning requirements, etc and get exact product matches. In addition to fast product matching, the SearchMyLoan.com service gives the originator the ability to run or re-issue credit using their existing credit reporting agency (CRA).

Currently, the SearchMyLoan.com system interfaces with more than 168 CRAs. The customer’s credit can be imported into the search for simultaneous “credit grading” while executing a search. “We go way beyond just a FICO score. The system actually reads the trade lines and derogatory credit and decisions the loan based upon the content of the credit; similar to DU or LP. The loan officer can also quickly print or email fully merged pre-approval letters, access the most up to date daily rates, view a PDF of the actual lender guideline, and get easy links to the lender’s Web site. It’s like having your own personal underwriter & processor 24/7,” says Salvatore Tomaselli, founder and CEO of SearchMyLoan.

Tell us about the origin and background of Searchmyloan.com. Give us a historical perspective on the founder, executives and employees at Searchmyloan.com.

SearchMyLoan.com was founded by the company’s CEO, Salvatore Tomaselli, in March of 2005. Tomaselli, a

COMPANY SPOTLIGHT

New York native, has more than 22 years experience in the mortgage brokerage industry. “The problem of locating the “best-fit” for a customer is a dilemma that has gotten even more difficult since loan products have become increasingly more complex. The mortgage industry needs an information repository, similar to Reuters or Bloomberg, which maintains the most up-to-date data about loan products in one centralized system.” Currently the SearchMyLoan.com team has grown to a staff of more than 40 people in the last year, comprising of our development team, quality assurance (QA) team, our Knowledge Processing Unit (KPU) data analysts and our sales team. “I was able to assemble a group of knowledgeable dedicated professionals committed to innovating and solving the problems loan officers face daily,” said Mr. Tomaselli.

Tell us about the company culture.

The company culture at SearchMyLoan.com is evolving as we grow. We are still clearly a “start up” organization, a “child”. The culture of the company represents its personality and ours is developing much like the way a “child” matures. We jokingly call ourselves the “Google” of the mortgage industry. Our clients are depending upon us to deliver accurate results every time they execute a search, and we must meet and exceed their expectations. Walking into our data analyst’s area is a rewarding sight. Little “logo” flags, with each lender they are responsible for are posted on each team members desk. “When I saw that, I knew our company culture was beginning to emerge. For me, that was a great milestone. At the inception of a company, let’s face it, there really isn’t a culture but as the company matures so does its culture.” Currently we are dedicated to growing SearchMyLoan.com and making it a world- class organization.

Who are your main competitors? And what are your plans to gain market share or retain market share?

Up until the release of SearchMyLoan.com, no comprehensive solution has been developed in the area of loan search technology. Currently there is no defined market leader in the loan search space. SearchMyLoan.com is very different from our competitors because of the approach we have taken in delivering fast and accurate results to users.

Our biggest differentiating factors are that we have mapped more than 150 attributes and we can search across that data very efficiently. The typical search time is less than 5 seconds!

In addition, we have the ability to “parse” or grade the borrower’s credit history. Both of those factors are important because it enables the system to yield the most accurate results.

Market share and customer loyalty are very important to us. In 2008 we are focusing on channel marketing and partnerships that will drive unbelievable value to our subscribers. Customer loyalty and retention is very important in subscription-based models, and we understand that we have to continually raise the bar and deliver outstanding results.

How will Searchmyloan.com stay ahead of both the rapidly changing technology and mortgage environments that are inherent to your business model?

Fortunately, staying on top of technology has not been a major obstacle. The SearchMyLoan.com system is built upon a very robust and flexible platform that allows us to adapt to different guideline types (i.e. A-paper, Alt-A, Sub-prime, FHA, etc.). This architecture allows our developers to adapt to changing guideline types with ease.

One of the biggest challenges in the loan search arena is obtaining and maintaining accurate guideline information.

