Originate Report- September 2017

SEPTEMBER 2017

THE OFFICIAL MAGAZINE OF GERACI

Inside September:

HERO (Villain?)

LOANS PRIVATE LENDING Local vs.National

Collaborative LEADERSHIP www.originate.report 1

2 Originate Report | September 2017

ANTHONY GERACI CEO/Editor

RUBY KEYS Marketing/Editorial Director

JOHN PELACHE Account Executive

ALICIA CARTER Marketing/Advertising Assistant

PAM HUBER Graphic Artist

CONTRIBUTORS Anthony Geraci • Linda Hyde Mark Moses • David Owen Kasey Stevens

FOUNDING UNDERWRITERS

Letter from the Editor “Why?”

Do you ask this question enough? I know I don’t. Why don’t we live in caves and

MARK HANF President, Pacific Private Money

away from each other? Why do we live in cities? In the old days this was an easy

answer – mutual protection and shelter. Biologically our fight or flight is hardwired

into our being, and we had to decide whether we were going to face the lion or run

away. Why do we still live in cities? Same reason? I believe that we are all connected together and the human fabric spins its way into the quilt of humankind.

In July, our inaugural edition brought you the lead story of John Ingoglia, whose

bought with alcohol and crashing into his child’s chair (his child wasn’t in it) woke

DAVID OWEN CEO, A List Partners

him to the reality that he was a force of nature. Last month, Drew Louis shared with us how he lost it all in the stock market, dealt with several lawsuits from stock

clients, and was psychologically frozen for months as the stock market crashed in 2000. Two different stories, but both of them fought their personal and professional

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GERACI ONLINE www.geracilawfirm.com Interested in advertising in Originate Report? Please reach out to John Pelache at John@Originate.Report or (949) 379-2600 For Advertising Submissions, Article Submissions, and Inquiries contact Submissions@Originate.Report

lions to the success they are today.

Within that suffering is the seed of hope and success in each of us. Hope is a

very powerful thing, and in my belief is the ideal that connects all of humankind together. These are the strands that make up the fabric of their life. What’s yours?

Do you have a story you need to tell? Reach out to us at articles@originate.report and if it is one of struggle and hope, we want to publish it.

To your success always.

ORIGINATE MAILING ADDRESS Geraci LLP 90 Discovery, Irvine, CA 92618 PHONE (949) 379-2600

GERACI CONFERENCES

Anthony

www.geracicon.com

www.originate.report 3

contents SEPTEMBER 2017

Personal Essay

10

Overcoming Obstacles to Make BIG Happen Sometimes you’ve got no other choice but to fight for what you want.

By Mark Moses, CEO Coaching International

10

Features

8 18

HERO Loans?

More like Villian loans. What you need to watch out for.

By Anthony Geraci, Geraci Law Firm

Growing Your Business Through Collaborative Leadership

Building your team to build success.

By Linda Hyde, American Association of Private Lenders

22

How to Market to Millennials

12

Reaching the largest group of potential homebuyers in the nation.

By Originate Report Staff

Special Sections

12 16

Special Series

Closing on Time, Everytime: Death & Taxes

By Kasey R.J. Stevens, Top Division Escrow, Inc.

22

Industry Spotlight

David Owen, CEO, A List Partners Management, LLC

20

Trend Alert:

24

Upcoming Events

26

Loan Home

Blockchain May Provide Solutions for the Mortgage Industry

By Originate Report Staff

4 Originate Report | September 2017

20

8

www.originate.report 5

M

What would YOU

attempt to do

if you knew you could

not fail?

Robert H. Schuller

6 Originate Report | September 2017

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www.originate.report 7

FEATURE STORY

HERO Loans?

More like VILLAIN loans.

Here’s What You Need To Watch Out For-They Will Either Delay Your Deal, Kill Your Deal or Worse…

By Anthony Geraci, Geraci Law Firm

8 Originate Report | September 2017

E

veryone loves the hero, right? I imagine a knight in shining armor riding into the fray rescuing the damsel in distress. Don’t you? When I first heard about HERO loans, I associated my vision of a hero with HERO – as I’m

sure they wanted me to. But they are far from HERO loans – they are more like VILLIAN loans – dark, shady

characters waiting to steal from your pockets, blow up your loan, or even worse, make you lose thousands of dollars.

We will discuss HERO/PACE loans in detail, what makes them constitutional, how they are arranged, what your risks

might be, and what is actually going on out there. In Part 2 of this article we’ll show a real-life HERO loan and scenario and what you might want to do to protect yourself and/or your borrowers from these villains.

What Can a LO Do To Protect Themselves and Their Borrowers?

1. Get the PSA / Loan Application and See If a HERO

is Disclosed. Seems obvious. Review the purchase agreement or loan application and see if a HERO was disclosed

in the agreement. If it wasn’t, then you still need to check

one more place, but at least you have an indication that one may not be on there.

What is a HERO loan?

HERO stands for Home Energy Renovation Opportunity (HERO). It falls under the Property Assesed Clean Energy

Program (PACE) program which provides financing for energy-efficient, renewable energy products to communities in general. As of this writing 31 states have either adopted or are adopting PACE programs (including HERO loans). See chart below for which states.

2. Review the Preliminary Title Report (PTR) and

See if It is Under Additional Taxes. Get a PTR as soon as possible and review it. Under the Tax Exceptions portion of the PTR a HERO loan would be listed. In Califor-

nia, for instance, the title of the HERO loan typically is “Notice of Assessment and Payment of Contractual Assessment Required.” It may be titled something else and

will typically be right before, at, or right after the special assessments disclosure in the PTR. If it is there, then you know you have a HERO you need to slay!

My Borrower has a HERO Loan– Now What?

See if you can get the HERO loan subordinated. As of

the writing of this article, HERO will only subordinate to new financing if (1) a bank or credit union require it, (2) a $350 subordination fee is paid and (3) it is an

n Pace Program Adopted n No Pace Program n PACE Pending

arms-length transaction. Also run the subordination by the GSE who will purchase the loan from your bank –

make sure they accept the purchase, otherwise the deal is

* AK: No * HI: No, but known interest

Does The Hero Save The Girl? It does if the Girl is the investor in the loans!

