Originate Report - Inaugural Issue - July 2017

!

SUE S I L A R U AUG

IN

THE OFFICIAL MAGAZINE OF GERACI | JULY 2017

FORCE of

NATURE Overcoming Self-Destruction

JOHN INGOGLIA, p. 12

TREND ALERT! Social Influencer Marketing p.24

CFPB CHANGES Will They Affect You?

p.22

The

ART of

Leadership

p. 10

www.originate.report 1

2 Originate Report | July 2017

ANTHONY GERACI CEO Anthony@Originate.Report

RUBY KEYS Marketing/Editorial Director Ruby@Originate.Report

ALICIA CARTER Marketing/Advertising Assistant Alicia@Originate.Report

PAM HUBER Graphic Artist pamhuberdesigns@gmail.com

CONTRIBUTORS Dennis R. Baranowski • Chrissey Breault Anthony Geraci • John Ingoglia Jaspreet Kaur • Drew Louis Elizabeth Morales Wendy Sweet

FOUNDING UNDERWRITERS

MARK HANF President, Pacific Private Money

Letter from the CEO “Content is King” – Bill Gates “I only read Playboy for the articles.”

– My Father

DAVID OWEN CEO, A List Partners

ORIGINATE ONLINE www.originate.report

GERACI ONLINE www.geracilawfirm.com For Advertising Submissions and Inquiries contact Submission@Originate.Report For article submissions, email Articles@Originate.Report

Are you tired of being talked at instead of to? We created this magazine out of frustration. Time and again all the magazines we read are just fluff with lots of advertisements to support their revenue dollars. But value? Value is something left on the lips of the publisher while they reach in your pocket to steal your time and money.

We want to be the Playboy of loan origination magazines.

No, we won’t have photos of naked women gracing the pages of the magazine (sorry guys). But who hasn’t heard about Playboy’s articles? Playboy has always been known for its articles. Real, raw and powerful articles. We’re going to do the same with The Originate Report.

Ready to go on the journey with us? Don’t worry, you’ll just read us for the articles.

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

-Anthony Geraci

www.originate.report 3

contents JULY 2017

Cover Story

12

A Force of Nature

Picking up the pieces after overcoming alcoholism.

By John Ingoglia, Socotra Capital

Features

8

The Need for Grit

What do you want and what are you willing to do to get it?

By Anthony Geraci, Geraci Law Firm

14

Daddy, What’s a Taxi?

16

The Best Seat at the Table: Lender

20

12

3 steps to capitalizing on the Uber-lution of the 21st century.

By Drew Louis, Del Toro Loan Servicing

Why being the bank is the best position in any deal.

By Wendy Sweet, Carolina Hard Money

28

Construction Lenders Beware: Taking Over Problem Projects

By Dennis R. Baranowski, Geraci Law Firm

22

What’s Coming for the Loan Originator Compensation Rule

The Dodd-Frank watchdog agency has radically affected the residential mortgage loan origination business.

By Jaspreet Kaur, Geraci Law Firm

28

12

The Art of Leadership

Being a leader is not hard, but being a great leader is.

By Elizabeth Morales, Applied Business Software

Special Sections

8

16

10 Loan Home

18 Industry Spotlight

Brew Johnson, Co-Founder & CEO, PeerStreet

24 Trend Alert:

Social Media Influencer Marketing

By Chrissey Breault, AAPL

30 Upcoming Events 4 Originate Report | July 2017

24

www.originate.report 5

Geraci Media 90 Discovery Irvine, CA 92718

nce Where re fe on C ey on M e at iv Pr s ce n Geraci Annou g Lenders in ad Le h it W ls ea D d n Fu s or Top Invest