Our lender liaisons are continually forging relationships with new lenders to increase our “data arsenal.” Relationships are very important to us, but coupled with that is process automation to insure that our data, program accuracy and entry time is as efficient as possible. We have built some exciting processes to maintain the data fidelity and streamline the information flow. We know our success is about having the most comprehensive database…It’s an arms race and we are ready for war!

What can we expect to see from Searchmyloan.com in the near future?

In the near future the SearchMyLoan.com team is focusing on quadrupling our lender database, streamlining integrations with CRAs, LOS systems, and partnering with third-party vendors to drive exceptional value to our subscribers. Our goal is to be the best search engine available on the market and to earn the business of the loan originator in the field.

Where do you see Searchmyloan.com 5 – 10 years from now?

That’s easy…the market leader in mortgage search technology for all types of mortgages!

TheNicheReport.com

33

N?8KĂ&#x2039;J PFLI E@:?<6 Advertise it monthly in The Niche Report.

Send us a request for subscription to info@nichereportonline.com.

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TIP OF THE MONTH

TIP OF THE MONTH Shout out and be heard.

BY STEWART MEDNICK

I

f you are a regular subscriber to The Niche Report, you have probably read my column before and I thank you for reading.

For the new readership, I welcome you and would like to introduce you to my column. I have focused the column content mostly on marketing tips, productivity tips, and relationship building tips. You, my audience, have responded with great enthusiasm and I have received emails and phone calls from many. As a result, I brainstormed with the publisher and was given a big “thumbs-up” to try something new.

Starting right now, I want all of you to email or call me and tell me what is on your mind. Here are some suggestions of what to ‘shout-out’ about: Comments about my previous columns Customer interaction Effective marketing techniques Growing a segment of your business How to control a conversation with a client closing the deal • Handling rejection • Sharing successful techniques you have used

development. My credentials, in a nutshell, are as follows; I hold an MBA in finance and a BA in organizational management and communication. I have nine years experience in the US Navy in various leadership positions and having earned many commendations and awards. I have been a business banker, a commercial and retail sales representative, a call center mortgage originator, a strategic manager, an entrepreneur, and mortgage banker, processor and closer. I have taught sales, marketing and finance on a college level and have coached professionals one-on-one and have trained mortgage company staffs. I have published articles in a few mortgage publications.

The only reason I gave this list of credentials is to qualify myself as someone that may know something about what I write. I am sure there are more experienced or equally experienced professionals who read this column. I want to hear from you! I want to hear from the not-so experienced as well. I want to field questions and post advice from a successful mortgage originator. I want to find common issues to address and to post to see what you think.

I hope I am inundated with responses. In times of market challenges, why reinvent the wheel to figure out what works to keep the pipeline full.

Let’s share.

Next month, I will post an email or reiterate a phone conversation with a response. By using this column as a ‘brain-trust’ we can all learn.

I am not a licensed psychologist, and as such, can not give certain types of advice. I am knowledgeable and experienced in sales, marketing and relationship

Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, customer satisfaction, marketing and sales techniques. Mednick is also a business coach and consults on these topics. Send emails to Stewart Mednick at smednick1@netzero.net or call 651-895-5122.

• • • • •

36

January 2008

Money Tree is a national commercial broker. Due to our extensive marketing and advertising we are receiving residential borrowers in need of a loan. We are looking for residential mortgage brokers to “network” with to refer out our residential business.

*** 25 FREE Borrowers! *** • Borrower inquiries that have been quality tested • Real-time lead distribution • Your own Account Manager who will monitor your campaign • No long term commitments • Excellent Return Policy • *** Mention this add to receive this offer ***

(818) 449-9600: Ask for Sarkis Hart

NICHE REPORTS

NONPRIME EquiFirst Corporation 800.232.3477

EquiFirst Corporation 800.232.3477

Gateway Mortgage Group 817.545.6153 A.E. is Jerry Lair

Gateway Mortgage Group

Up to 95% LTV with a 660 Score, Full Doc Purchase. Up to 90% LTV with a 580 Score, Full Doc Refinance Loan amounts up to $750,000 Full Doc Core Product. Loan amounts up to $1.5 million Full Doc Jumbo Product 90% to 580 Cr-90CLTV to 530(seller 2nd)-Cr 80% to 500 Cr6x60 okay-90% Rural-2 Trades at 12 mo.