In most states, HERO loans are issued by state bond laws.

What does that mean? In short and simplified terms, it means these loans have the same priority as property tax-

es. That means that they are superior to the liens issued by mortgage lenders. Thus, failure to pay these liens puts

all liens junior to them (the very financing used to acquire the properties in most scenarios) at risk.

THE GSEs Slay the HERO

In its Selling Guide issued July 25, 2017, Fannie Mae states that it will not purchase any PACE loan that does not subordinate to its loan. Freddie Mac says the same thing. Since all loans are basically pre-sold to Fannie Mae

prior to bank funding, this effectively slams the door on traditional financing for HERO loans without such subordination. FHA refuses to finance as well without subordination.

…but HERO will subordinate upon an application!

Yes, there are provisions and ability for HERO loans to be subordinated and thus allow a GSE lien to be in place.

However, as recent as last year there were issues with

dead in the water.

Fannie Mae and Freddie Mac accepting HERO’s subordi-

Conclusion

Regardless, there is a definite chill on the sales process

struments with little oversight by the lending authori-

nation language.

of a home. Agents can expect a longer DOM for a house due to the HERO loan. Further, because GSEs do not al-

low HEROs as part of Assessments, they must be included in the CLTV of the property.

HERO loans in the residential sector are dangerous inty and given super-priority status. This is a recipe for disaster. Be careful when dealing with a property with a HERO loan. If you can push the deal through, make

sure you get the subordination lined up FIRST, otherwise you’re going to do a lot of work for no reason.

So What’s Next?

Where can a buyer turn? Where can a borrower turn?

Possibly to alternative non-bank lenders or private money lenders. However, for a LO who wants to close a loan, this

effectively becomes a headache and a potential non-starter for them. Best case scenario there are more hoops to jump through for the borrower to close their loan.

This is the first part of a three part series. Part Two will focus

on Alternative Lenders and HERO loans and Part Three will

focus on Real Life Stories of Dealing with HERO loans. Have

one? Email me at anthony@geracilawfirm.com and I may include you in Part Three.

ABOUT THE AUTHOR: Named a Super Lawyers® Rising Stars in the legal field, which is given to just 2.5% of attorneys nationwide, Anthony Geraci is the managing shareholder of Geraci in charge of firm strategy and development of Geraci’s team and culture. He is skilled in mortgage lending and securities law and has authored numerous articles on real estate finance and security subjects. Mr. Geraci is a leader in creating national mortgage pools and mortgage funds as well as sophisticated net branching arrangements among several mortgage companies. Mr. Geraci is also an active member and a member of the board of directors of EO (Entrepreneurs Organization). CONTACT: (949) 379-2600 | anthony.geraci@geracilawfirm.com www.geracilawfirm.com www.originate.report 9

FEATURE STORY

Overcoming Obstacles to Make Big Happen

By Mark Moses, CEO Coaching International

L

ife was good growing up in the small Canadian town of Sudbury, a mining community about 250 miles north of Toronto. My dad operated a retail men’s clothing store. We were your typical middle-class family.

When I was 12, Dad let me work in his store, selling men’s suits. I soon became the top sales guy. His regular staff wasn’t thrilled with how I was showing them up. So how did my dad respond to the staff’s concern about this precocious young kid?

He fired me. Dad said I caused too much drama and asked too many questions.

Then, when I was 17, everything changed. My dad declared bankruptcy and I had to grow up in a hurry.

My dad’s bankruptcy was just the first of several life-shaping traumas that helped clarify my thinking and guided me throughout the past three decades. A severe family health challenge, a disloyal business partner, uncontrollable economic changes — I’ve been through them all and more.

I am 5’4” tall. I’ve been height-challenged all my life.

But what I lack in height, I make up in heart.

After my father’s bankruptcy, I knew I was going to have to find a way to help put myself through college. One day, at the college career center, I saw a sign: “Be your own boss,” it said. “You can earn $5,000 to $15,000 in a summer by having your own Student Painter franchise.”

I figured that sounded like me.

“This painting thing, it’s crazy. That’ll never work,” my dad said to me when he first heard about my business pursuit. But I applied anyway and got the job. I opened a new territory in Waterloo, Ontario, my college town, and

10 Originate Report | September 2017

that first summer, I was the top rookie franchisee in Canada and made $18,000. “This entrepreneur stuff is pretty cool,” I said to myself. I had expected study accounting in college. It wasn’t long before I thought I could be the guy who hired the accountant.

I did it again the following summer. I was the International Franchisee of the Year. I was 20 years old and made $35,000 that summer.

At that point, I knew I had to run my own business, so I convinced the franchise company to partner with me. It didn’t take long before I packed up my U-Haul and drove south to the United States to launch the business.

As I was packing, my dad told me: “You will be back.

That’ll never work.”

I took his comment as a challenge. It drove me to win.

Despite the long odds — after all, I was a startup in a foreign country — I was determined to succeed. I didn’t want to face the music if I failed.

Eventually, I ended up in California and opened my Student Painters business. I went from zero to 250 branches, employing more than 3,000 students by my fourth year in business.

Looking back, my initial vision was simply to make enough money to pay for college. Over time, the vision grew as I realized how big the world’s opportunities are.

Through it all, the key was to maintain a clear vision of what I was trying to accomplish.

I’ve been setting annual goals since my late teens. Back then, I set a goal to be a millionaire by the time I was 30.

I achieved it by age 26. I wrote down that I wanted to win the US squash championships by the time I was 30. I met that goal two years early.

Later on, I set a goal to complete an Ironman Triathlon in less than 13 hours. I checked that one off when I finished my first Ironman in 12 hours and 55 minutes.

In fact, I have completed 12 full-distance Ironman Triathlons, including five Hawaii Ironman competitions.

By setting clear goals and focusing on the steps to accomplish them, I have built and sold businesses that generated hundreds of millions of dollars in revenue. I’m an Ernst & Young Entrepreneur of the Year award winner. I

More than 30 years and several successful entrepreneurial ventures later, I am still asking questions.

What do I want? What do I have to do to get it? What could get in my way?

