November 2023
THE OFFICIAL MAGAZINE OF GERACI
INSIDE: AAPL
The New Fraud in Town: Business Identity Theft
TITAN
Sarper Beyazyurek Churchill Real Estate
TRAILBLAZER
PIONEERING A BRIGHT FUTURE FOR BANKING
Andrea Propp Knorring IceCap Group
AND MORE...
SPECIAL EDITION
November 2023 Originate Report 1
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2
TABLE OF CONTENTS NOVEMBER 2023
COVER STORY 6
Western Alliance Bank – Pioneering a Bright Future for Banking By Charles Peckman, Contributing Writer for Originate Report
6
FEATURE ARTICLES 24
Diversification and Strong Leadership Guide Constructive Capital to New Heights By Nick Georgandis, Contributing Writer for Originate Report
38
Val-Chris Investments – Standing the Test of Time By Charles Peckman, Contributing Writer for Originate Report
12
CONTRIBUTED ARTICLES 12
The New Fraud in Town: Business Identity Theft By Kat Hungerford, Project Development Manager, AAPL
28
The Offense and Defense of Building an Organization By William J. Tessar, CEO, CV3 Financial Services
34
The Crucial Role of Speed and Process Consistency in Real Estate Investing By Alex Offutt, Managing Director, Constructive Capital
42
How to Keep Yourself Out of Court (and Away From Me) By Steven Ernest, Esq., Director of Litigation & Bankruptcy, Geraci LLP
PRIVATE LENDING TITANS 18
Sarper Beyazyurek, Principal, Churchill Real Estate
18
24
PRIVATE LENDING TRAILBLAZERS 30
Andrea Propp Knorring, Chief Strategy Officer, Fund Management & Investor Relations, IceCap Group
30 November 2023 Originate Report 3
2 0 2 4
C O N F E R E N C E
VEA NEWPORT BEACH NEWPORT BEACH, CA Help shape the future of private lending. Join forces with private lending industry legends and newcomers at Innovate to discuss the multi-layered approach they are taking to address rapid societal shifts, supply chain disruptions, evolving product lines, and the ever-changing needs of both the borrower and lender alike. INTERESTED IN ATTENDING OR SPONSORING?
Contact Ruby Boulanger at r.boulanger@geracillp.com (949) 379-2611 | https://geracicon.com/ 4
Welcome to the AAPL Special Edition of Originate Report!
Partner & CEO Geraci LLP ANTHONY GERACI a.geraci@geracillp.com Senior Vice President, Marketing LESLEY BOYD l.boyd@geracillp.com Creative Director LYNDA HIGHT l.hight@geracillp.com Sr. Marketing Ops. Manager & Editor DANI L’HEUREUX d.lheureux@geracillp.com CONTRIBUTORS Kat Hungerford • William J. Tessar Alex Offutt • Steven Ernest, Esq. Charles Peckman • Nick Georgandis
“The secret of change is to focus all of your energy not on fighting the old, but on building the new.” - Socrates Turbulence and chaos marred the banking world as the new year rang in for 2023. Regional bank failures headlined the news throughout Q1 and brought confusion and some panic to seasoned professionals and the public alike. In a climate such as this, only banks that can strategically plan ahead, adapt, and change are able to survive. For this month’s cover story, Pioneering a Bright Future for Banking, Originate Report had the distinct privilege of sitting down with two Senior Vice Presidents of the Note Finance Group within Western Alliance Bank, Lisa Alberti and Mark Roberts. Foresight and the ability to make informed decisions, combined with a commitment to transparency and strong communication, are invaluable assets to allow for adaptability in an ever-changing financial environment. These innate strategies have allowed for Western Alliance Bank to thrive despite the turmoil in the industry. In fact, Bank Director and American Banker recently ranked Western Alliance Bank as a top U.S. bank for 2023. Check out this month’s cover story to learn more about the steps that Western Alliance Bank has taken to
FOUNDING UNDERWRITERS
achieve this distinction. While this is the final issue of the year, we’ve already got our eyes
MARK HANF President, Pacific Private Money ORIGINATE REPORT www.geracilawfirm.com/originate-report GERACI LAW FIRM www.geracilawfirm.com LIGHTNING DOCS www.lightningdocs.com CONFERENCE LINE www.geracicon.com
on the horizon for next year. Registration is now open for our Spring Conference, Innovate, taking place at our new venue, Vea in Newport Beach. Join us by registering here: https://geracicon.com/. You don’t want to miss this opportunity for networking, education, and fun! It’s time to #shareyourstory with us. Contact us to find out how: submissions@originate.report. All 2024 editions are now available. Until next time,
Lesley November 2023 Originate Report 5
COVER STORY
By Charles Peckman, Contributing Writer for Originate Report
T
he
first
quarter
of
2023
was
marked by turbulence and chaos in the banking world. The sector
navigated a stormy sea, underlined by bank failures and confusion among seasoned professionals and the public alike. This was not the story for Western Alliance Bank, though, which has not only weathered the storm but emerged more robust. To Western Alliance, which has
over
$65
billion
in assets and serves customers across the country, the start of this year served as a springboard to redefine the banking landscape in the years to come. In fact, Bank Director and American Banker recently ranked Western Alliance Bank as a top U.S. bank for 2023. One of the cornerstones of Western Alliance Bank’s strength lies in its leadership team’s unwavering commitment to a clear strategy.
6
From the onset of this year, the
downturns and market corrections
executives and senior management
Western Alliance team recognized
assisted in the response to the
are ready to meet with clients and
the need for adaptability in an
turmoil of early 2023.
listen to their concerns. It is rare for a customer to be able to meet with
ever-evolving financial landscape. Their foresight and ability to make
"The speed and certainty of execution
the CEO of a bank, but that sort of
informed decisions, combined with
of our offerings is a critical element
open-door policy has allowed us to
a commitment to transparency and
to our continued success," she said.
keep the lines of communication
strong communication, have proven
"Our private lenders are moving
open with our customers."
to be invaluable assets, ensuring
very
that the institution remains at
environment, and they need to feel
At the end of the day, Lisa said, the
the forefront of innovation and
assured that they have access to
results speak for themselves. In
financial stability.
capital. The entrepreneurial nature
quarter two of 2023, Western Alliance
of Western Alliance also allows
has
Originate Report sat down with
us to tap into different niches and
1,000 new accounts with $3.5 billion
two Senior Vice Presidents of the
become
in deposit growth (as of June 30,
Note Finance group within Western
which in turn allows us to offer the
Alliance Bank, Lisa Alberti and Mark
best possible rates and experience
Roberts. The two banking veterans
for our customers."
"What we have experienced in quar-
prioritize resilience, innovation, and
In a sector sometimes criticized
the strength and stability of the bank
a longstanding client-focused ethos
for prioritizing profit over people,
throughout this period and beyond.
Western Alliance Bank's commitment
quickly
in
subject
this
matter
fast-paced
experts,
to its clients has been a breath of fresh "If we go back to mid-2022, the ex-
air amid banking sector concerns.
ecutive management team saw that
Their client-centric approach coupled
there may be challenges on the hori-
with personalized solutions and a
zon in terms of the macroeconomy,"
deep understanding of the unique
Mark said. “This allowed us to be
needs of each client has solidified
well-prepared for the unique chal-
Western Alliance's reputation as a
lenges we saw this year. Western
trusted financial partner.