817.545.6153 A.E. is Jerry Lair

More information @ www.nonprimewholesale.com-Get ID/PW to GPS Pricing / email JLair@Gatewayloan.com-Broker Packet on Rates Page www.nonprimewholesale.com

Griffin Capital Funding

Full Doc and Stated income commercial loans. 3% YSP +2 points paid to brokers

800.710.6762

Guaranteed Rate 877.377.4067 Ask for Tim Dooley

95% to 620 Mid Full Doc w/unlimited 60 day MTG latesOK . Co/borrwer w/scores below 500 OK No reserves, No seasoning refi's. 1 day off MLS OK/ 55 DTI. Loan amounts 750K. Higher on exception, case by case

Guaranteed Rate

G-Rate will pay 3 YSP on 95% loan, and will pay YSP in no PrePay States

877.377.4067 Ask for Tim Dooley

Heartland Wholesale Funding 877.HWF.1887

Heartland Wholesale Funding 877.HWF.1887

The Helvetica Group 888.866.3426

100% LTV cash-out or purchase. 620 min. credit score. Credit delinquencies allowed 95% LTV cash-out or purchase. 590 min. credit score. Credit delinquencies allowed No FICO® underwriting, foreclosure bailouts, BK buyouts, no seasoning, unlimited cashout, unlimited mortgage lates; Up to 65% LTV. Stated income, flex DTI, interest only programs available. Super Jumbo loans to $7M+. CA, AZ, CO, NV, OR, WA

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

39

NICHE REPORTS

PRIME Gateway Mortgage Group 817.545.6153 A.E. is Jerry Lair

“Best in Business” Technology giving you 24/7 access to the industry leading rates and service you should expect from an Inc. 500 organization

Gateway Mortgage Group

To EAIIs-VA-Manual FHA Available to 550 Credit-Broker Packet on Rates Page www.nonprimewholesale.com

817.545.6153 A.E. is Jerry Lair

Guaranteed Rate 703.989.2276 Ask for John Lovell

Guaranteed Rate 703.989.2276 Ask for John Lovell

Indymac Bank 866.690.2240

Indymac Bank

Jumbo - Super Jumbo, Full Doc, SIVA, DTI up to 50% Industry leading rates, Work Visa’s accepted Levels I, II, and III, Flex 97 and 100, NO MI (Lender Paid), Program up to 100%, No hit on SISA w/720+, My Community Rates consistently ranked in top 3 Agency Conforming and Fannie Mae programs available, including MyCommunityMortgage™, Flexible 97™, Flexible 100®

866.690.2240

Reverse Mortgage products available for FHA- and Non-FHAapproved customers. Flexible lending limits for higher value homes

Irwin Home Equity

Combo programs; 100% First with 125% Second for complete financing with no PMI, Full Doc, Cash Back up to $100K

888.524.7946

World Alliance Financial

Reverse Mortgage opportunity for non-FHA licensed brokers

877.692.7762 ext. 404

ADVERTISE YOUR PRIME NICHE HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

40

January 2008

NICHE REPORTS

ALT–A Gateway Mortgage Group 817.545.6153 A.E. is Jerry Lair

Gateway Mortgage Group

NOO to 90% @ 625 Cr-SISA to 90% @ 625 Cr-80% NOO to 620 Cr/4 units-No Seasoning of Funds <$15,ooo

817.545.6153 A.E. is Jerry Lair

More info @ www.nonprimewholesale.com-ID/PW to GPS Pricing / emial JLair@Gatewayloan.com-Broker Packet on Rates Page www.nonprimewholesale.com

Griffin Capital Funding

Full Doc and Stated income commercial loans. 3% YSP +2 points paid to brokers

800.710.6762

Guaranteed Rate 703.989.2276 Ask for John Lovell

Guaranteed Rate 703.989.2276 Ask for John Lovell

Indymac Bank 866.690.2242

Indymac Bank 866.690.2242

90% NOO Full Doc, 90% NOO SIVA , Non-Warrantable Condo’s Allowed Jumbo – Super Jumbo, Full Doc, SIVA, DTI up to 50% Industry leading rates, Work Visa’s accepted 3/1, 5/1, 7/1, and 10/1 LIBOR ARMs; 15- and 30-year Fixed; 10year I/O period available for ARMs and 30-year. Temporary buydowns and long-term locks also available.