d contivate Conference, which is the thir Cap ir the ing nch lau is dia Me 7- Geraci an exclusive meeting space LAS VEGAS, Nev., July 1, 201 at the Cosmopolitan Hotel with ce pla e tak l wil te tiva Cap . nts s, fund managers, ference in the series of eve floor. This event will have lender the on s ual ivid ind y onl the be ited inveswhere conference attendees will high net worth investors. Accred of ce ien aud an to e stag on ds their fun ing to Las Vegas on Sepand those who syndicate present over the United States will be com all m fro ies pan com ce ran insu akers talking about tors, family offices, and gain knowledge from several spe ds, fun ir the h pitc s ual ivid ind se g industry. tember 10-12, 2017 to hear the ionals in the private money lendin fess pro h wit rk wo net and s ing tax sav legacy and teaching the latest in rs, viewing the beauat the Boulevard Pool, after hou ion ept Rec me lco We a h wit in g suite to the This luxurious event will beg nt. From the balcony in every kin eve ve lusi exc und aro allan be l r next tiful Las Vegas Strip. Captivate wil feel relaxed and ready to make you you ke ma to is l goa s aci’ Ger g, workin meeting space, through all the net business deal. ference. The d Money stated, “We love this con Har a olin Car h wit eet Sw ndy nt, We es with it. Not just from Commenting on Geraci’s past eve t you get, but the networking that com tha on cati edu the only not is it ut e the things that you thing we love the most abo and holding the booths. It’s awesom sors spon as here are t tha ple peo work with, table the people that attend, but the e picked up two great lenders that I hav I s. ines bus of ds kin all re sha to some conference and we will learn from them. We have been able them... it’s just wonderful. It’s an awe te crea we r afte s loan our ing buy funders, people that are never miss it.” tivate and high net worth individuals, Cap rs, esto inv al ion itut inst , ces offi of family estors to attend this event If you are looking to get in front ping over 100 high net worth inv com is aci Ger s. mis to t wan not is an event that you will w.geracicon.com. tion or to register, please visit ww in September. For more informa

Media Contact: Ruby Keys Marketing Director ruby@geracicon.com (949)379-2600

6 Originate Report | July 2017

September 10-12, 2017 The Cosmopolitan of Las Vegas

Join us at Captivate, where lenders will present their mortgage funds on stage before an audience of high net worth investors. If you are looking for capital for your real estate, development, or mortgage fund business, you can NOT miss this event.

www.geracicon.com

Contact Geraci’s Marketing Director Ruby Keys at Ruby@geracicon.com for more information www.originate.report 7

There is no other way to say this – gritty people achieve their

FEATURE STORY

goals. They don’t just sit there and wait for their phone to ring,

The Crystal Ball exercise makes you think about the end of the year, and you know you knocked it out of the park. What did you do? What SMART goals did you set? or hope they get that sale. They make things happen. All gritty people I know have the following habits: 1. They Don’t Make Excuses

Gritty people don’t make excuses about what they failed to do.

You didn’t close the sale? You didn’t achieve your goal? Okay, so

what are you going to do about it? What are you going to learn from your failures and implement, so it doesn’t happen again?

I’m a huge fan of Gary Vaynerchuk’s videos, and I remember

one of his more famous videos, where a member of the audience

The Need for GRIT

By Anthony Geraci, Geraci Law Firm

I

Do you have grit? I boil grittiness for achievement down to two

in length, are well researched, and well cited to other sources,

to do to get it?

in order to add conversation to the legal bodies out there. Every student had to write it, including me, and I spent two months

writing and working on mine. In my mind, since I had no choice but to write it, I was going to get it published. Each law school

(including mine) had a journal, if not several journals. Naturally,

I thought the easiest place to publish my article would be in my personal law journal. However, they decided not to publish it, so

I was determined to shop it to other schools’ journals and get it published.

I sent it to five schools. The responses rolled in. But, they were

not positive responses–they were rejection slips. You know the kind: “Despite your excellent work we regret to inform you...” I

cannot tell you the rest, but you get the message. 0 for 5. I sent it to five more schools. Those schools did not even respond, and I was ignored. Ten rejections.

What would you do? What if I told you that no one from my school at that time had published an article as a student outside of the law school? Would you continue to apply to other schools or do you quit and just shelve the article and let it collect dust?

I will tell you what I did: I was going to send it to every accredited law school–over 180 at the time I was in law school. And I did.

More rejection letters. 15. 20. 30. 50. I got 61 rejection letters. 61.