Alliance prioritizes a very strong risk management environment, an
To Mark, maintaining a competitive
environment that carries us through
edge is impossible without estab-
all seasons. Our diversified banking
lishing a track record of excellence
model also allows us to prioritize
and trust. and
transparency
The importance of this diversified
are more than buzzwords to us," he
model was reiterated by Lisa, who
said. "When there are downturns
added
Alliance's
in the market or specific tension
experience throughout economic
points with one of our products, our
Western
approximately
2023 vs. December 31, 2022.)
going forward," Lisa said. "We're looking to continue those conversations to deepen our relationships with customers and selectively look at new customer relationships." Lisa expressed that it can be easy to get lost in the numbers on a balance sheet. What is not expressed in quarterly earnings reports and mere numbers, however, is the underlying mindset that leads to sustainable growth. This point was echoed by Mark, who said Western Alliance has built a strong customer base and rapport with players from
areas of growth."
that
seen
ter two and beyond just reaffirms
stressed how the group continues to
"Accountability
already
across the field. "We have a reputation for delivering consistently for our clients," he Western Alliance Bank: Continues on pg. 8
November 2023 Originate Report 7
Western Alliance Bank: Continued from pg. 7
said. "We receive a steady stream of
referrals
from
our
existing
customers which only strengthens our credibility in the marketplace. An extremely important ingredient for our success, though, is the team that stands behind Western Alliance every day. Whether a customer needs to get a wire out at the last minute or needs assistance with something as routine as pulling a bank statement, we often joke that our customers come for the loans but stay for the customer experience." When
thinking
about
today's
competitive marketplace, Lisa said she is often surprised at how many new customers who come to Western Alliance have already met with others in the space. Lisa Alberti and Mark Roberts
"Clients will often approach us having already been to five or six other groups. They feel like no one speaks the same language as them,"
diligence and follow-through. While
she said. "We understand the inner
What is continuously expressed to
some lenders only focus on the
clients is the mantra that Western
speed of deal flow, Western Alliance
Alliance stands behind its word.
workings
of
these
complicated
deals, and our external partnerships with groups like Geraci allow us to tap into an extensive professional network at an enterprise level. We
prioritizes efficiency and attention to detail.
"It's not just about making promises; it's about keeping them," Lisa
"We are always looking at the
said. "This commitment is shown
factors
deal
in our diversified banking portfo-
flow," Mark said. "This includes
lio where we serve a wide range of
asset class, geography, and market
clients with unique financial needs.
concentration. When we meet with
Our ability to see a process to com-
our customers, we want to impress
pletion is evidence of not only our
An important element of this ever-
on them that we are viewing the
outstanding staff but the underlying
evolving customer/bank relationship,
landscape from a bird's eye and
principle of dependability in place
Mark said, is the importance of due
boots-on-the-ground perspective.”
at Western Alliance."
feel comfortable with our clients because we know what they do. And we take the time to get to know them and learn what they desire from the customer/bank relationship."
8
that
can
influence
Western Alliance Bank Note Finance Team
In addition to this emphasis on
lending loans that measure how
matters, Lisa added. At Western
transparency,
Alliance's
much borrowers can advance. When
Alliance, technology is not just a
dedication to clients is shown through
we look through a historical lens,
tool – it is a means to enhance the
an investment in technology. With
tasks that used to take a full day can
human touch. This is shown through
words such as 'AI' and 'automation'
now be accomplished in a half hour.
the bank's strategic use of tools to
buzzing
banking
What we want to be keenly aware
industry, Mark said it is imperative
of, though, is how we are utilizing
to focus on the products that foster
technology without over-relying on
an environment of forward thinking
algorithms. That mindset can lead
and consistency.
to a false sense of positivity about a
Western
around
the
deal – and not consider the human "At Western Alliance, we have been
element of a transaction."
investing in technology that makes more
While technology does play a pivotal
efficient and beneficial," Mark said.
role in modern banking, it is the
"This
way tools are harnessed that truly
our
customers' includes
processes our
asset-based
streamline operations and create meaningful connections with clients while
preserving
the
essential
element of personal interaction. "Technology is very important for speed and efficiency," she said. "Because of the nature of our business, though, there are very few products that can be purchased Western Alliance Bank: Continues on pg. 10
November 2023 Originate Report 9
Western Alliance Bank: Continued from pg. 9
off the shelf. We have to start from scratch and build proprietary tools that improve our workflow and client
relationships.
We're
also
always thinking ahead to the next step, and how we can improve tools to make them smoother – both internally and externally." Just as technology platforms ebb and flow out of popularity, Mark added that some entrants to the space lack the expertise and awareness to gain traction. Western Alliance's commitment to innovation not only shows their grasp of customer needs but
Western Alliance Bank’s foresight and ability to make informed decisions, combined with a commitment to transparency and strong communication, have proven to be invaluable assets, ensuring that the institution
that the bank is here for the long run.
remains at the forefront of
"What we see in the space, often, is
innovation and financial stability.
groups jumping in and out of lending. This is not our approach," Mark said. "We have the staying power and ability to take on whatever the market throws our way. Our team of dedicated professionals on the lending side of the equation wakes up every day and focuses on nothing but private lending. That is a key reason we are successful."
the pulse of what is happening on a
"Our journey through the turbulence
larger scale. We often meet with cli-
of the first quarter was a testament
ents two or three times a week, and
to the power of experience and tech-
because of this high-touch, hands-on
nology working in harmony," he
mindset, we can share that informa-
said. "Our track record provided a
tion with clients in real time. This
bedrock of stability, while our com-
Consistency and commitment are the
doesn't only allow us to maintain
hallmarks of Western Alliance Bank's
transparency, it also lets clients feel
approach to lending. In a market sometimes marked by fluctuations and uncertainties, their steadfast focus on private lending – and utilization of market-wide data – sets them apart from the competition.
as though they are an active stakeholder in the bank's success." Where there are periods of success, however, there also are times of doubt. This is not a justification
mitment to embracing new methods allowed us to adapt and thrive in these challenging times. It's not about choosing one over the other; it's about finding the balance that enables us to deliver exceptional value to our clients. It's an age of rapid change, and we have found synergy between learning from the past and
"We have access to data from across
for ‘hiding behind the phone,’ Mark
our products and the industry as
stressed, adding that communication
a whole," Lisa said. "In addition to
becomes paramount when navigating
Despite
our portfolio, we have a finger on
market concerns.
with navigating less-than-optimal
10
keeping our eye on the horizon." the
difficulty
associated
Mark Roberts
Lisa Alberti
conditions, Lisa said there is much
and experienced staff – will continue
one of the country's top-performing
to learn from what many would
to support lasting relationships.
banking companies.
"We continue to stress to our
Its
consider a negative situation. "Periods of strain on the banking sector offer invaluable lessons. They remind us of the importance of adaptability, the need for commitment to our clients, and the power of innovation in times of strain," she said. "These challenges become growth opportunities, and they show the en-
customers that our commitment is unwavering and constant," Mark said. "We are not just a bank; we are your financial partner, standing in your corner through ups and downs. Your goals are our goals, and your success is our success. We're here, ready to listen, adapt, and provide
during strength that comes from a
solutions
dedication to excellence, trust, and
because when it comes to financial
the pursuit of lasting partnerships."
journeys, we're with you every step
that
empower
you,
primary
subsidiary,
Western
Alliance Bank, Member FDIC, offers an array of solutions and services delivered by banking and mortgage experts who put customers first. If you would like to learn more about Western Alliance Bank or its Note Financing group, visit: westernalliancebank.com/ commercial-corporate/note-finance
of the way." Looking forward, Mark said that Western Alliance's ability to adapt –
With more than $65 billion in assets,
partnered with a robust balance sheet
Western Alliance Bancorporation is
For more information, please visit: westernalliancebank.com
November 2023 Originate Report 11
CONTRIBUTED ARTICLE
The New Fraud in Town BUSINESS IDENTITY THEFT By Kat Hungerford, Project Development Manager, American Association of Private Lenders
T
his article was originally
(and should) train your staff against
For private lenders, business identity
pub lished in the American
them, educate your borrowers, hire
theft generally looks like this:
Association of Private Lenders’
or outsource cybersecurity experts,
Fall 2023 issue of Private Lender
It’s You, But Not Quite You. You’re
and purchase insurance.