How do I hold myself accountable? also won the Blue Chip Enterprise award for overcoming adversity.

More than 30 years and several successful entrepreneurial ventures later, I am still asking questions. What do I want? What do I have to do to get it? What could get in my way? How do I hold myself accountable?

CEOs often lack this clarity of vision to answer these questions. Yes, they have an idea of what they want, but they don’t have laser-like focus. Vision plus focus plus emotional intensity enables you to accomplish great

things.

It can also help you when adversity strikes.

In September 1996, three months after I got married, I signed a lease to move my company, Platinum Capital, from our little 6,500-square-foot office space to a 24,000-square-foot space with 160 cubicles.

Then, my business partner, the best man at my wedding, left to set up a competing company two blocks away.

He left me with a shell of a business, empty offices, a marketing campaign I could not support, huge financial losses, and a rift that would never heal.

Was I mad? Absolutely. But I chose to fight.

“I’m going to show everyone our vision for this space, for these 160 cubicles and this whole room where we can expand,” I told my assistant. “Find me an elephant. A marching band, too.”

On the appointed day, the marching band was there.

I rode the elephant down the street and into our annual meeting. We were on the morning and evening news broadcasts. The Los Angeles Times and the Orange County Register sent reporters. The message was if you think big and act big, you will be big.

We would take this company to $1 billion dollars, I said. I heard laughter, and I saw tears. By the next day, I was starting to notice an interesting addition to the decor around the office, particularly on people’s desks: ceramic elephants, stuffed elephants, and crystal elephants. I felt a

In any life, we’ll all experience the days of desolation, as well as the ones of sparkling inspiration. I have come to understand that what comes our way often is a matter of what we have come to expect. And I have learned firsthand how the dreary days give us an appreciation for the dreamy ones. clear message: “Hey, pal. We’re with you.” Platinum stayed out of bankruptcy, and when I exited in 2006, I left behind a thriving company.

But the biggest challenge in my life was personal. One October day in 2004, my 3-year-old son Mason complained of a headache. Soon he was vomiting. Before long, my wife and I stood in disbelief as the doctor told us Mason had a brain tumor.

Surgery was the next day. The doctor warned us that Mason might lose full use of his arms and legs. He might not be able to walk.

Fortunately, he survived that surgery, but a couple weeks later, he was back in surgery to drain water on his brain. After another week in the hospital, the pressure in his brain started to come down. Our boy was getting better. The hospital released him, and we brought him home.

He still could not walk and, while we hoped for the best, we knew what the worst could be.

Over time, he got better. In 2009, Mason was declared cured.

Then one night, my wife Ivette and I were out to dinner at our friend Jack Daly’s house. We had left our phones in the car so that no calls would interrupt our time together.

When we returned to the car, we found dozens of messag-

(l) Mark competing in one of many triathlons, (r) The Moses family in 2016

es. Mason was back in the hospital. He had been playing

consequences. He has been a regular kid. He has faced

That evening, Mason was transferred back to Children’s

has eagerly pursued. Mason is showing the world that life

at a friend’s house and had multiple seizures.

Hospital of Orange County, where brain monitors indi-

cated hundreds of seizures. After several days of brain activity tests, however, the doctors concluded that the seizures were psychogenic in origin, meaning they were self-created.

In therapy, Mason told us that he was just tired of all those doctors and hospitals and white coats. When he was

younger, we could tell how scared he was — even if he didn’t tell us, we could see it in his eyes. Now, he was tell-

ing us outright what he thought about it all. He was done with it.

“Look, Mason,” my wife said to him one day, “whatever

demons you have in your stomach, why don’t you give them to me, and together we’ll throw them in the trash can.” And they did. He has not had a seizure since.

Ivette and I had different ways of dealing with Mason’s

illness. I was task-list oriented. She had an emotional response. When it comes to healing, there is a place for both.

In the end, our family gained strength from the ordeal. I

do not doubt that Mason is a stronger young man because of what he endured and overcame. And I know that our marriage benefited as we learned to deal with our differ-

ences and, together, gained a perspective on what really matters in life.

Today, Mason is healthy and happy. He had some

problems with motor skills for a while but no cognitive

other challenges in life, including exciting ones that he doesn’t just happen to him.

As Mason was recovering, I felt a deep sense of grat-

itude. To raise money for Children’s Hospital of Orange County, where Mason was treated, I decided to compete

in the Ironman Canada triathlon. The training was ardu-

ous, as one might expect for a competition that includes a 2.4-mile swim, a 112-mile bike ride, and a 26.2-mile

run — which is a full marathon — all in one day. Through it all, I kept sight of why I was doing this: to support the hospital that saved our son’s life and that was in the busi-

ness of saving many lives. And I did it in honor of Mason.

The training I endured was nothing compared with what he had experienced. We set up a web page for donations and raised $110,000 for the hospital.

In any life, we’ll all experience the days of desolation, as well as the ones of sparkling inspiration. I have come

to understand that what comes our way often is a matter

of what we have come to expect. And I have learned first-

hand how the dreary days give us an appreciation for the dreamy ones.

There will always be surprises, but what matters most

is how you learn from the experience, accept it for what it

is, and apply it. Now, in everything I do, I try to have fun and influence others positively. I have reached the point in life where I get to do that every day. I strive to make a difference. That is the greatest form of success.

ABOUT THE AUTHOR: Mark Moses is a founding partner at CEO Coaching International, where he and his team help businesses and individuals increase profitability, drive margin expansion and gain accountability in order to meet business objectives and reach new heights. Moses is a highly successful serial entrepreneur and top business coach who advises entrepreneurs and leaders toward extraordinary results. His firm CEO Coaching International coaches more than 100 CEOs and entrepreneurs in nine countries. He regularly facilitates annual planning sessions for companies, and is also a passionate and energized keynote speaker who covers topics that include what it takes to be a top performing CEO, building the life that you want, overcoming adversity in your business and your life and how to build a $100 million company. CONTACT: (714) 392-6060 dawnpope@ceocoachinginternational.com | markmoses@ceocoachinginternational.com www.ceocoachinginternational.co

www.originate.report 11

SPECIAL SERIES

DEATH & TAXES: Closing on Time, EVERY Time Part Three of a Six-Part Series

By Kasey R.J. Stevens, Top Division Escrow, Inc.