The 62nd law school sent me a letter as well: “The St. Thomas

Law Review is pleased to extend an offer to publish your work

entitled, “Gore’s Metamorphosis in State Farm v. Campbell: When Guideposts Make A Detour.”

With that offer letter, it is as if the other 61 law schools didn’t matter–because I was going to be published. Even more importantly, I was going to be published by another law school as a law

student. I was achieving what no one else did, and it felt amazing!

Grit is defined by Angela Duckworth (in her book titled Grit)

as “perseverance and passion for long-term goals. Grit entails working strenuously toward challenges, maintaining effort and interest over years despite failure, adversity, and plateaus in progress.”

8 Originate Report | July 2017

questions: (1) What do you want and (2) what are you willing

What Do You Want?

What do you want? It is a simple question to ask, and one of the most difficult for me to answer. What I want also changes from

time-to-time. Have you considered what you want out of your career, family, and personal development?

What Are You Willing To Do To Get It? You only have 86,400 seconds in a day. 1,440 minutes. What are

you going to do with them? Once they’re gone, they’re gone. You

cannot get yesterday back. You can only do something about what you want today.

Do you want to lose weight? What are you going to do to make sure you do it? Diet? Exercise? Both?

Do you want to make $500,000 this year originating loans?

Ok, do it. How many loans do you need to originate to make $500,000? How many points do you get per loan? How many

leads do you need to get there? And how many of the 1,440 min-

utes in each day do you need to allocate spending time getting leads, talking to leads, working with your processor/underwriter and getting it funded?

Do you want to spend more time with your family? How much more time? What will you give up to do it? What are you willing to do to achieve your goals?

cles X, Y, and Z and complained that “there’s nothing I can do.”

Gary told him that no one cares about his excuses because while he’s complaining, someone else out there is doing it.

2. They Plan Their Year Backwards – By The Quarter, Month, Week and Day

Gritty people know that if they don’t have a plan, they’re not going to achieve their goals. A great exercise on how to do this

n law school, I had to write an article for our school’s law re-

view (think journal). These articles typically are 20-40 pages

was asking Gary about what he should do when he faced obsta-

is the Crystal Ball exercise. The Crystal Ball exercise makes you

think about the end of the year, and know you knocked it out

of the park. What did you do to knock it out of the park? What SMART goals did you set to do so?

3. They Have a Mentor/Coach

Ever drive down a strange road at night? How do you feel? I feel uncertain in those scenarios. Even in business, there are roads I

am going down for the first time, and I feel uncertain. I knew at this point I needed to hire a coach.

A coach is someone who has traveled down that road and can

guide you through it. My coach has provided invaluable advice on anything from building a sales book through assisting me in a partnership break-up. His guidance was invaluable.

I am also fortunate enough to have mentors in my life. These

people are successful entrepreneurs whom I ask questions of

from time to time, and their answers help guide me to the next level.

Navy Seal hopefuls go through BUDS training for months to become Navy Seals. The Seals, however, don’t test a person’s

physical strength as much as they test someone’s grittiness. They

want to know whether that Seal has the mental toughness to get through any situation. Seals have grit.

Grit will get you through dips and challenges. Grit will make you achieve where others will just quit. Become grittier, and I promise you will achieve everything you set out to do.

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) and spends time traveling and learning from entrepreneurs globally.

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www.originate.report 11

COVER STORY

A FORCE of Nature

By John Ingoglia, Socotra Capital

I

grew up in an Italian family, one of five boys.

As I grew up, I pushed myself doing odd jobs and worked while

my grandfather, Tony Ingoglia, Sr. I have many cousins, all

well off. My father was a prominent attorney and eventually ran

My father is one of four children, all of whom worked for

of whom were very close growing up, held together by the

force of nature, our grandfather. He was an immigrant from Sicily. He was a self-made man, who didn’t go past the 7th grade.

Having come from a very poor childhood, he believed the mea-

sure of man’s success was having money to provide for his family.

The two things that were ingrained in all of us in the family were: that family came first and the importance of money.