ABC Lender LLC. The scammer has
Magazine. When
a
fraudster
hijacks
your
Where there is money to be made,
business’s identity – your website,
there is the potential for fraud.
your name, your reputation–it won’t
Always.
be because an employee unwittingly
In today’s digital lending world, the
multitude
of
opportunities
for bad actors to, well, act badly, is ever increasing and ever more sophisticated. You may be familiar with (and have personally seen a time or two hundred) “common” fraud-like borrowers faking income statements, email phishing attempts, ransomware, and elaborate wire transfer schemes. Most of these require some element of interaction with your business, a knowledge of how things work, and where your weak points are. You can
12
clicked a malicious link or didn’t
cloned your website, ABClenderllc. com, but to a domain (XYZlenderllc. com) that doesn’t remotely resemble your business. They’ve also changed key details within the content of their new cloned site, like your company
properly verify loan documentation.
name (now XYZ Lender LLC), logo,
There is no training or awareness
location, and, of course, contact
campaign that can prevent it because
information and inbound lead forms.
it’s not predicated on any exposure or attack point. It’s entirely external. What Is Business Identity Theft? “Imagine you’re at home one night and receive a phone call from a borrower. He asks if you’ll be funding his loan, reminds you of the fee he
The brand colors will still be yours, as is all the content that differentiates you and makes ABC Lender, well, ABC Lender. Your face will probably still be up as the CEO, but instead of John Somebody you’ll be James Someday. And these are scammers, so some of the other pertinent
paid, and wonders why you stopped
details will fall through the cracks
communicating. The problem? You’ve
in their effort to separate ABC from
never heard of him before.”
XYZ: social links still go to you, your
– Jeff Smallowitz, Private Lending Direct
linked to your YouTube), and many
embedded videos are still up (and
of the internal pages will still have ABC-identifying information. The fraudster will have spun up a host of fake social media accounts for brokers and real estate agents, planted them in popular online groups and forums, and have them make referrals and friendly recom-
As our industry grows and gains credibility among borrowers and investors, private lenders must proactively guard against a concerning new digital risk.
mendations to drive borrowers to the cloned site. The cloned site looks legitimate, because it was, up until it was stolen. It’s All You. These scammers aren’t just stealing your hard work to make themselves look and sound legitimate (with breadcrumbs that lead alert borrowers back to you).
dollars into application fees, down
Enter AAPL
payments, underwriting fees, pre-
In all but one case (the private
closing fees, this-fee-I-just-made-up fees, they also (finally) get desperate enough to start digging.
Their goal is to defraud people using your business, your name, and
In the cases we know of, borrowers
your reputation. You’re ABC Lender
landed in front of the “real” private
LLC; they’re ABC Lender LLC. Your
lender by:
site is at ABClenderllc.com; theirs is ABClenderllc.net. You’re John Somebody; they’re John Somebody. Your site looks exactly like their site (except location, contact information, and inbound lead forms). It’s So You, It’s Actually You. One lender, Jeff Smallowitz, didn’t have a website to clone. But he has a longstanding reputation in the business, is well-known in local investment groups for face-to-face lending, and has a California Finance Lender License (which is likely how the fraudsters found him). Scammers built a website with their phone number,
1. Clicking through the cloned site
lender who didn’t have a website), by the time the borrowers found the “real” lender, that lender already had a heads up on the situation. This is because, in every case, the lender was a member of the American Association of Private Lenders and prominently displayed the member emblem on their site.
to find out where to blast them on
Either because fraudsters don’t real-
Google Reviews or social media.
ize what AAPL is or are hoping to use
2. Google searching the business name to land on the real site to send angry emails and phone calls. 3. Skip-tracing a home phone number using information on the cloned and/or real lender site. 4. Process serving a lawsuit. Universally, these borrowers had not yet realized the lender was also a
but his name, his company… and his
victim of fraud and that the scammer
home address.
and lender were not the same. Many of them hadn’t yet realized they’d
And Then the Shoe Drops
fallen victim to a scam at all, still
When a borrower gets desperate
believing the situation could be fixed
enough after sinking thousands of
and their money returned.
our credentialing to earn the trust of unwary borrowers, when these bad actors clone a site, they leave our emblem in place. And savvier borrowers will reach out to verify membership and potential red flags. We in turn check against known contact information, help borrowers understand the indicators that demonstrate they are not actually working with ABC Lending LLC or John Somebody, and then direct them to fraud victim recovery resources. Then we send a very bad news email to our member, along with next steps to get the fraudster site shut AAPL: Continues on pg.14
November 2023 Originate Report 13
AAPL: Continued from pg. 13
down (See DIY Fraudbuster Guide). But that takes time, sometimes months (if we’re successful at all). In the interim, lenders must deal with a 1-2-3-4 punch to their time, reputation, budget, and sometimes personal lives.
On finding fraudulent activity, they
the faster we can react, the more
have Fastlane processes to rapidly:
time, effort, and money fraudsters are forced to put into the scheme. Eventually they give up and move on to an easier target. Long term, preventing and reacting is a powerful weight in our favor
When we point out that every business identity theft victim we know of was also displaying our member emblem, we’re aware this is the definition of confirmation bias. How many fraudsters removed the emblem from a cloned site? How many borrowers never reached out to verify membership? How many members are not displaying the voluntary)
credentials?
How many more private lender victims aren’t AAPL members?
• Inject decoy data into scammer phishing forms, hiding victims’ “real” data in a bunch of looks-
quickly to crack down on fraud
It’s Not Enough
(entirely
monitor for potential threats and
against new regulation or licensing requirements. Scammers don’t care if they are defrauding businesses or consumers. When an industry becomes a haven for fraud, the government has historically proven that they view the easiest method to “protect the public” is to require a license to practice.
real-but-actually-fake information. • Have web browsers place “go back!” alerts on fraud sites. • Take down fake social media profiles that directly refer borrowers to the fraud site. • Take down the fraud site via the site registrar and/or hosting provider. This multipronged monitoring and mitigation brand
approach
protection
means
that
specialists
can
You Don’t Need to DIY
usually find and remove fraudulent
(and Probably Shouldn’t)
activity within days, if not hours, and
Where there is fraud, there are people
often before anyone falls victim to
who make it their business to fight it
the scam. These services range from
(literally). Online Brand Protection The larger picture issue here is
software-as-a-service
is a growing sector of cybersecurity,
that technology makes this scam
encompassing
touch/monitoring required from the
easy to perpetuate. It’s easy to buy
domains, social media, mobile apps,
domains, clone websites, and replace
and the web.
monitoring
for
information. Many bad actors have backup copies ready to spin up
In our industry, it looks like coun-
when a cloned site is shut down.
terfeit monitoring, but for content
Most of these scammers operate
and brands rather than knock-off
internationally in countries known
products. Companies specializing in
for ignoring this kind of activity, so
these services use machine-learning
there’s little permanent recourse.
technology to:
Simply
put,
mitigating
business
identity theft is like playing a game of whack-a-mole.
• Create domain watchlists so brands don’t have to purchase every iteration of their name.
with
high-
user to all-inclusive packages with human-reviewed alerts. Enter AAPL (Again) As the oldest and largest association for the private lending profession, we have a responsibility to be aware of everywhere our name is used and where our logo and member emblem appear. We must be proactive in safeguarding the industry by shutting down fraudsters pretending AAPL membership to gain borrower trust and by stepping up monitoring so
The solution is to make things less
• Monitor for site cloning and
easy, more uncomfortable, and even
social media impersonation.
we can alert members to potential
outright inhospitable for scammers—
• Monitor for usage of protected
business identity theft and other scam
both for individual fraud events and
images (like trademarked logos
activity. We cannot rely on victims to
as an industry. The more we can
and emblems).
be our canary in a coal mine.
14
To that end, we researched, interviewed, and vetted more than 20 of the top online brand protection providers. Several work with financial services clients and hit the right blend of technology and account management. Ultimately, there is only one we feel confident can meet most of our members’ needs across service offerings and price point.
Gather Intel There are several providers for these tools. Below are recommendations that tend to have more complete information. 1. Find the registrar of the scam site by searching the domain at lookup.icann.org/en. • The search result may include an abuse contact email or phone number. • Otherwise, search the registrar's website for abuse notification process. 2. Find the IP address of the scam site domain using “Website to IP Lookup” at NSLookup.io.
Allure Security (alluresecurity.com)
• Search the resultant IP address at search.arin.net.
will monitor not only AAPL brand
• On the ARIN results, find the abuse team contact information for the site’s hosting provider.
assets but also member site content. Allure Security also understands the importance of reacting quickly to protect lenders and borrowers when business identity theft occurs. As part of its partnership with AAPL, Allure
Security
will
take
down
members’ first cloned site.
proactively take advantage of a 30% AAPL Member Discount on Allure Security services that include advanced domain and cloned site monitoring, blocklisting from search engines, data decoy injection into phishing forms, and social media AAPL
receives
no
compensation or affiliate fee. Locking down your brand assets will protect your reputation and prevent diverting untold resources to respond to
threats
gained
a
after
they’ve
foothold.
already
Importantly,
doing so will also contribute to a broader effort to make our industry a safe, trusted place for borrowers, investors,
service
• Links to referring social media profiles • Links to social media forums and/or groups • If via internet search, what search engine and term(s) Build Your File 1. Keep track of affected borrowers • Name and contact details
We also encourage members to
monitoring.