A

s a senior advisory escrow officer and escrow manager who has worked in this industry for more than 25 years, I can’t say I’ve seen it all, but I can say I’ve seen a lot.

If you as a loan originator haven’t found that very special someone who drives your transactions from open to close, pay special attention for the next few months as I continue to share tips with you to help you close on time, every time. The third tip is proactively managing the unavoidable — death and taxes — and still closing on time. I’ll be sharing the rest in future issues of the Originate Report.

The two most unavoidable things that can stop your closing in its tracks are death and taxes. We can start with when someone passes away during the loan process.

Real property with a clear title may pass to an heir if the previous owner has gone through the probate process in the county in which the property is located. The title must be examined by a title agent, who searches for any defects in the title (judgments, liens, mortgages, unpaid tax bills, etc.) within the last 60-plus years. If the title did not pass by virtue of having been probated or if any defect is found, there is a “cloud” on the title.

When this happens, you cannot close a loan as no title insurance can be issued.

In most states, if a legal last will and testament or trust passes title to the heir, then title insurance can be obtained and you are clear to close. However, if neither trust nor legal last will and testament exists, the property may only be passed to the heir via probate.

When a person dies owning real property, the title must be passed through the estate, via a formal probate, and a deed of distribution entered into the public record. Any estate where the deceased died 10 years earlier can’t be probated. In that instance, a Determination of Heirs action has to be instituted to pass title to the heirs. The court order will act as the deed to pass the property to the heir.

However, in some states (Hawaii, Illinois, Nebraska, Nevada, North Dakota, Oregon, Arizona, Arkansas, Colorado, Indiana, Kansas, Minnesota, Missouri, Montana, New Mexico, Ohio, Oklahoma and Wisconsin), an asset-specific will substitutes for the transfer of property at death. The owner may designate beneficiaries to receive the property upon the owner’s death without waiting for probate.

If your client has inherited a property, the key points that you as an originator need to clarify are: • Was there a legal last will and testament? If not, this file will have to go through probate.

• If an attorney hasn’t already handled the transfer of title, then your client will need to have a full copy of the legal last will and testament available for your title officer.

• Do they have an original or certified copy of the deceased’s death certificate? If not, obtain one. It will be a closing requirement.

• Was the deceased part of a trust? If so, a legal last will and testament is not required, but a full copy of the trust is required.

12 Originate Report | September 2017

You’re going places.

Don’t stop until that place is the top.

If you’re a loan originator looking to build your business and gain insight from the nation’s top mortgage brokers, bankers, lenders, and lawyers, Originate Report is for you. Distributed to 35,000 professionals in the private lending industry every month, this is where you come to see and be seen.

To discuss submitting original articles, or for general Originate Report questions, email us at submissions@originate.report.

behind you all the way. find us online at www.originate.report

www.originate.report 13

If your client is terminally ill and wants to button down financial details prior to their passing, the things that you as an originator need to remember are: • Contact your escrow officer or settlement agent immediately. The sooner they know what is happening, the quicker the closing details can be cleared.

• In the case of a deed, make sure there are unrelated witnesses present to prevent post-death litigation against you as a lender (for charges of signings under duress, accusations of elder abuse, and whether or not the client had the mental capacity to execute documentation — these are the most commonly contested).

• If your client is in the hospital or hospice, then their doctor and someone from the hospital or hospice social services staff should be present at the time of signing.

I know from arranging these signings that they are difficult for all parties. However, they must be done to ensure not only your client’s safety, but also yours as the loan originator as well. We all know that even if a suit is brought that has no merit, you still have to defend your position.

This can be lengthy and costly, but with a little bit more preparation, it can be avoided.

Now on to the favorite subject of every closer across the nation: taxes.

Both federal and state tax liens are required to be paid in order to close. However some originators may not be aware of the timelines.

A federal tax lien can take anywhere from 14 business days (which is actually 3 weeks) up to 10 weeks. Keep in mind the IRS states that the turnaround time starts as soon

14 Originate Report | September 2017

as the correct paperwork has been received. The correct form (F8821) can be obtained at https://www.irs.gov/pub/ irs-pdf/f8821.pdf and the instructions (I8821) on how to complete it at https://www.irs.gov/pub/irs-pdf/i8821.pdf.

The only caveat with this payoff request is the IRS may not view the form you submit as complete. For example: • Say your client is named Josh A. Smith and the original lien was filed as such. However, Mr. Smith’s last communication from the IRS is addressed to Josh Allen Smith.

The file may be under either of those names. If you pick the wrong one, the application will be denied (you can get around this by submitting twice: once on Monday and once on Wednesday. Do not submit on the same day it will be counted as a duplicate.

• The type of tax form must be correct or the application will be denied.

• Have the client provide you with a copy of the filed tax return. If anything on the form does not match their file

(i.e. type of tax form that was originally filed or type of tax information), the application will be denied.

• If you are requesting the payoff, make sure you check the

box for section 4, or you will be replacing their current tax representative. If you mark the box in section 4, you then skip sections 5 and 6.

• If the client’s signature does not match the IRS files, then the application will be denied.

State Tax Liens are very similar in timing and execution.

Go to your state web site to obtain forms and instructions on ordering.

Again, keep in mind that each time you prepare in ad-

vance to avert the only two unavoidable closing delays of death and taxes, it gets easier to manage the next transaction the same way, until it becomes habit and each transaction runs smoothly. So eventually, you can close on time, every time.

ABOUT THE AUTHOR: Kasey Stevens closed 3 out of the 5 largest land

transactions in California history within the last 100 years, including Tustin Marine

Base, Pacific Century Land Transfer, and Civic Center Drive finance project. She successfully managed the largest builder desk in the nation at +1,000 transactions per month, encompassing Los Angeles, San Diego, Orange County, and the Inland Empire. Kasey started in the legal division of FNF for head legal counsel to post closing manager (South-Eastern U.S.) for First American Corporate, and has 10 years experience as an expert witness for various firms, including FDIC cases.