He started a salami distribution company in 1934, and the

company grew with each generation. Today, it is one of the largest food distributors in the United States. When I visited him, as a young boy, I would be given the opportunity to take puffs off

his cigar, while he imparted his wisdom to me. As early as I could

remember, maybe 6 or 7 years old, he would tell me, “Spend a

little, save a little.” Alternatively, if someone didn’t have money on them, he would lean into me and whisper, “Always carry money.

Cash. Keep your cash in one pocket and your wallet in the other. Don’t be like him.” Later he would say, “And never borrow.

Always buy CASH,” he would say with an East Coast accent. He

immigrated to Boston, and so had a Boston accent even though

going to grade school and high school. I didn’t need to. We were

the family business. My mother was a successful political figure

in California politics. I choose to work and have laboring jobs in spite of this comfort. I wanted to imitate my grandfather.

Being in sales. Being in finance.

Being in real estate. Raising money and originating loans. Wining and dining. Drinking was a major factor in this sport I play. Through life, I became an alcoholic.

Something I did not plan. I was born into the club, but it took time for it to take over my life.

All the while, I became a drinker. When you grow

up, like this, driven, in a family like this, you might find yourself taking on many things, early on. It also helped to be big for your age. I looked older than I was. I was able to buy cigarettes at the

age of 12. This is how it was for me. Going to college in Boston,

at a Catholic college, drinking was a sport. After 9/11, I really drank. New York, in finance, drinking was part of life in a bad way for many in the city.

By 2003, I was spent. The market was bad. I could not afford

he lived in California most of his adult life.

I had paper routes when I was nine years old. I mowed lawns

New York City. I felt I had to come back to California. I had a

He was the first salami salesman to walk Northern California.

soda jerk/stock boy at a pharmacy at age 14. I worked nights at

ny had a hiring freeze, this was during the war build up for Iraq,

He was an incredible salesman. The best! He knew how to talk.

He was a pioneer. He inspired me. He would be watching the

ticker, watching the stocks on the television when I visited, and he would tell me how he loved the stock market. As a result, I wanted to become a stockbroker, and I got jobs as soon as I could.

I wanted to be like my grandfather. I too wanted to be a force of nature.

12 Originate Report | July 2017

and washed cars. I was a janitor at a tennis club at age 13, and a

the plant loading trucks throughout high school. I always wanted to go to Boston where my grandfather grew up, and so I jumped

at the opportunity to attend Boston College in 1994. Upon grad-

uating in 1998, I wanted to be a stock broker, and so I went to New York in 1999. After selling yellow page advertising for a time, I became a Financial Advisor for Prudential Securities.

potential job opportunity in San Francisco. However, the compapart 2. However, I had already moved to San Francisco. I decided to become a cab driver. That’s what out-of-work stock brokers

did in the seventies. In 2003, I was probably the only Boston College graduate in San Francisco driving cab. Broke, living in the Tenderloin, taking the bus to work every day, I was making it my own way. My pops at Easter asked me to swallow my pride

and come home. After driving for about a year, I came home.

nine months from when we first met. Hard money lenders move

brother, and nephew. Of my uncle, Tony. Of my stepdaughter and

60 lbs. on mom’s cooking. I started a job working for a local

23rd, 2012, I tried to slow down the drinking. It wasn’t working.

to be a force of nature for good. I do not want to destroy small

I moved back with my folks to Sacramento in 2004. I gained commercial real estate firm doing leasing and investments. I did

well and saved up a lot of money. I also spent a lot of time with my grandfather, taking him to church, playing cards, and going on drives. I eventually bought his house in 2005 when he moved into an assisted living spot with his girlfriend.

I was such a destructive force of nature. If I had not quit, I would have lost everything.

I was good at what I did, but after four years I experienced the

next market crash. I seem to pick industries that crash, I thought to myself. This time, however, a friend of mine presented an opportunity to me. Hard Money. He got me drunk, which wasn’t hard, and convinced me to quit my job and start this compa-

ny right before I got married. She wasn’t very happy about it.

I joined Adham Sbeih in November of 2008. We renamed his company from Sbeih Financial to Socotra Capital.