Full Doc up to 97% LTV with a minimum 660 Decision Credit Score (DCS); Stated Income up to 90% LTV with a minimum 660 DCS; DTI as high as 55%

ADVERTISE YOUR ALT–A NICHE HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

41

NICHE REPORTS

COMMERCIAL AcuPen Financial

High LTVs, and low debt coverage ratio requirements

305.666.1879

Equitable Commercial Lender, Inc 213.249.9113 or 626.296.0120

Nationwide Wholesale Commercial Lender. Stated Income, Full Doc & SBA programs available. Loan amounts from $100k - 5 Million. Easy Broker Approval Process

Fairview Commercial Lending

No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours

866.634.1270

Griffin Capital Funding 800.710.6762

The Helvetica Group 888.866.3426

Indymac Bank 866.908.3279

Indymac Bank 866.908.3279

Ocean Capital 877.337.3757

Manaseh, Epharim & Associates

YSP Commercial Loans, Full doc and Stated income. Earn up to 3% YSP + 2 points.

Commercial Private Equity Lending: No FICO® underwriting, foreclosure bailouts, BK buyouts. Multi-family and Commercial loans from $300K to $10.0M+ Up to 60% LTV. Fast flexible underwriting and creative solutions. Nationwide, metro areas Up to $5 million; purchase and refinance (including cash out); 5, 7, and 10 year Hybrid ARMs (30 year fully amortized with Interest Only option); 7, 10, 15, and 30 year Fixed (30 year fully amortized with Interest Only option on 10 and 30 for up to two years) Loans for: Multifamily / Apartment Complexes (5+ units); Mixed Use (if Commercial is less than 35%); Mobile Home Parks We're the real deal for subprime owner-occupied commercial mortgages to $2M. Credit scores to 500. Up to 90% financing.

Low debt-service coverage. Stated & investment programs.

Difficult-to-finance industries welcome Fast, flexible funding for all your commercial financing needs

678.387.3230

Metro Funding Corp 866.302.6360

Fast closing, no points upfront, all commercial properties including land, acquisitions, refis, and development loans

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

42

January 2008

NICHE REPORTS

HARD MONEY Anglo–American Financial

DIP (Debtor in Possession) Financing Available

434.981.1017

Anglo–American Financial 512.657.9310

BlueWater Funding, LLC 301.656.6566 or toll free 866.551.BLUE

BlueWater Funding, LLC 301.656.6566 or toll free 866.551.BLUE

Commercial Lending LLC 800.979.4470

Fairview Commercial Lending 866.634.1270

First Mount Vernon 866.908.FMV1 (3681)

First Mount Vernon 866.908.FMV1 (3681)