CONTACT: (949) 900-6512 | krjstevens@tdescrow.com | www.tdescrow.com

GERACI PRESENTS

2018 CONFERENCE Attend Innovate 2018 to learn about the latest trends and insights in the private money lending space that we’re seeing. We will show you how to raise and deploy capital more effectively, while also bringing you together with the people that you need to know in this industry! See you in Newport Beach.

FOR MORE INFORMATION ABOUT ATTENDING, SPONSORING, OR SPEAKING, CONTACT RUBY AT RUBY@GERACICON.COM

FEBRUARY 7-9, 2018

BALBOA BAY RESORT | NEWPORT BEACH, CA

www.geracicon.com/innovate www.originate.report 15

SPOTLIGHT

Industry Spotlight: David Owen

CEO, A List Partners Management, LLC

16 Originate Report | August September 20172017

DO: I founded and managed some successful companies

OR: What is one piece of advice you have learned and

AUM (Assets Under Management). My ROI for my in-

DO: My granddaddy once told me that in order to be an

in Austin and over the years managed over $200MM in vestors during this time ranged from 8% to as high as

19%, so my investors grew to trust and believe in what I

was doing, as well as what I was accomplishing for their investments. When I decided to retire, my partner bought me out and I intended to move to a far-away beach and just enjoy retirement. However, my investors began to call

A

comfortable with the littlest of chores, including scrub-

bing the toilet. In other words, never ask a co-worker or employee to do something that you are not willing to do yourself.

OR: What is the main ingredient in becoming successful

for retirement and the idea for A List Partners Manage-

DO: Building and maintaining trust is key. Our funds are

ment was borne; meaning, creating a business model that was much broader and involved more income streams for LLC, David Owen, CFM, is responsible for

effective CEO or President of a company, one has to be

me, almost immediately, and ask when I was coming back.

Furthermore, I realized very quickly that I was not ready

s the CEO of A List Partners Management,

carried with you throughout your life?

the securities I wanted to build, and I knew the Texas real estate markets were the place to focus.

in the lending business?

relatively new, so we are very much in acquisition mode right now, both for investment capital infusion and ac-

quisition of projects, developments and loans to service.

Cultivating trust through relationship building and, of course, consistent positive returns for our client-base is key to our success.

managing the management team whose

OR: What has been one of your favorite moments starting

companies and funds under the A List Partners um-

DO: The second investor. Once the investment capital

OR: What are the criteria for A List Partners to consider

had for A List Partners would not only work, but flourish,

DO: We are open to consider any viable project. My only

members assist in the day to day operation of the

brella of companies. Also responsible for working

with securities and local attorneys to stay on top of

Federal and State Legal Compliance reporting, liaison to accounting firms, mentoring the members of the management team and preparing them to keep the

A List Partners?

began coming into my program, I knew that the vision I

both for the company I am building and, more importantly, for our investors.

funds and related companies profitably running for

OR: Why Texas Real Estate in particular?

US Investors in countries around the world.

know the demographics of Central Texas very well. What

years to come and, to build relationships with NonOriginate Report: How did you get into lending?

David Owen: I began my career over 40 years ago as a Realtor and then Real Estate Broker. Private Lending was

a synergistic next step for me in my career. I met Anthony Geraci in 2007 at a conference and sat down with him to hear how a mortgage pool security is structured. After

DO: It is what I know. I am an 8th generation Texan and I

I decided to do was expand on the concept of truly cap-

booming market of Central Texas around Austin. Plus, I’ve worked this market for over 40 years.

DO: Network, Network, Network. The best way to build tinually working with my clients’ own networks. I guess

you could call it being focused on massive Grass Roots marketing efforts.

originator/broker?

OR: Have you had to learn any lessons the hard way?

and anyone who wants to work in the lending industry

in this business. Openness to learning is paramount to

DO: Disclosure and accuracy! I am a stickler for details,

must have a firm grip on every detail and minutia for each and every loan on their desk.

OR: What CRM systems do you use to email your target market?

DO: We have both a proprietary platform as well as a database management system in which we connect and market to our prospective clients, as well as our current investor base.

OR: What made you want to create and begin A List Partners Management?

attention. We underwrite the project. In other words, we ask ourselves, “would we want to own this asset within the confines of one of our funds?”

into our funds, including foreign national capital invest-

this business is to continually meet new people while con-

OR: What is the most important characteristic in a loan

write the individual or entity bringing the project to our

and down into San Antonio, particularly the robust and

States: that “golden corridor” from Dallas through Austin

especially here in the Texas Real Estate industry. Plus, I plug into. It was just a natural progression for me.

detailed project Executive Summary. We do not under-

OR: What makes A List Partners Management unique?

OR: Think about your loan officer days, how would you

had a huge network already built that I could immediately

initial requirement is a very solid, well thought out, and

italizing on the greatest real estate market in the United

a year of conversations, research and interviews, I saw

a huge opportunity and need in Hard Money Lending,

a project or loan?

DO: Absolutely. Learning lessons is an everyday process

success and growth. Even bad experiences are good learning opportunities.

OR: What is one fun fact that most people don’t know about you?

DO: I’m a very adventurous man and I love a good adren-

aline rush. I’m a huge fan of zip lining, whitewater rafting and sky diving.

DO: The fact that we have multiple streams of income ment. We offer what many do not. Our Portfolio Interest

Exemption program allows foreign investors to earn interest and income with zero tax withholding, a 30%-40%

savings for them. We offer the EB-5 Visa program to de-

velopers here in the US which allows them to plug into cheap capital infusion for their projects, while stream-

lining a foreign investor’s Green Card process. And, of course, our higher than average yields to our investors because of these programs, and more, make us unique compared to most.

OR: Why would an investor want to put their money into your funds?

DO: We are creating something very special here at A List Partners Management. Compared to traditional forms of

investment, which begins at the lows of bank savings or CD’s (negligible ROI’s) to traditional mutual funds (generally low interest rates) to stock market volatility (possibly higher interest rates, but also the ability to lose big), A

List Partners funds offer conservative principles that offer higher than average rates of return.