3. Ask borrowers how they found the fraudster site.
providers,
and
lenders to conduct business. Reach us at contact@aaplonline.com for more information and to get started today.
• Amount they were each defrauded • How they found the fraud site • Where they have submitted complaints • If their complaints name you/your business 2. Document the fraud site. You may consider an all-in-one site archiving software like Stillio (stillio.com), Pagefreezer (pagefreezer.com), or TrueScreen (truescreen.com) • Site screenshots that include the domain • Video recordings of a screenshare as you navigate the fraud site 3. Track where you’ve reported (see below) Report, Report, Report Your goal here is to make law enforcement aware of (and proactively protect yourself from possible recourse), stop referral traffic, and take down the fraudulent site. 1. Government agencies and law enforcement • Attorney General—Your state and fraudster’s “business location”: https://www.naag.org/find-my-ag/) • Federal Trade Commission: https: reportfraud.ftc.gov AAPL: Continues on pg.16
November 2023 Originate Report 15
AAPL: Continued from pg. 15
• US Cybersecurity and Infrastructure Security Agency: email phishing-report@us-cert.gov • Federal Bureau of Investigation Internet Crime Complaint Center: https://www.ic3.gov/Home/FileComplaint 2. Report abuse to domain registrar and website hosting service. Each provider will have their own reporting methods. Common methods:
We do not receive compensation or any affiliate fee for members who enlist their services. Reach us at contact@aaplonline.com for more information and to get started today. Allure Security Both members and non-members may sign up for a free trial at https://alluresecurity.com/aapl. 1. Domain and Web Impersonation Monitoring (We recommend this for most members.) • Similar domain detection
• Abuse phone number, form, or email from ARIN search results
• Web beacon deployment (advanced cloned site alert)
• DMCA takedown notice
• Data decoy injections into phishing forms
• Additional international resources via the World Intellectual Property Organization (https://www.wipo.int/members/en) 3. Report referring social media profiles. • To the platform Most providers will have some kind of abuse/report button for posts and profiles. • To the group/forum Message the group/forum moderators to block the profiles and request they alert their members.
• Blocklisting from web browsers, email services, etc. • Fraud site take down 2. Social Media Impersonation and Monitoring (brand and/or company executives) We recommend this for larger lenders or lenders who have previously experienced impersonation attacks. • Monitoring on Facebook, LinkedIn, Instagram, Twitter • Profile take down Kat Hungerford is executive editor of Private Lender
4. Report for blocklisting in web browsers and email services:
magazine and digital project manager at the American
• Google (used by Chrome, Firefox, Safari): https://safebrowsing.google.com/safebrowsing/ report_phish/?hl=en
tions, project management, and marketing. Hungerford
• Microsoft (used by Edge and IE): https://www.microsoft.com/en-us/wdsi/support/ report-unsafe-site-guest Alert Others 1. Create a quick-reference sheet based on this Guide but with specifics of what to report and where to go. • Fraud site information
Association of Private Lenders. She specializes in operaalso acts as secretary for the association’s Government Relations Committee, which serves as AAPL’s advocacy arm in Congress and state legislatures. AAPL is the oldest and largest national organization representing the private lending profession. The association supports the industry's dedication to best practices by providing edu cational resources, instilling oversight processes, and fighting regulatory encroachment.
• Specific pages where phishing occurs • Registrar, hosting, and social media reporting links 2. Send your quick reference to affected parties. • Anyone whose logo or name also appears on the cloned site • Defrauded borrowers • American Association of Private Lenders We will pass your sheet on to borrowers who reach out to us directly. Engage Expert Help AAPL Members receive a 30% discount off all Allure Security services. We have engaged Allure Security for AAPL brand and limited member site monitoring.
16
Kat Hungerford Project Development Manager American Association of Private Lenders https://aaplonline.com/
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November 2023 Originate Report 17
PRIVATE LENDING TITANS
PRIVATE LENDING
TITANS
Sarper Beyazyurek Principal, Churchill Real Estate
18
Q: What excites you about your role today? I am excited to keep identifying and building opportunities for Churchill’s long-term growth. Churchill originated a total of $5.4 billion in 2022 and emerged as the only non-bank real estate finance company with the ability to originate, finance, and manage residential and multifamily real estate assets nationwide across strategies and products. I am proud of our ability to serve as a leading provider of flexible capital solutions to our borrowers across the U.S. residential real estate sector. Q: Can you explain a time where you faced adversity or had
Sarper Beyazyurek Principal Churchill Real Estate
Q: Why did you choose Private
been fragmented and under-insti-
Lending?
tutionalized. Given banks are not as
I have been in the lending and
active in private lending due in part
financial services sector for most of
to complexities surrounding construc-
my career. Prior to joining Churchill in 2019, I spent ten years at Wachovia (now Wells Fargo) focusing on the highly regulated and competitive consumer mortgage space. The opportunities in the private lending space are enormous, and Churchill is a leader in providing flexible capital to the U.S. residential
struggles early on in your career? Where did it all begin? How did these experiences mold and shape you into the leader you are today? I started my career in the mortgage business right before the Global Financial Crisis. I observed the entire mortgage industry meltdown, the collapse of businesses that no one would have ever expected could fail,
tion, loan management, and other is-
and, most importantly, witnessed
sues, we see an attractive opportunity
what it was like for so many people
in private lending today to create new
to lose their jobs. Managing the start
investment classes within residential
of my career through a tumultuous
real estate and deploy institutional
cycle taught me how to manage risk
capital into a space that has not yet
above all else.
reached full maturity. Q: Is there anything that you wish Q: What is your current role and
real estate sector. As a private non-
what do you do day-to-day?
bank lender, Churchill is in a unique
I am a Principal at Churchill responsible
position to drive innovation within
for business development, risk manage-
an asset class that has historically
ment, and portfolio management.
you could go back and tell yourself at the beginning of your career? Luckily, looking back on my career so far, I have no major regrets. I Sarper Beyazyurek: Continues on pg.20
November 2023 Originate Report 19
Sarper Beyazyurek: Continued from pg. 19
have been fortunate enough to be surrounded by great people and mentors throughout my career who have made a significant difference in
my
career
development
Churchill's edge within the highly competitive market in which we
and
trajectory. While I definitely have made some mistakes and learned important lessons from them, they collectively made me the person and
operate is its wealth of proprietary data and comprehensive technology platform,
professional that I am today, and I
which underpins the entire business and
wouldn’t wish to change that. Q: Who is someone that has had a significant effect on your career and why? There are multiple people across
drives scale. The firm’s multiple lines of business also differentiate us from most
different phases of my career who have made a substantial positive impact on me. A good friend of mine, Fred Barros, gave me the opportunity
to
work
at
KPMG
banks and lenders in that they allow us to finance both small balance and large
consulting right out of grad school. That role exposed me to many types of businesses and taught me how to work with different kinds of people across a large organization. Later, Serkan Erikci brought me to Wachovia, which eventually became
balance residential housing programs, providing opportunities for investors that other managers cannot provide.
the Wells Fargo Mortgage Finance team. Serkan taught me how to maintain the fine balance between
leadership, and experience-driven
business, which allows me to be far
approach to calculated risk-taking
more creative in finding flexible
inspired me to join them at Churchill.
capital solutions for our borrowers.
Q: What has been your favorite
Q: What would you consider to be
Travis Masters, who respectively
aspect of being in private lending
the highlight of your career thus
taught me how to best structure a
over the years?
far?
deal from a business perspective
My favorite aspect of working in
The highlight of my career so far has
and how to leverage analytics to be a
private lending is that the sector is
undoubtedly been the opportunity
strong programmer. Their guidance,
not as heavily regulated as consumer
to help drive the successful growth
risk and return and how to manage the competing needs of our internal risk management team and our borrower clients. There, I met my current partners, Derrick Land and
20
of Churchill over the last few years.
to finance both small balance and
portfolio to maintain integrity for
Looking forward, the firm is well-po-
large balance residential housing
our borrowers, investors, employees,
sitioned to pioneer new investment
programs, providing opportunities
and counterparties.
opportunities and provide access to in-
for investors that other managers
vestment classes for its investors that
cannot provide.