It was not easy. Our office was in one of our first salami dis-

tribution warehouses in West Sacramento. An iconic hard money

start-up story. With my marriage on the rocks, I slept on the couch most nights. If 2001 was the worse stock market crash

since the Great Depression, 2008 was the worse real estate mar-

ket crash since the Great Depression. As miserable as it was, it was thrilling. I felt I had given everything up for this single op-

portunity, and it was exhilarating. We closed our first deal May of 2009. We were hit or miss for the first year and a half. In 2010,

I got divorced, and then my grandfather died. He was 98. We had a cigar together the night he died.

I drank. When you are an alcoholic, you cannot stop. I met my second wife, Shirley, at the end of 2010. She moved in within a few months and was pregnant shortly after,

fast in everything, I guess. After my son, Tony was born, April

I got a DUI. I actually tried slowing down. I had a real bad night when I crashed through Tony’s bouncy chair. He wasn’t in it, but my wife left me worried the next time we might not be so lucky.

After talking to my father, he asked, “What are you going to do?

Not good enough. What are you going to do? Not good enough.

What are you going to do?” He would repeat those two sentences after I gave him one bullshit answer after the next. So, I went to my first AA meeting, five days later. I promised him, and I prom-

ised my wife I would go to meetings and stop drinking for good.

She came back but worried. She had heard it before.

I had my last drink on December 16, 2012. Thirty-eight days

later, my father, brother, and nephew, along with two others died

in a head-on car accident, on January 23rd, 2013. This was on the highway in Kona, Hawaii, on the way to visit the volcano. My mother was playing bridge that day; otherwise, she would have also been in that car.

Some people deal with severe loss in different ways. I stayed sober but more out of spite and anger than anything else. I made

a promise to my father not to drink. So I worked. I worked that

week of the memorial. I never took any time off. I worked that entire year like I did that first year we started in 2008. I also

stopped eating. I lost 60 lbs. I looked bad. After about six months,

I started eating and joined an MMA gym, an outlet to channel my anger. I became more centered. Balanced. If it wasn’t for that promise to my father and his proceeding death, I am not sure if I would be sober today. That weighs on me almost every day.

I was a high functioning alcoholic for a very long time. Being in sales. Being in finance. Being in real estate. Raising money and originating loans. Wining and dining. Drinking was a major factor in this sport I play. Through life, I became an alcoholic.

Something I did not plan. I was born into the club, but it took

time for it to take over my life. I was such a destructive force of nature. If I had not quit, I would have lost everything.

Today, I go to AA meetings every week. I have pictures of my

son. Of my wife. The pictures remind me why I choose this path: villages. I want to move mountains.

I wanted to share a little bit of my life to hopefully connect with some of you that might be going through something similar.

Maybe alcohol, maybe something else. Become who you really

are. Make the choice no matter how difficult. Make the choice to be a force of nature for good. It is never too late.

So, what are you going to do?

Not good enough.

What are you going to do?

Not good enough.

What are you going to do?

Let’s move some mountains, John Ingoglia, a force of nature.

ABOUT THE AUTHOR: John Ingoglia manages business development at Socotra Capital. He has extensive experience managing money and real estate panning over the past seventeen years. Prior to joining Socotra Capital, John spent his early years in New York from ’99‘02 as a Financial Advisor before becoming a commercial real estate broker in Sacramento, doing Leasing and Investments from ’04-‘08. His varied background and experience has provided him the necessary tools to lead the business development team at Socotra Capital.

Since joining Socotra Capital in 2008, the company has originated over two hundred and fifty million dollars in private money loans. John has led the origination team on a wide variety of residential and commercial loans, constantly adapting the loan program to maintain a competitive advantage, while striving to adhere to highest professional standards. Since 2014, Socotra has created a platform to lend to the cannabis industry with over 30 loans related to cannabis use properties.

family all throughout my office: of my grandfather, my father, my Left: John with Paul Cotter, COO, Adham Sbeih, CEO and dog Dexter, Collections; Below Right: John with mother Patricia Ingoglia

www.originate.report 13

FEATURE STORY

14 Originate Report | July 2017

Daddy, What’s a Taxi?