The Helvetica Group 888.866.3426

The Helvetica Group 888.866.3426

Manaseh, Epharim & Associates 678.387.3230

Meecorp Capital Markets 201.944.9330

Metro Funding Corp 866.302.6360

Asset-based lending on real estate, consumer receivables and other readily marketable assets Direct Lender, 65% Loan-To-Value, No prepayment penalty, Lending throughout the Mid Atlantic Region Apply online www.bluewaterfundingllc.com, Immediate response, Brokers Protected and Respected Direct Lender of Non O/O, Equity-Based, No Prepayment, No minimum credit score, Rehab, Fix & Flip, Construction, Land, Up to 70% LTV, No Payment Programs, Online Broker Portal No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours No seasoning requirements, No upfront commitment or processing fees, Minimum credit score 400 Minimal documentation required, Combined Loan-to-Values to 105% No FICO® underwriting, foreclosure bailouts, BK buyouts, no seasoning, unlimited cashout, unlimited mortgage lates; Up to 65% LTV. Stated income, flex DTI, interest only programs available. Super Jumbo loans to $7M+. CA, AZ, CO, NV, OR, WA Commercial Private Equity Lending: No FICO® underwriting, foreclosure bailouts, BK buyouts. Multi-family and Commercial loans from $300K to $10.0M+ Up to 60% LTV. Fast flexible underwriting and creative solutions. Nationwide, metro areas Private hard money financing for commercial real estate investments It specializes in non-conforming transactions ranging from $2 million to $100 million and above.

Please visit http://www.meecorp.com Fast closing, no points upfront, all commercial properties including land, acquisitions, refis, and development loans

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

43

NICHE REPORTS

CONSTRUCTION Bismark Mortgage 503.741.7334

Commercial Lending, LLC 800.755.7310 ext. 201

Indymac Bank

Residential construction loans for custom, owner-builder, spec and construction completion projects. All programs Stated Income/Stated Asset. Nationwide lender.

Equity Based, No Prepayment, No Minumum Credit Score, 6 month and 12 month programs, No pay and interest only pay programs, Up to 70% LTV, Online Broker Portal

866.913.3863

Construction-to-Permanent (CTP) Loans up to $5,000,000, Owner-builder program; 24/7 Online Draw Requests; Full Doc and Stated Income; dedicated construction support

Manaseh, Epharim & Associates

Private lender specializing in commercial real estate loans nationwide and internationally

678.387.3230

Meecorp Capital Markets 201.944.9330

Presidential Bank

Commercial lender providing fast, creative funding solutions nationwide. Bridge loans, mezzanine debt, construction financing (including land development) and occasional equity participation

866.725.5825 ext. 2103

100% New Construction, Renovation, and Lot Loans in VA, MD, DE, PA, WV and NC. Self builds, Modulars, Cross Collateralization, flexible draw schedules and an experienced, creative staff

Strongtower Financial Inc.

New construction and renovation loans for churches, nonprofits, schools and assisted living centers.

800.333.9893 ext. 111

ADVERTISE YOUR CONSTRUCTION NICHE HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lenderâ&#x20AC;&#x2122;s information on products, program, procedures, representations, and warranties for details.

44

January 2008

LENDER & RESOURCE DIRECTORY

AcuPen FINANCIAL, LLC The Premier One-Stop Commerical Mortgage HUB www.acupenfinancial.com A la mode, inc. www.alamode.com Anglo-American Financial www.anglofinancial.com 675 Berkmar Court Charlottesville, VA 22901 Gardy Bloemers: 434.981.1017 [e] gardybloemers@anglofinancial.com Tom Finnegan: 512.657.9310 [e] tomfinnegan@gmail.com AppraiserLoft www.appraiserloft.com [phone] 877.229.7799 [fax] 877.797.0280

ASCENT HOME LOANS, INC. www.ascenthomeloans.com 6465 S. Greenwood Plaza Blvd.

Englewood, CO 80111 [phone] 866.467.3157 ext. 2605 BISMARK MORTGAGE www.bismarkmortgage.com 10500 NE 8th St. Suite 700 Bellevue, WA 98004 Contact: Ron Maes [phone] 503.741.7334 [fax] 425.283.5005 [e] ron@bismarkmortgage.com

BlueWater Funding, LLC www.bluewaterfundingllc.com 4925 St. Elmo Avenue Bethesda, Maryland 20814 [phone] 301.656.6566 [fax] 240.766.0609 [e] info@bluewaterfundingllc.com

THEBOARDNETWORK.COM www.mortgageboard.com www.titleboard.com www.bankingboard.com www.creditunionboard.com www.escrowboard.com 101 Continental Blvd.