Q: What advice would you give to
other asset managers simply cannot
someone who has just started out Q: What tools do you use to
in private lending?
aid you in your role to be most
Always be transparent and tell the
Q: What do you enjoy most about
efficient, organized, and focused?
story as it is rather than offering a
your job? Least?
Technology is integrated into the
spun-up sales pitch. Maintaining a
What I enjoy the most about my job
physical spaces of Churchill’s offices,
high level of integrity for investors,
at Churchill is the freedom it grants
enabling real-time reporting, real-
employees, counterparties, and cli-
me to think outside of the box and
time performance monitoring, and
ents by providing honest feedback,
implement creative solutions for our
real-time risk management. Each
especially in challenging situations,
clients in a collaborative environment.
vertical across the firm shares key
goes a long way toward building trust,
information
which is paramount in this industry.
provide, which is an exciting prospect.
and
data,
enabling
Q: Is time or money more valuable
Churchill managers to be better-
and why?
armed investors, fiduciaries, and asset
Q: How will private lending change
It’s hard to say whether one is more
managers. We leverage proprietary
to adapt to the current market
valuable than the other, but my
data platforms to synthesize data and
trends?
approach to maximizing both is to
report performance in real time for
Change is all about risk versus re-
take the long-term view. Some of
all parties which gives us proactive
turn. Investors deploying billions
my
current
which
and institutional risk management
into the space want to be able to hit
can’t
be
many
capabilities. Our programs allow
their hurdles, so the assets will need
years to cultivate. Similarly, in this
for
making
to generate attractive returns. To do
business, you have to make financial
throughout all aspects of a loan
so, private lenders have made adjust-
investments without expecting an
lifecycle by facilitating relationships,
ments for not only underlying note
immediate
having
reducing complexity, and accelerating
rates, which have increased from 6%
confidence it will pay off in the end.
approval times while incorporating
to 11% over the past year, but also
real-time risk management.
to tighten up the credit box, focus
relationships,
purchased,
return,
took
while
streamlined
decision
Q: How do you make sure your
on more experienced borrowers, and
company stays ahead in this
Q: Has your role changed
decrease their leverage. We are also
industry?
significantly to address the
seeing rating agencies showing in-
Churchill's edge within the highly
current environment?
terest in rating short-term residen-
competitive market in which we
While market conditions are always
tial transitional loans (RTL), which
operate is its wealth of proprietary
changing in real estate, one of the
will be a big milestone for the asset
data and comprehensive technology
core skills of my role will always
class and help attract more investors
platform,
the
remain the same: the ability to
into the space.
entire business and drives scale. The
analyze data to understand the
firm’s multiple lines of business also
current state of the market, make
differentiate us from most banks
an educated guess as to where it’s
and lenders in that they allow us
heading, and proactively manage the
which
underpins
For more information, please visit: https://churchill-realestate.com/
November 2023 Originate Report 21
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November 2023 Originate Report 23
FEATURE ARTICLE
Diversification and Strong Leadership Guide Constructive Capital to New Heights By Nick Georgandis, Contributing Writer for Originate Report
“T
he beauty of empowering others is that your own power is not
diminished in the process.” — Andrew Carnegie If major players in private lending have learned anything in the past few volatile years, it’s that the only thing you can count on is change. 2022 was known as the year of the skyrocketing interest rate, and this year has presented its own challenges. The companies who are not only surviving but thriving in this environment all exhibit similar characteristics: a product array that addresses the needs of the industry and a leadership mindset that can help their teams stay the course. “Our market remains challenging because of the fact that important factions
Ben Fertig President, Constructive Capital
24
of
liquidity
are
going
to, for the most part, stay on the sidelines,” said Ben Fertig, President
at Constructive Capital. “What you
“It started with diversifying our cap-
An Environment of Empowerment
are seeing is a lot of the fixed income
ital sources for debt service coverage
Being one of the largest players
or bond-related liquidity not coming
ratio (DSCR) loans. That allowed us to
with a great product offering might
back to a healthy level. That’s not
lock in our cost of capital for extended
seem
time periods.”
to
exactly a new story, but a story that has been seemingly refreshed throughout the year. Everyone had thought the rate environment was going to taper, but that’s not what
•
Rental loans in the form of long-term financing for singlefamily and multi-family rental
•
Short-term financing (Fix and rehabilitation of single-family
– one being Constructive Capital. Originate Report recently had the opportunity to speak to Ben Fertig, President at Constructive Capital, to talk about his firm’s true source of differentiation. Industry-Leading Moves Since coming on as president of Constructive Capital in September 2017, Fertig has learned that the only consistent thing in the industry is the lack of consistency. Their answer to that challenge has been to make sure they are never caught holding just one position. Almost adverse to “status quo,” Constructive is continuously pushing boundaries to see what it can accomplish.
during
an equally important reason lies in
several prominent companies in
opportunities to diversify and grow
success
products:
Flip loans) for the purchase and
are many players who have found
Constructive’s
advantage
the company and the market suggests
the dissolution or consolidation of
taken its toll on the industry, there
built-in
Today, Constructive offers three main
properties and portfolios,
the space. While the market has
a
uncertain times, but a closer look at
we’ve been looking at.” These recent events have led to
like
and multi-family properties, and •
Lines of credit for clients who are interested in frequently fixing and flipping homes.
loans.
After
the
company funds the loan, it may sell it on the secondary market to investors who package it with other mortgages to sell as mortgage-backed securities or to a life insurance portfolio. This essentially turns Constructive into a financial intermediary, which greatly assists in making money available in the market for new mortgages and increases
liquidity.
Constructive
also services the loans through collecting mortgage payments and maintaining escrow accounts. This ecosystem creates a nice synergy with
Constructive’s
third-party,
white-label funding business. Constructive’s
levels throughout the firm. Leadership can take many forms in the dynamic business world. For Constructive, their industryleading status was developed from the inside out. Because Fertig and his management team confidently lead their staff on a daily basis, there is a foundation to lead their
Constructive offers wholesale and correspondent
the leadership mindset found at all
diversification
clients through the private lending process. Managing Director Alex Offutt, Senior Vice President Tess Siwa, and Vice President Darryl Shelton are all critical members of the management team that inspires and leads Constructive daily. “My belief is that leadership and management are two distinct systems of action. It's very difficult to guide a team through a tough market through just management. You need to be a leader,” Fertig says. “From a leadership standpoint, we focus on ensuring the right talent is in the right seats and empowering them.” Constructive,
ef-
forts have propelled the company “In 2021, we diversified our sources
forward in recent years, solidifying
of capital and liquidity,” Fertig says.
it as a market leader.
with
its
115
staff
members, averages 700+ loans per month. Fertig emphasizes that hiring employees capable of this level of Constructive Capital: Continues on pg. 26
November 2023 Originate Report 25
Constructive Capital: Continued from pg. 25
efficiency in a niche market like private lending is no easy task. “We built our company to outperform when the market is really difficult,” Fertig says. “Our team utilizes innate critical thinking skills to adapt and succeed in the most difficult times.” Continuous improvement and in novation coupled with the desire to build strong, lasting relationships with their clients allows Constructive to deliver an exceptional experience from beginning to end. Ben Fertig
Leadership Through Tech A diverse offering is not only where Constructive
leads
the
charge.
The company offers an all-in-one client-facing portal tailored to each client’s individual needs and the feedback they provide. This docu ment management system is fully integrated with Constructive’s loan origination system and is powered
“There is always going to be an
continues to push the envelope in
analog element to loans in our
both the quantity and quality of
business,” says Fertig.
loans in the private lending sector, with no plans of slowing down.
“We focus on technology to support our clients and our products, but
“Constructive has grown and picked
we’re never going to be a fintech
up market share as the conditions
company that fails to prioritize
have gotten more difficult,” Fertig
Encompass software, an end-to-
earnings and relationships. That just
says. “I think that our relative per-
end digital mortgage solution. This
hasn’t worked in our space.”
formance has a positive correlation
by
ICE
Mortgage
Technology’s
to how difficult the market is. It’s
plat form helps ease new clients into the headspace of working with
What’s in a Name?
a private lender.