CONTACT: (513) 687-6263 | dfo@alistpartners.com | www.alistpartners.com www.originate.report 17

FEATURE STORY

Growing Your Business Through Collaborative Leadership

By Linda Hyde, American Association of Private Lenders

A

ll leaders share at least one desire: to grow. But growing pains do not have to hinder planned growth. In fact, through collaborative leadership, you will often see fast, sustained progress.

Today’s leaders, in all walks of business and political life, are talking about the breakdown of silos and walls while building collaborative relationships. In tough times, some leaders turn inward to protect their business interests. This may win some short-term popularity, but whether it’s leading a business or a country, the siloed approach does not work for long. The only successful response is to build your team through collaboration.

Collaboration starts at the top, but it should include your team before bringing in outside sources.

You cannot successfully grow your business without your team, so you need to gain their buy-in to the process. It is human nature to question the who, what, where, when, why and how before processing and accepting the next step forward. It is important as a leader that you are relinquishing all the data you can so the team can effectively answer these questions.

Collaboration creates innovation. You should always be open to ideas from other groups that have shown previous success. By surrounding yourself with different perspectives, you and your team will be exposed to different ideas and resources that can substantially impact your daily operations. Sharing new and innovative ideas

18 Originate Report | September 2017

openly will certainly bring two teams together.

Collaboration reduces unnecessary risk. Collaboration can lead you to partner with competing parties or even build a bridge with a sister organization. It sounds risky, but opening this door will allow you to reinvest your time and energy into your business rather than protect your territory. When you allow a partner into your circle, you share success but also share the risk. Sharing of joint time, resources and brainpower can reduce your overall risk of failing. As a leader, you must buy into these changes to show the team that you are fully vested in this partnership.

Collaboration amplifies success. It is more rewarding to celebrate with a team than by yourself. Do you really want to enjoy that glass of champagne alone? Think about the last win you had and how good it felt to share that

with your team. You will see a spike in employee morale after the smallest win, positively impacting the business overall. When you allow others to share in your success, you will gain a renewed personal commitment from your team.

As a leader, it is always important to remember the value of a good idea no matter where it comes from. Ideas shared in a collaborative environment can blossom into something bigger than imagined. It is important for your team to understand they can share and help implement a communal idea to better the business, but they need to be smart enough to give the credit where credit is due. As a respected leader once said, “Success is bringing an idea to life but not being too stupid to not share the credit.”

“If you want to go fast, go alone.

If you want to go far, go together.”

– African Proverb Do you really want to grow, improve, and expand? Then strive to rid your organization of internal and external selfishness. Don’t merely look out for your own interests, but find partners in which you and your team can invest and trust. You will encounter problems along the way, but the dividends you’ll reap by nurturing a collaborative environment will far exceed any price you must pay. We can do far more together than we can alone.

ABOUT THE AUTHOR: Linda Hyde is Executive Director at the American

Association of Private Lenders, an association built on the principles of Ethics and

Education. A Kansas City Native; Linda has more than 18 years of customer service experience, with 15 years being managerial. While you will not find her on Twitter, you can find her on LinkedIn networking with other professionals in the Real Estate industry.

CONTACT: (913) 888-1250 | LHyde@affinitygm.com | www.aaplonline.com

You have knowledge. You have ideas.

Let us showcase your voice.

Currently we’re looking for articles showcasing: Business Development • Fintech/Newest Loan Programs • Automation in Today’s Evolving Society • Upcoming Trends & Changes • Marketing & Outreach Essential Tools & Technologies • New Legal Issues and Regulations.

Another idea? We’d love to hear that, too.

Write for us. Email submissions@Originate.Report for more information.

www.originate.report 19

TREND REPORT

Blockchain May Provide Solutions for the Mortgage Industry

By Originate Report Staff

B

y now, most people in the business world have heard the term “cryptocurrency.” It refers to a type of virtual currency, such as Bitcoin, Litecoin, Ripple, and others, that came into existence in 2009.

Bitcoin was the original digital currency and used cryptography to control security and manage its exchange.

Transactions of Bitcoin and other digital currencies are controlled by a secured, distributed database known as a blockchain. A blockchain, as mentioned in the August edition of Originate Report, is used to monitor and manage an infinite chain of records that track the sale, barter, and transfer of cryptocurrencies.

The benefit of blockchain technology is its sequence, meaning it is time-stamped and corresponds to the pre-

20 Originate Report | September 2017

vious transaction in the chain. Once recorded, the data in any one block cannot be altered. It becomes an incorruptible permanent record until another block is recorded. Although it is hosted on peer-to-peer networks as an open, distributed ledger between two parties, the software algorithm can be set to trigger transactions automatically based on certain criteria or on a pre-determined schedule.

Now, the mortgage industry is exploring opportunities on how to use blockchain’s distributable ledger software technology for loan transactions. Blockchain’s ability to write records that are incorruptible, unchangeable, and cannot be copied but can be pre-programmed, is of increasing interest to the financial community.

While many analysts say it will be some time before

blockchain becomes an everyday solution for mortgage transactions, it appears to be an ideal solution for func

The mortgage industry could use blockchain technology to provide a more streamlined record-keeping and transactional process. As blockchain operates peer to peer, there is no need for a third party to validate a transaction.

tions such as title insurance, inspections, appraisals, and loan servicing. When a blockchain transaction is initiated,

the computer network validates the data

streamlined record-keeping and trans-

eration is complete, the software informs

peer to peer, there is no need for a third

between the two parties. When the op-

all participants that a secure record action

has occurred and the record is permanent.

The

encrypted

transaction

occurs

quickly - typically within 10 minutes

from beginning to end. This time frame

leaves little chance for hackers to infiltrate the transaction and crack the encryption.

The speed and security of the transaction are what makes blockchain so appealing to the financial services industry, especially mortgage servicers and investors.

Blockchain uses mathematical algorithms to book transactions. These algo-

rithms can be written to include certain data or exclude it. Take the secondary mortgage market for example. If a securitized mortgage pool is offered for sale,

but one loan or a group of loans is outside the buyer’s criteria, blockchain technology makes it possible to automatically remove

those loans from the sale without a third party intervening.

The mortgage industry could use

blockchain technology to provide a more

actional process. As blockchain operates

party to validate a transaction. This benefit could save time and reduce the fees

paid by the lender and the borrower

during a transaction. Since it is only the two parties involved in a transaction, both

will have confidence that the information recorded is accurate.