16 Floor, Suite 1657 [phone] 866.452.8800 [fax] 866.452.8799 Contact: Julie Messina or Jodie Messina [e] info@theboardnetwork.com

COMMERCIAL LENDING, LLC www.commericallendingllc.com 7603 Maple Branch Road Clifton, VA 20124 [phone] 800.755.7310 ext. 201 [fax] 703.852.7933 Contact: Will Lansing [e] wlansing@commerciallendingll.com

credit plus inc. www.creditplus.com 31550 Winterplace Pkwy Salisbury, MD 21804 [phone] 800.258.3488 [fax] 800.258.3287 [e] beyondbundled@creditplus.com

direct marketing associates www.dmaleads.com 5215 NW 33rd Avenue Ft. Lauderdale, FL 33309 [phone] 561.807.6909 [fax] 877.984.9401 Contact: Jim Gilbert [e] jgilbert@dmaleads.com

equifirst corporation www.equifirst.com

500 Forest Point Circle Charlotte, NC 28273 [phone] 800.232.3477 [e] results@equifirst.com

EQUITABLE COMMERCIAL LENDER, INC 3250 Wilshire Blvd Suite 1001 Los Angeles, CA 90010 [phone] 213.249.9113 [fax] 213.249.9116

Fairview Commercial Lending www.fairviewlending.com 1932 North Druid Hills Road Suite 250 Atlanta, GA 30319 [phone] 866.634.1270 [fax] 404.634.0319

first fINANCIAL mortgage service, LLC www.ffmloans.com [phone] 703.989.2293 [fax] 703.991.2362 [e] kristen@ffmloans.com First Mount Vernon I.L.A. www.FMV1.com 6019 Tower Court Alexandria, VA 22304 [phone] 703.823.6800 [fax] 703.997.2499

GATEWAY MORTGAGE GROUP www.nonprimewholesale.com 3820 Laurel Lane Bedford, Texas 76021 [e] weirdloans@nonprimewholesale.com AE: Jerry Lair [phone] 817.545.6153 [fax] 918.392.8364

continued on next page TheNicheReport.com

45

LENDER & RESOURCE DIRECTORY CONT.

griffin capital funding www.ysploans.com 1135 Heatherstone Dr. Suite 102 Fredericksburg, VA 22407 Contact: Mike Brewer [e] mbrewer@gcfunding.com [phone] 540.548.1001 ext. 105 [fax] 540.548.1117 Guaranteed Rate, Inc. www.griwholesale.com 3940 N. Ravenswood Chicago, IL 60613 Contact: Tim Dooley [e] tim@teamdooley.com [phone] 877.377.4067 [fax] 877.377.4970

Heartland wholesale funding www.heartlandwholesale.com 1150 Hanley Industrial Court St. Louis, MO 63144 Contact: Michael Brenning [e] mbrenning@heartlandwholesale.com [phone] 800.860.0878 [fax] 314.963.2316 the helvetica group www.helveticagroup.com 11620 Wilshire Blvd., Suite 890 Los Angeles, CA 90025 Contact: Johnny Camarena [e] loans@helveticagroup.com [phone] 888.866.3426 [fax] 866.844.3295 IndyMac Bank www.indymacb2b.com 3465 East Foothill Boulevard Pasadena, CA 91107 [phone] 866.419.4639

irwin home equity www.ihepartners.com 12677 Alcosta Blvd., Suite 500 [e] wholesalelending@ihe.com [phone] 888.524.7946 manaseh, epharim & associates www.meandassociates.com 5932 Hugh Howell Rd. Suite 109 Stone Mountain, GA 30087 Contact: R.D. Walker [e] info@meandassociates.com 46

January 2008

[phone] 678.387.3230 [fax] 678.302.6444

plumbline Studios, Inc. www.plumbline.com 1754 2nd Street, Suite C Napa, CA 94559 [phone] 888.282.1248

meecorp capital markets www.meecorp.com 2115 Linwood Avenue, Suite 301 Fort Lee, NJ 07024 Contact: Daniel Edrei [e] principal@meecorp.com [phone] 201.944.9330 [fax] 201.944.9332