Constructive Capital chose its name for several reasons, chief among
While leveraging technology to
them being its connection to the Lat
minimize errors and expedite the
in word “constructus,” which means
application-to-approval
is
organizing parts in a particular place
a crucial aspect of Constructive's
and order. This perfectly reflects the
business model, Fertig believes
challenges faced in the ever-chang-
that automa tion will never fully
ing world of private lending. Under
replace the value that people bring
the guidance of Fertig and an impres-
to the process.
sive leadership team, Constructive
26
cycle
not easy for anyone, but we are still going strong.” Spoken like a true leader in the industry.
For more information, please visit: https://www.constructiveloans.com/
Stable, reliable capital with unmatched execution
85% of our 1Q fundings closed within 20 days of application
833-208-1442
Rental and fix & flip loan products in a variety of term lengths
Competitive rates and a 21day rate lock
ConstructiveLoans.com
November 2023 Originate Report 27
CONTRIBUTED ARTICLE
I
By William J. Tessar, CEO, CV3 Financial Services
had the privilege of coaching
a camaraderie through hard work,
team’s success, advocate for their
boys’ football for 14 years and
teamwork, celebrating successes, and
wellbeing, and create a platform
have come to learn just how
overcoming failures.
for their voices to be heard, you
closely the strategies for football parallel the strategies for building and running a business. Whether you are a sports fanatic or not, putting an offensive and defensive strategy into play will help you establish the
foundation
that
sets
your
organization up for success—and the common denominator for both strategies is putting people first.
came
different
levels
me invaluable lessons on being proactive and protective. These lessons, which apply today and have produced incredible results over my 40 years in lending, collectively amount to the dos and don’ts of organizational leadership. The top five offensive and defensive
With each new season of my coaching tenure
will create a mutually reciprocated The experience of coaching taught
of
talent and experience to the team. While the varying skillsets may have impacted our scores, one thing was always consistent year after year: an unwavering purpose for why we
strategies I have learned, on and off the field, for building a company from the ground up are:
OFFENSE • Exercise a people-first mentality. The power of your business lies
respect and commitment that no job description can define. • Surround yourself with positive influences. If you are the only one in your organization to have a people-first mentality, you bear the responsibility of spreading that mindset. Be selective and pick the right people who will foster that mentality, because when executives commit to it, managers commit to it, and direct reports commit to it. The trickle-down philosophy is no longer a mentality; rather it becomes a movement. The commitment to
within the people that make up
consistent connection and involve
your organization. As a leader, it
ment is a long game, but with the
and advanced players all united
is imperative that you genuinely
right people leading the way, it
under the shared philosophy that ‘We
operate with your people as a
eventually becomes an unspoken
are in this together’, and they built
priority. When you champion your
love language of the organization.
were there. Beginner, intermediate,
28
• Collectively create core values.
ears and one mouth for good reason…
your business, so listen, but don’t be
Your company’s core values should
use them proportionately.
distracted. Remain unflappable to the thousands of different views in
be ones that each member believes in and will live by, both in and out of the office. Create your core values to be more than a façade; create them to exemplify a way of life and a guiding compass unique to your business and team. Make this a collaborative process, welcome ideas, and socialize your selected values so they become engrained in your team’s everyday life. • Have a “customer for life” approach. The embodiment of a relational business is when you view your clients, as well as your team members, as a long-term investment by investing in them as people. True customer service begins at ‘hello’ and ends never, and, with a servant approach, the relationship will evolve as a partnership and not a deal. If you lead with a relational mindset and translate that into running a business, you will have a winning long-term strategy that evolves into business prosperity. • Take extreme ownership. No matter what mistakes are made within the organization, as the leader, the buck stops with you. Own it.
DEFENSE • Embrace constructive criticism. The open-mindedness to receive constructive criticism is instrumental to true growth. Do not close off your senses to the invaluable feedback
• Don’t fall in love with your own
the marketplace and stay loyal to the
ideas. While great ideas and strong
one that matters most… your team’s.
viewpoints are par for the course, be careful to not become so set in your ways that you miss out on opportunities. For example, COVID brought a huge paradigm shift in the way I viewed it as necessary for everyone to work in the office. I squirmed when people began to work from home, but their gratitude for feeling safe and being present for loved ones resulted in unspeakable gratitude and increased productivity. The people’s actions spoke, and my work-in-office position evolved to work-from-anywhere. • Know when to stop. Don’t succumb to the coziness of your comfort zone. If a person, place, thing, idea, or concept isn’t working… STOP it. Having the discipline to stop something despite habits, history, or convenience is a defensive play that is easier said than done, but assuredly a move that
• Inspect what you expect. It’s my belief that constantly evaluating the results of your strategic plan is key. This means constantly revisiting, pivoting
where
necessary,
and
doubling down when appropriate. The proper execution of this strategy requires the collective culmination of all four defensive strategies above. When you can assess your actions and direction with honesty and have the humility to course correct, your organization will have the strongest defense possible. Offensively or defensively, the foundation of your business is centered around your people. They need to feel like they have a purpose, feel exceptional being a part of your team, and define their ‘why.’
By putting
people first in all aspects of their lives, you will collectively build the bedrock of a solid organization.
will always expand your organiza tion to new and improved horizons.
For more information, please visit www.CV3financial.com or reach
• Stay true to your vision. Distrac
out to the CV3 Financial team at
tions are all around but remember to
info@CV3financial.com.
turn down the noise when it comes to outside influences that weigh you down or deviate you from your vision. Specifically, this means not allowing factors such as other peo ple’s business plans, other “expert”
you receive internally from your
opinions about the marketplace, or
organization or externally from your
even antagonistic personalities to
customers. As I used to say when I
impact your shared strategic initia
was coaching, we were given two
tives. Your vision is what drives
William J. Tessar CEO CV3 Financial Services https://cv3financial.com/
November 2023 Originate Report 29
TRAILBLAZERS
PRIVATE LENDING
TRAILBLAZERS Andrea Propp Knorring
Chief Strategy Officer, Fund Management & Investor Relations, IceCap Group
30
addition to their recently acquired insurance business. I am proud of what we’ve built and to have worked with the team at Geraci to structure these funds. Q: Where did you get your start? I started my career at Goldman Sachs in 2010 on the commodities trading floor in Calgary, Canada. I made my way to New York with GS in 2012, then worked for two
Andrea Propp Knorring
Chief Strategy Officer, Fund Management & Investor Relations IceCap Group
large wall street hedge funds and eventually converted my focus from one hard asset (commodities) to another (Real Estate).
Q: How many years have you been
but in a way that didn’t involve all
in Private Lending and why did
the middlemen. This is how I met
you enter this field?
the Oved Family and their private
I’ve been in private lending for 4
lending business, IceCap Group. I
of the 14 years I’ve been in finance.
joined Joseph Oved and Ezra Dweck
I entered this field after seeing
in 2019 with a vision to launch fund
the opportunity through the lens
vehicles that would provide investors
of a larger asset manager I was
with direct and diversified exposure.
working with. They were buying
Working synergistically with their
residential transition loans (RTLs)
quickly growing business originating
from other private loan originators
mainly short-term, first lien RTLs in
and generating an excellent risk
the Northeast, we launched our first
adjusted return. I liked the short-
fund in August 2020. We followed
term nature (12 to 24 months) and
that with our second fund, a private
the fact that this niche part of the
REIT, in September of 2021, and just
real estate market was serving a very
recently launched our third fund,
important role in addressing the US
IceCap Real Estate Debt Fund III.