Some industry analysts say that adopting blockchain for mortgage transac-

tions could take up to a decade to fully implement. There is little doubt that any

mortgage application of the software will take time. Interested parties will have to

develop a proof of concept, design an implementation plan, perform testing and

modification, and then persuade their employees and clients to buy in. However,

given the appeal of the idea and the po-

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tential for investment from the financial services sector, we think that blockchain use for mortgage banking may become a reality in the not-too-distant future.

CONTACT: www.originate.report www.originate.report 21

FEATURE STORY

How to Market to Millennials

By Originate Report Staff

22 Originate Report | September 2017

M

ortgage professionals are always seeking out the right demographic on which to focus their marketing efforts. So, there is little wonder why more loan officers and realtors are now looking to millennials for new business. This generation offers enormous potential for signing new clients, as the core demographic comes of age with regard to their career, families, and future financial goals.

With a majority of millennials well into their careers, they now turn their focus to building a family and laying down roots within their chosen community. The demographic now represents the largest group of potential homebuyers in the nation.

It sounds strange, but the question is how do you reach

Online Presence — Millennials do everything online.

They work online, they shop online, and they pretty much live online. Being connected 24/7 provides them instant access to colleagues, friends, and news. Why should mortgages be any different? A mortgage company with a strong online presence and brand, coupled with online process-

marketing with accurate demographic data that includes education, income, financial wherewithal, and the market history of potential clients can help focus your online energy toward this group. Getting a reaction from your posts, building a strong online presence, and following up with the millennial generation through online, speed-

ing and customer service, will earn the respect and future business of millennials.

Peer Support — Based on the popularity of Yelp and online reviewers, millennials value the input of their peers on all types of services and products, and mortgages are no different. When the time comes to purchase a property with a mortgage, this demographic will research, review recommendations, and ask a friend. A mortgage company with strong performance reviews will rise in rank.

Social Consciousness — Growing up in the era of 9/11 and beginning their careers during the recession, millennials have a keen awareness of how small actions can affect world events. They seek out and do business with companies that have a social conscience. Mortgage companies that give back to society rise to the top of the list.

Exceptional Communication — Raised on technology that allows people to communicate with nearly anyone instantly, millennials want to talk with their mortgage lender regularly. More than communication, they want to be involved in the process. Providing up to date and accurate information is key to building trust.

of-light mechanisms will help drive more new business faster and more consistently than with traditional forms of marketing.

Education — Although a majority of millennials are college educated, some may not have insight into the benefits of owning a home, as well as the responsibilities that come with that obligation. By developing marketing pieces that spotlight insightful information and then sharing this information with thoughtful and enthusiastic copy, you will engage your audience and deliver enthusiasm with a call to action.

Brand Creation — Use the information you have learned about millennials to build a brand around what is important to them. Homeownership is a big step, and they want to work with knowledgeable, trustworthy, and tech-savvy individuals to help guide them through the process.

Follow Through — You created the marketing plan, hit the social networks, and broadcast your message to the world. Now, it is time to live that message. Be familiar, be consistent, and follow through on your promises.

Building that initial trust was key to earning millennial business, but living up to your commitments and proving your dedication to your client’s best interest will earn you their loyalty.

Millennials will become one of the largest real estate buying demographics over the next decade, but marketing to the group presents its challenges. them? Millennials grew up in the age of technology. They entered their teens during the tech boom of the 1990s.

They most likely don’t remember not having the Internet available to them, and they may be the most technically diverse population in America. Marketing to this group is an entirely different endeavor.

What Distinguishes Millennials?

The millennial generation consists of people born between 1977 and 1995, and it now encompasses more than 80 million individuals ranging in age from their early 20s to late 30s. Nearly 50 percent of all jobs in the United States are held by this demographic, and that number is likely to increase by double digits in the coming decade. While more than one-third of this group holds a degree, they may also carry a heavy debt burden from their college years. Besides racking up student loan debt, millennials like their creature comforts, and most hold other debt, such as auto loans and credit cards.

Growing Up in the Age of the Internet

Millennials not only grew up surrounded by technology, but they embraced it. For many millennials, their education evolved from written books to online studies. They were immersed in the tech realm by necessity but quickly learned to succeed in today’s workplace, they needed to understand and master technology. They communicate faster and more efficiently than the previous generation, and rest assured, they are ready to take on the next big innovation.

Millennials may be the most socially aware generation.

With 24/7 news cycles and a constant stream of new app or social media platforms introduced, this demographic is immersed in national and global events. However, they shun typical marketing efforts. They are a savvy bunch and understand the difference between click bait and informative content. With so much information at their fingertips, their comprehension level is high, but the tolerance for exhaustive marketing pieces is small. They value the amount of content they have access to but primarily focus on only that content that relates to them.

What Millennials Want from Their Mortgage Company

Trustworthiness — Millennials look to build trust

with whoever they do business. So, pursuing trust with millennial clients from the beginning is paramount to a continuing relationship. Upfront honesty and sincerity, truthfulness in the process, and finishing what you begin, will help lock up a customer for life.

How to Make Your Marketing Work

We have explored how millennials think and act, and what they want in a mortgage lender. Now, let’s break down how to develop a strategic marketing plan that works.

Introduction — With millennials, it is all about getting to know someone. Use your social media presence to not only promote your business and products but also to introduce yourself to prospective clients. Tell them about your company and the real people behind the brand. Explain why you are the right mortgage professional for all of their needs, and why you uniquely understand their financial plan and how you can play a part in ensuring their reach it.

Online Presentation — Today’s social media platforms and an endless supply of virtual marketing resources provide companies an opportunity to market to thousands in the blink of an eye. Also, in our data-driven world, there is a wealth of information for the asking. Targeting your

Millennials will become one of the largest real estate buying demographics over the next decade, but marketing to the group presents its challenges. While millennials are near the top of wage earners for their age group, they also carry too much debt. In a housing market that is near or at the peak of all-time highs, designing a mortgage solution around current obligations could be a delicate endeavor.

