Since Sally wants all cash, Sally contacts Mort Broker. Mort has a note buyer ready to buy the mortgage at the time of closing or anytime after that. Mort offers to purchase the mortgage deed and note for $70,000 that includes a $3,700 commission to Mort. The actual price paid for the mortgage would be adjusted to reflect the remaining payments. Sally accepts the offer since she would rather have the cash. Therefore, Sally has received the following in cash: Downpayment: ........................$20,000 Cash From Sale of Mortgage: ....70,000 Amount Realized: ..................$90,000
Other cash flows Other cash flows work similar to mortgage purchase plans. Basically, investors purchase cash flows on structured settlements getting a discount. Other cash flow activity will increase as a way of cash out, since refinancing a mortgage seems more expensive. In this market niche, almost any cash flow could be purchased, including: O O O O O O O O O O O O
Structured settlements; Annuities; Office leases; Equipment leases; Workers’ compensation settlement claims; Lottery winnings; NFL pension annuities; Death benefits; Personal injury awards; Medical malpractice awards; Product liability awards; Motor vehicle collision awards;
OCTOBER 2009 O
MISSISSIPPI MORTGAGE PROFESSIONAL MAGAZINE
O www.NationalMortgageProfessional.com
Real estate property sold using MPPs generally sell closer to the listing price. Listings are sold quicker since affordable financing is available. Many closing costs and time delays are eliminated. Some costs include surveys, termite inspections and such, as required by traditional lenders. With the increase in interest rates, more seller-held mortgages will be produced because borrowers will
demand and get a lower interest rate from the seller and less people will qualify for mortgages with higher interest rates.
36
O O O O O O O O O O O O O
Contest awards; Trusts; Inheritances; Credit card receivables; Business receivables; Delinquent mortgages; Law firm settlements; Judgments; Mortgage deeds and notes on real property; Land mortgages; Time share mortgages; Business notes with or without real property; and Mobile home notes with or without the land.
FHA programs There are FHA programs that you should be able to provide your clients. You should explore becoming FHA approved. The NAMB provides education programs for you to learn FHA.
USDA programs The folks who grade your meat make loans. One program is Rural Housing Section 502 Direct Loans are loans that are directly funded by the government. These loans are available for low- and very low-income households to obtain homeownership. Applicants may obtain 100 percent financing to purchase an existing dwelling, purchase a site and construct a dwelling or purchase newly constructed dwellings located in rural areas. You definition of rural may not be Department of Agriculture definition of rural.
Downpayment assistance/SHIP
1. Go to www.ruralhomeloan.com 2. Pick a low fixed rate for your borrower 3. Enjoy an easy closing, and then relax!
“Innovative Rural Financing since 1993” Lending in TX, NM, and OK
Florida administers the State Housing Initiatives Partnership program (SHIP), which provides funds to local governments for homeownership and multifamily housing. The program was designed to serve very low-, low- and moderate-income families. Generally, mortgage payments do not exceed 30 percent of the area median income limits, unless authorized by the mortgage lender. SHIP dollars may be used to fund emergency repairs, new construction, rehabilitation, down payment and closing cost assistance, impact fees, construction and gap financing, mortgage buy-downs, acquisition of property for affordable housing, matching dollars for federal housing grants and programs and homeownership counseling. Various state, county, city and other organizations offer downpayment assistance.
Right sizing It is important to be the right size; so
you won’t capsize. It is important to write a formal complete business plan. You will never get to where you are going if don’t know where that is. Review all of your expenses for two cycles, i.e. two months. Review all checks, credit card payment and automatic debits. Reduce or eliminate what you can. If you are primarily a service business, review you financial statement monthly. If you are primarily asset-based business, review your financial weekly.
Allied industries O Real estate-owned (REO): REO has become a growth industry. Work with realtors who specialize in REO and help them structure transactions that close. Work with companies that auction off properties. O Foreclosures: Work with attorneys, realtors and other professionals to structure beneficial loan modifications and short sales. O Banking: As the mortgage brokering industry downsizes, there are still opportunities in banking.
Leaving the business There is no shame in leaving the industry. Now may be the time to go back to college. Now may be the time to become a diplomat and see the world. Now may be the time to retire. Investigate the opportunities. Go to job fairs, visit Workforce One and go online.
When is it going to end? There are small signs of optimism everyday. The end will come when there is confidence in financing property, when property values stabilize and stop continuing to fall and consumer confidence returns.
In conclusion None of these ideas should surprise you. Hopefully, you do some of them now. To compete in this market you need to be lean, flexible, creative and tight-fisted. You need to formulate and formalize a formal written business plan now, so you will know what to do. With formal preparation you can turn opportunities into victory after victory. Gary Opper is president of Weston, Fla.based Approved Financial Corporation. Gary has been a mortgage lender and note buyer since 1984, in addition to mortgage consulting. He has a CPA and a CFP license. Opper is past president of the Florida Association of Mortgage Brokers Miami Chapter and the Florida Institute of CPAs Gold Coast Chapter. He may be reached by phone at (954) 384-4557 or e-mail opper@approvedfinancial.com.