housing crisis. I could also see that
We target 13 to 18% net cash-on-
these loans were often originated,
cash returns, which our first fund
sold, and then packaged up in
has delivered on consistently over
various securitizations that found
the last three years. Fund III is an
their way in the portfolios of large
open-ended
institutional pensions, endowments,
with a quarterly investment and
and foundations, but by the time they
redemption period that we plan to
made it to them, there were many
grow to over $100m in AUM in the
layers of spread removed. I quickly
next year, which fits in nicely with
realized that I personally wanted
the family’s existing balance sheet
exposure to these types of loans,
dedicated to longer term lending in
evergreen
structure
Q: What is your current role and how does that affect your company at large? I am the Chief Strategy Officer, Fund Management and IR, supporting our firm’s ability to originate more than $500M a year, predominantly in short term bridge loans used for more affordable residential and multifamily rehab projects. I manage our funds and investor relationships while also working on interesting opportunistic private deals, either personally or in concert with the Oveds. Q: How have you seen your company grow in spite of or because of current market conditions? The last few years have presented many challenges in the form of Covid, rapidly rising interest rates, and general market volatility by way of regional bank instability. Because of our strong balance sheet and family office backing, we’ve been able to continue originating loans Andrea Propp Knorring: Continues on pg. 32
November 2023 Originate Report 31
Andrea Propp Knorring: Continued from pg. 31
and acquire talent through all market conditions while some others in the space have unfortunately atrophied. Q: What are some of your goals for 2023 and beyond? To see our business exceed originations of $1B/year and our Funds hit $250M AUM while partnering with the highest quality borrowers and
"Success is all about the double bottom line. There are many ways to make money in this world, but strong monetary performance must also be coupled with doing something to improve humanity and/or the planet in some way, otherwise, I’m not interested."
investors alike. Q: What does success look like for
— Andrea Propp Knorring
you? Success is all about the double bottom line. There are many ways
a full development team. This is
finance / investing / entrepreneurship
to make money in this world, but
what has allowed us to punch out-
that I am so grateful to support and be
strong monetary performance must
side our weight class and continue
supported by!
also be coupled with doing some-
to grow our business at a time when
thing to improve humanity and/or
markets have presented their fair
the planet in some way. Otherwise,
share of challenges. This has also
I’m not interested.
helped us keep our portfolios healthy and current with very little by way
Q: What is something most people
of delinquencies.
don’t know about you or your
Q: Tell us about a person or organization you admire. How have they made an important impact on you, the industry, or the world? Since moving to Austin, TX a couple years ago, I now agree with those who say Matthew McConaughey is
company? What steps are you or
Q: What piece of advice did you
your company taking today to
personally receive early in your
make an impact on the industry?
His philanthropic work is admirable
career that has helped shape
We are relationship lenders. Our team
(Just Keep Livin’ Foundation), and
decisions you’ve made?
actively works with our borrowers
his book Greenlights is filled with
Careers are a jungle gym, not a ladder.
inspiration I think about often. There
There is no linear path to success.
is one quote I often reflect on:
Q: Are you involved in any
“Life is our resume. It is our story
to
avoid
foreclosures
and
keep
their careers on path. We’ve even been known to help our borrowers in situations where they have a foreclosure with another lender. This is a big reason why over 65% of our loans are with repeat borrowers. They like doing business with us because we put them first.
associations, networking groups, or the like that have influenced your career path? The GS Alumni Network, The Univer sity of Calgary Alumni Network, Summit, The Spru Crew, Vibrant Ventures,
We’ve also invested heavily in our
The Microdosing Collective, and my
own proprietary technology and
own personally curated network of
underwriting by backing them with
badass women across various roles in
32
a state (if not national) treasure!
to tell, and we write the chapters. Can we live in a way where we look forward to looking back?” Thank you for the opportunity to share a little bit about mine! Many more chapters still to come… For more information, please visit: https://icecapgroup.com
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CONTRIBUTED ARTICLE
THE CRUCIAL ROLE OF SPEED PROCESS CONSISTENCY IN REAL ESTATE INVESTING By Alex Offutt, Managing Director, Constructive Capital
“I
feel the need. The need for speed!” Maverick and Goose said it best in Top Gun all those
years ago. But what they meant wasn’t as reckless as it may sound. Fighter planes have been dogfighting each other in battle (or practice) for almost 100 years, and it is taken as gospel that the greatest advantage a fighter plane can have in a dogfight is speed. While Constructive Capital isn’t dogfighting MIGS over the open ocean in a Hollywood movie, what we are doing is winning the war on operational excellence for our clients. Lenders and brokers report that loan file velocity is the most important component of a client/investor relationship for them. Speed at every step combined with transparency and communication can offer investors a tremendous competitive advantage and increase the likelihood of a successful outcome.
34
At Constructive, thanks to our best-in-industry Operations team, we have been continuously work ing to refine our process of provid ing industry-leading turn times for DSCR rental loans. However, it must be noted that, in this current environment, there are no shortcuts to this level of performance. Just like in the real world, if a fighter plane doesn’t pass all of its pre-flight checks, they won’t clear for takeoff. Much like a loan moving through our process, we must also make sure that the quality of our loans
“Regardless of whether rates go up or down, and irrespective of what is going happen in 3 or 6 months, our goal has been, and will always be, to provide best-in-class speed and stability to our clients and their borrowers. "
is airworthy. Currently, we are
— Alex Offutt
seeing 57% of our files close in 13 days or less. On top of that, for some of our more experienced, high-volume clients, we have been able to get their loans into closing in five days or less! The only thing that matters
consequences for businesses in this space, underscoring the ne cessity of working with trusted partners.
more than speed and execution
This is where the combination
is knowing that your capital
of stability, speed, and certainty
provider will be there when you
of execution matters most. We
need them. We’ve heard from our
routinely hear from our clients,
clients themselves that nothing is
in one way or another, that these
worse than not knowing if your
factors matter a great deal to
capital provider will be there for
real estate investors; knowing
them at closing. As everyone in our
how quickly they can get to the
industry is aware, we currently
closing table overcomes most
find
other considerations.
ourselves
in
uncharted
in-class speed and stability to our clients and their borrowers. Constructive is dedicated to providing lenders and brokers with bestin-class products that allow them to grow their client base. And while speed wins above all else, we are still maintaining the high standards that have enabled us to achieve this unparalleled combination.
economic waters. We don’t know what rates are going to do. We
Regardless of whether rates go
don’t know what the future
up or down, and irrespective of
holds for credit policy in this
what is going happen in 3 or 6
product class. These unknowns
months, our goal has been, and
can
will always be, to provide best-
potentially
have
drastic
Alex Offutt Managing Director Constructive Capital https://www.constructiveloans.com/
November 2023 Originate Report 35
EN S E R P P
LL I C NOW! A T U R O E G RN FOU
TS
SEASO
A Podcast Brought to You by the Nation’s Largest Private Lending Law Firm Listen on
https://geracilawfirm.com/lender-lounge-podcast 36
February 2023 Originate Report 36
November August 2023 Originate Report 37
FEATURE ARTICLE
Val-Chris Investments
Jeff LaMotte Vice President, Val-Chris Investments
Standing the Test of Time
By Charles Peckman, Contributing Writer for Originate Report
I
n the fast-paced world of non-
regulatory environment and stays
“I think there is a lot to be said for
conventional lending, Val-Chris
on top of trends in the marketplace,
a family-run business atmosphere,”
Investments stands out as a
Originate Report sat down with Vice
LaMotte said. “What I have found
beacon of excellence and innovation.