However, millennials present a tremendous opportunity to capture a major portion of the future home buying market, while building the type of loyalty that only comes around once in a generation.

CONTACT: www.originate.report

www.originate.report 23

UPCOMING EVENTS

Upcoming Events

Don’t be left out! Showcase your upcoming event here! Contact Ruby@originate.report for more information.

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

JANUARY

FEBRUARY

MARCH

APRIL

Captivate 2017 Conference SEPTEMBER 10-12, 2017 Las Vegas, NV www.geracicon.com/captivate

Innovate 2018 Conference FEBRUARY 7-9 2018 Newport Beach, CA www.geracicon.com/innovate

AAPL Conference 2017 NOVEMBER 12-14, 2017 Las Vegas, NV www.aaplconference.com

24 Originate Report | September July 2017 2017

All event dates subject to change.

Please visit conference websites for agendas and details.

Presented by

Northern California

www.crelc.com

Thursday, November 2, 2017 G r a N d h yaT T s a N F r a N c i s c o

OPENING SESSION A View From Fannie & Freddie

A

Christina Flynn Director, Credit Underwriting FannieMae - Western Region Tony Nargi Director - Production & Sales FreddieMac - Western Region

~ FEATURING ~

The LoanMakers ForuM

Jeff Hudson - Moderator SVP - Managing Director Walker & Dunlop

Where Lenders Compete For Your Loan requests LIVE!

FEATURING Jesse Gundersheim San Francisco Market Economist CoStar Group - Commercial RE

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COMMERCIAL RE STATE of the MARKET

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MEE T, GREE T & NE T WORK WITH THE FOLLOWING PARTICIPANTS:

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www.crelc.com • 818-532-7660 FOR MORE INFORMATION: www.crelc.com • (818) 532-7660 • Use Discount Code: “OR” When Registering www.originate.report 25

M

LOAN HOME

Help Make Dreams Come True.

Are you a lender? Advertise with Originate Report’s Loan Home and be seen by 35,000 industry professionals each month.

Contact our Loan Home director at alicia@originate.report or (949)383-4788.

Asset-Backed Lending Partners, LP www.ablp.com bws@abp.com (805) 371-8020

Columbia Pacific Advisors, LLC

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JCAP Financial Group www.jcap.net info@jcap.net (949) 622-6199

Direct Lender

500K 5M

www.money360.com/getaloan getaloan@money360.com (888) 283-7809

√

√

√

√

EB-5

√

√

√

√

√

√

√

5M 50M √

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

Direct Lender

26 Originate Report | July September 2017 2017

√

√

* TX

√

√

√

√

√

√

√

√

√

√

75/3

√

√

√

√

√

√

√

√

√

70/2

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

* CA

75/10

√

√

√

√

√

√

* AL,AK,AZ,AR,CA,CO,CT,DE,FL,GA,HI,ID,IL,IN,IA,KS,KY,LA,ME,MD,MA,MI,MN,MS,MO, MT,NE,NV,NH,NJ,NM,NY,NC,ND,OH,OK,OR,PA,RI,SC,SD,TN,TX,UT,VT,VA,WA,WV,WI,WY

√

√

√

√

√

√

SFR

√

√

California Properties, 1st & 2nd TD’s

1M 20M √

150K 5M

√

70/30

√

√

√

√

√

√ 2017

www.pacificprivatemoney.com loans@pacificprivatemoney.com (415) 883-2150

√

* AL,AK,AZ,AR,CA,CO,CT,DE,FL,GA,HI,ID,IL,IN,IA,KS,KY,LA,ME,MD,MA,MI,MN,MS, MO, MT,NE,NV,NH,NJ,NM,NY,NC,ND,OH,OK,OR,PA,RI,SC,SD,TN,TX,UT,VT,VA,WA,WV,WI,WY

Direct Lender

√

√

* AL,AK,AZ,AR,CA,CO,CT,DE,FL,GA,HI,ID,IL,IN,IA,KS,KY,LA,ME,MD,MA,MI,MN,MS, MO,MT,NE,NH,NJ,NM,NY,NC,OH,OK,OR,PA,RI,SC,TN,TX,UT,VA,WA,WV,WI,WY

Direct Lender

250K 5M

√

68/3

√

Direct Lender

Pacific Private Money

70/5

Direct lender against Texas Real Estate—EB-5 loans and projects in most states.

Direct Lender

Money360

e

100K 50M √

Senior Housing

www.alistpartners.com scott@alistpartners.com (512) 687-6263

* = states lending in

A List Partners Management, LLC

Br

MI N

LENDER

idg

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Do you want to find your loan a home?

That home can be found here, in these lenders.

IM U MA M L O XI MU AN $ Co M mm LO A e r N Co c $ ns ial

LOAN HOME

TYPES OF PROPERTIES WE LEND TO

Co rpo ra Ac t ion s/ T qu is ru No ition sts/ L tes s a nd ega De l En Pu ve t rch lop ities as me e Re d nts ha b Bla / Re nk mo de et Se Loa led/ co ns Re nd no M va Jo ted int ort g Ve ag Fo ntu es rei r gn es Na Ot t io he na r ls MA XL o Ch an-to urc -Va he lue s/ (% La Te nd ) m ple / MA (B X s/ Au are tom / Co Syn Term ag m (yr o me o Re tive s rci gues ) tai a l (S l/ L h En ot) ter ops/ tai St rip Ga nm Ma s S en lls tat t ) ion Le s isu re Ho (Go sp ita lf Co Mi lity ( urse xe d- Hote s/ M ari ls) Re use sid Pro Indu na) en s p Ra tial er t ie trial In nc s he vest me Se s a n lf-s nd tor Fa t Pro pe r ag Re m rtie s sta e s ura Of nts f ic e

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* CA

www.originate.report 27

PROVIDING PEACE OF MIND As a full service law firm that caters to the private lending industry, Geraci’s team of bankruptcy, banking and finance, litigation, securities, corporate, and real estate attorneys has provided our clients with peace of mind for over a decade.

Let us deal with the legal side of your business—so you can stay focused on what’s really important.

28 Originate Report | September 2017

Geraci Law Firm | 949.298.8050 | www.geracilawfirm.com