Presidential bank www.prezbank.com 8840 Stanford Blvd, Suite 1900 Columbia, MD 21045 [phone] 866.725.5825 ext. 2103 [fax] 443.285.0089 [e] jason@presidential.com

metro funding corp www.metrofundingcorp.com One Kalisa Way, Suite 310 Paramus, NJ 07652 Contact: Jennifer Smith [e] jennifer@metrofundingcorp.com [phone] 866.302.6360 [fax] 201.262.6910 money tree [phone] 818.449.960 Contact: Sarkis hart

Searchmyloan.com "It's All About The Search!" www.searchmyloan.com 921 Port Washington Blvd. Suite 2 Port Washington, NY 11050 Contact: Jay Black [phone] 516.767.9292 ext. 304 [fax] 516.767.9218 [e] jay@searchmyloan.com TROIKA MARKETING www.mynfcredit.com [phone] 404.949.9598 [fax] 404.949.9450

ocean capital www.oceancapitalonline.com 2 Altieri Way Warwick, RI 02886 [e] information@oceancapitalonline.com [phone] 877.337.3757 [fax] 401.739.9711

world alliance financial www.worldalliancefinancial.com 3 Huntington Quadrangle, Suite 303N Melville, NY 11747

HIRING LOAN OFFICERS Has your company closed their doors?

Are you an experienced Loan Officer with a built-up referral network?

Do you check the ten year bond every hour to see if you can make a .125 more in spread?

Do you have to charge a minimum or give a minimum portion of the gross commission up front before you get your split?

If you answered YES to any of these questions, then NOW is the time to find a home worthy of your efforts. We pay the best and expect the best. There is no complex split to make you lose sight of what belongs to you – your commission.

• • • •

Hiring experienced loan officers The best loan processors in the industry Solid lender relationships to get your loans closed Licensed in VA and MD

Call 703.963.8377 or fax resume to 703.991.2362

BROKER EARNS

BROKER EARNS

$164,000

$29,900

FUNDED IN 10 DAYS

FUNDED IN 3 DAYS

Probate Purchase of partially

Foreclosure Bailout & debt

developed Residential Resort

consilidation

Residential Resort

Residential

BROKER EARNS

BROKER EARNS

$17,000

$14,000

FUNDED IN 2 DAYS

FUNDED IN 3 DAYS

Refinance with

Purchase to 100%CLTV 100%CLTV

cross-collateralization

with seller carry-back

Residential 10+ units

Restaurant

BROKER EARNS

BROKER EARNS

$18,525 FUNDED IN 3 DAYS

$59,000 FUNDED IN 10 DAYS

Foreclosure Bailout &

Interfamily transfer with

cash-out refi

$1.0M cashout

Residential

Jumbo Residential

DIRECT PRIVATE MONEY LENDER

LOAN GUIDELINES & HIGHLIGHTS

Residential, Multi-family, Office, Strip, Retail,

Loans Up to 65% LTV

Mixed Use, RV Parks, Lt. Industrial, Storage, Warehouse, & Other Property Types

NON-CONFORMING LOANS No FICO, No Seasoning, Unlimited Cash-out,

Residential Geography: AZ, CA, CO, NV, OR, WA Commercial Geography: Metro areas nationwide Loan Size: up to $10,000,000+

Bankruptcy Buyouts, Foreclosure Bailouts, Subprime Fallouts, Stated & Interest Only Programs

Fast, Flexible & Creative Funding Solutions

T he H elvetica G roup I N V E S T M E N T

&

L O A N

Hard Money Wholesale Lender PHONE 310-575-3301 FAX 866-THG-FAXI (866-844-3295) MAIL 11620 Wilshire Blvd., Suite 890 LosAngeles, CA 90025 EMAIL loans@helveticagroup.com WEB www.helveticagroup.com

"TheNicheReport is nationally distributed to over 15,000 real estate finance professionals."

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