President Jeff LaMotte, who has been
is that working closely with a core
With over 45 years of experience
with the company since 2009.
group of people allows for a level
in the real estate lending industry, Val-Chris has consistently adapted to
A key element that contributes to
market shifts, employed innovative
Val-Chris Investments’ success, Jeff
approaches, and prioritized a client-
said, is the close-knit dynamic in
centric ethos to create lasting value
place at the firm. Jeff added that the
for borrowers.
mentoring he received – and contin-
of trust that is unparalleled in the industry. We are constantly dealing with complicated situations, and I think a hands-on, collaborative approach leads to the best outcomes for borrowers and the industry.”
ues to draw upon – from President
Part and parcel to this collaborative
To better understand how Val-Chris
Chris Boulter has been instrumental
approach, Jeff added, is the impor-
Investments navigates a complex
in his career.
tance of keeping a keen eye on the
38
regulatory environment of lending.
downturns or a pandemic. Despite
that to stand in the way of acquiring
Laws at the local and state levels of-
these potential negative situations,
and keeping new talent.”
ten change without fanfare and can
Jeff said there are lessons to be
have a lasting impact on investors. “Understanding who our investors are – and how regulatory changes can impact them – is at the core of what we do. Because we do not run a fund, and our customers are individual investors, we strive to leverage our knowledge and create deals on a personalized basis. There is no such thing to us as a ‘cookiecutter deal.’ Our relationships with groups including Geraci allow us to maintain a holistic view of the lending landscape,” he said.
learned when ‘elements of the market
The mindset of embracing the chang-
are scrambling.’
ing nature of business and workflow speaks to the intertwined nature of
“We learned a number of lessons from COVID-19,” LaMotte said. “Our volume drastically increased because we
doubled
down
and
became
intimate with our investors’ needs. We found deals with higher yields and lower loan to values, all of which accelerated our growth. In addition to focusing on creating more lasting value for our customers, we also embraced the idea of remote work, which has yet to be seen across the
But maintaining a holistic view of
lending field. If someone makes the
the market, he admitted, can be
decision to move somewhere new
difficult when faced with market
with their family, we do not want
championing the staff and investors, Jeff said. This attention to detail – and care – is a core component of the Val-Chris ethos. “No matter what business you are in, customer service is a key component for growth and success, period. Because so many private lenders are smaller shops, this attention to customer service must be amplified. What I stress to newer people in the field, though, is that you never want to run a business so lean that your customers feel as though you are too busy for them. Especially in lending, where there is trust associated with
“What I have found is that working
capital changing hands, you want to showcase that you are a good
closely with a core group of people
custodian of those funds. We have
allows for a level of trust that is
Chris since the beginning,” he said.
unparalleled in the industry. We are
In a post-COVID world, Jeff said the
constantly dealing with complicated
– while not overlooking the human
situations, and I think a hands-on, collaborative approach leads to the best outcomes for borrowers and the industry.” — Jeff LaMotte
been embodying that mindset at Val-
continued leveraging of technology element of lending – will yield substantial growth for Val-Chris. “One of the many lessons we have learned in the past few years is the value of maintaining an agile staff,” he said. “This includes embracing reVal-Chris Investments: Continues on pg. 40
November 2023 Originate Report 39
Val-Chris Investments: Continued from pg. 39
mote work and using the tools at our disposal, like Lightning Docs from Geraci, to integrate our boots-onthe-ground operation with remote employees and stakeholders across the country. Being cloud-based allows us to pull documents and important elements no matter where we are.” With this ability, though, may come a sense of trepidation. The first quarter of 2023 was marked by uncertainty in the lending space,
Jeff LaMotte with Chris Boulter, President, Val-Chris Investments
but Jeff reiterated that the field – and Val-Chris’ resolve – has never been stronger. “Our extensive experience in the lending field allows us to draw on decades of experience, including what has worked and what hasn’t,” he said. “Every time we begin the loan process, we are harnessing our
collective
relationship
experience
with
the
and
investor.
Outside of this, we also keep in close contact with what many would
Val-Chris Investments Team
consider our competition. This may sound like a cliché, but being on the same page as others lets us move forward collectively.” Moving forward, Jeff is excited to be part of Val-Chris’ continued growth. As the conversation surrounding
“What we are seeing now is in-
To learn more about the services
creased interest in non-conven-
offered by Val-Chris Investments, visit
tional products like using self-di-
https://www.val-chris.com/.
rected IRAs to purchase trust deeds with us,” he said. “These trends, and the curious nature of our investors, allows us to create cre-
private money lending evolves, he
ative solutions and positive gains
said, the group’s track record speaks
across the board. It is an exciting
for itself.
time to be in lending.” For more information, please visit: https://www.val-chris.com/
40
U P C O M I N G
E D I T I O N S
INNOVATE SPECIAL EDITION If you would like to be featured in any of our upcoming editions, reach out to us at: submissions@originate.report November 2023 Originate Report 41
CONTRIBUTED ARTICLE
HOW TO KEEP YOURSELF OUT OF COURT AND AWAY FROM ME
By Steven Ernest, Esq., Director of Litigation & Bankruptcy, Geraci LLP
M
y boss has told me a few
of Title Insurance (we recommend
waives your collection remedies (for
times
conferences,
125%) of the loan amount. Fraud is
a time) in hopes the loan will one day
“no one has figured out
a bigger topic and will be the subject
begin performing again. You want to
of a forthcoming article (teaser!).
ensure this doesn’t extend too long,
at
how to make money in litigation.”
or you may find yourself unable to
I’m assuming he meant no one other than me. Point taken. So, how can you
Presuming you find yourself with
collect at some point (owing to the
avoid litigation, or ‘lawsuit proof’
a defaulted loan, a way (not recom-
Statute of Limitations).
your loan files? Let’s have a look.
mended) is to just let it go. You can make a forbearance agreement with
You can also modify the loan terms.
The time to start is at underwriting.
your customer. That means you and
This variety of ‘work out’ generally
Fraud is WAY up since 2017, so
the borrower agree that you won’t
involves moving defaulted payments
ensure you know who your borrower
enforce your rights now, and that the
to the end of the loan, waiving fees/
is, that the collateral exists and is
borrower promises (pinky swears
costs/interest, changing the interest
owned by your borrower, and that
this time) that he’ll cure the default
rate, changing the monthly payment,
you’ve purchased the right amount
over a period of time. This essentially
or extending the duration of the loan.
42
(for you) if I had to sue and enforce
also ‘double track’ these cases with
this contract pal, because you’ll have
non-judicial foreclosures.
to pay my lawyer (and yours).” You see, all the fees and costs of litigation get added to the balance owed, so litigation becomes rather expensive for borrowers in default. This might intimidate them into consenting to one of the remedies listed above. If litigation seems inevitable, have a
Once you get finished winning, there are cost effective remedies (and others not so much) which will find their way to uniting you with your money. Record abstracts will immediately cause your deficiency balance to attach to all real estate your borrower/ guarantors own (and they cost less than $40). Bank levies can really ruin
careful look at your file. Do you have
your borrower’s day (and get them to
a signed contract? Is the guaranty
you notify all guarantors. They don’t
come negotiate payments with you).
signed? Is the Deed of Trust signed,
Same for wage garnishments.
have to agree, or like it, but they
and does it encumber the correct
must be notified (otherwise you’ll
property? Is your account payment
forever waive your right to collect
history sufficiently detailed that you
from them).
could explain it to a golden retriever?
If you do this, IT IS ESSENTIAL that
If so, make a final attempt at “saber Perhaps your borrower is in a
rattling”, and give the borrower one
substantially worse position and
last chance; or have your attorney do
can’t make any modification work.
it. A last-gasp effort might resolve
He just wants to walk away and toss the keys to you. This is a deed in lieu of foreclosure circumstance. This will get you title to the property (your collateral) and will avoid the costs and time of conducting a foreclosure. It also waives your right to collect any deficiency against your customer (not so against your
this for you. If you have to march down to the courthouse, consider at the outset your strategy; it may save you a tremendous amount. Bearing in mind the fees provision in your contract – which really means your borrower is paying for all this – combining remedies into one case will make
guarantor – but again, remember to
the procedure cheaper. If you sue for
notify him beforehand).
judicial foreclosure and add breach
Saving all that, you can use compli cated methods (the extraordinary relief – also the subject of a forthcoming article – teaser2). These involve receivership, judgment debtor exam inations, keepers (the till tapper), and other exotic remedies. We are always available to you and excited to help strategize your plan. Doing so is the only responsible way to manage your asset. If you don’t know where you are trying to go, any road will take you there. All the best. Do you have questions about how to approach a delinquent borrower? Geraci’s litigation team is here to help. Contact us today.
of guaranty causes of action in it, Failing any of those pre-litigation
by the end of the case you will have
remedies, there is the time-honored
title to the property, a deficiency
practice of “saber rattling.” Ensure
judgment against your borrower,
your contract has an attorney’s fee
and a deficiency judgment against all
provision. So long as it does, and
your guarantors. You’ll also insulate
so long as you are convinced your
yourself from many of the borrower
position is correct, this strategy can
claims against you and protect from
work. “It sure would be unfortunate
the anti-deficiency rules. You can
Steven Ernest, Esq. Director of Litigation & Bankruptcy Geraci LLP https://geracilawfirm.com/
November 2023 Originate Report 43
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44
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