3 Steps to Capitalizing on the Uber-Lution of the 21st Century

By Drew Louis, Del Toro Loan Servicing

T

wenty years ago companies were given am-

Goals: Create a cascading set of goals: five year, one

a must read.

competition. Today, products and services are

al goals must feed into the success of the 5-year goals.

creased accuracy and customer satisfaction on nu-

ple warning against industry shifts and rising tested, implemented, and are posing a signifi-

cant threat before most people know the “Disruptor” product or even its company exists.

Once the largest cell phone company in the world,

Nokia was brought to its financial knees by a com-

pany with less than 1% of the financial backing and number of employees. “Waze” leveraged free commu-

nity-driven data to power their navigation app while Nokia spent over $8 Billion on physical infrastruc-

ture. Bought out by Google in 2013, every one of the 100 Waze employees became millionaires. Time from concept to cash in? Seven years.

From 2015 to 2020 the number of people with access to smart technology will double to over 5 BIL-

LION. It would be foolish to think that there are not companies like Waze and Uber out there looking at every industry, including ours.

It is not likely that you will wake up tomorrow to find the face of our industry unrecognizable, but it is naïve to think that we will not be impacted by the “Amazon-ing” of the world. To best prepare for this, I offer up the following three time-tested strategies for success.

STEP ONE

Focus Your Team

In a recent Deloitte survey, 86% of CEOs stated that their number one focus is to engage employees,

yet only one-third have a plan of how to make this happen.

Creating an engaged team doesn’t require out-of-

town retreats with pages of textbook content. Below are four things you and your team can do right now

year, and quarterly. Your quarterly tie into your annu-

STEP TWO

Build Strategic Alliances

Disruptors don’t add office square footage and hire

more employees, they leverage technology and strategic partners to stay relevant and focused. They capi-

talize on collective genius to avoid problems, identify solutions, and drive success.

There are times when being nimble and focusing on core strengths means trusting others to be a part of the equation.

Here are the top three things to consider when partnering proves to be a good offense and defense:

Synergy: You might be surprised what you can

achieve by working with a complimentary partner – even someone who may seem to be a competitor.

Starbucks and PepsiCo teamed up and created the popular coffee-flavored drink, Frappucino.

that clearly states the reason your company exists and the difference it makes.

Values: Identify your top 3-5 unwavering principles that guide the decision-making of the company.

Vision: Imagine ten years into the future and describe what it looks and feels like to be in the company. How

many employees are there? What are the revenues?

What geographic areas do you serve? What are all the products and services you provide?

book saved us over 1,000 hours in 2015. By applying

basic efficiencies to everyday tasks, we made things better, faster, and stronger.

Extreme Ownership by Leif Babin and Jocko Willink: Two Navy Seals reminded me that while not every-

thing is my role, everything is ultimately my respon-

sibility. Awesome correlations between battle and business.

Leading with Purpose by Marc Koehler: A business coach since 2014, Marc helped empower and focus

the Del Toro Team. He developed a program that de-

livered massive impact on our alignment, our trajec-

tory, and the bottom line. He also teaches people how to use it as a “Family Plan” as well.

about an ounce of prevention…

you do need similar values. Spend time really getting

try, will last forever, but you know what they say

to know the staff and clients of the partner you are considering. They will be a direct reflection on you, and vice-versa.

Fair and Equal are Not a Science: Daryl Hall draws

bigger crowds (and a higher average ticket price)

when John Oates joins him on tour. Hall doesn’t need Oates to have a career, he needs him to have an easier and better one. Partners don’t always bring 50/50 to

the table, but respecting each other’s contribution will

stave off painful and costly breakups and keep the hits coming.

Every day at 9:46 a.m. we all get together to

Brand Purpose: Create a short and concise statement

Second Lean by Paul A. Akers: Without a doubt, this

ad dressing. You don’t have to be cultural twins, but

your team’s heart to your Company and Service, and ment – you will be rowing in the same direction.

the checklist.

Nothing can guarantee a business, or even an indus-

and oil do not mix, but they do make for a great sal-

STEP THREE

you will see better retention and stronger commit-

merous tasks by implementing the simplest of tools:

Culture and Values are Different Stories: Vinegar

to give you an edge. Do it together–people are more

committed to the big picture than the daily tasks. Tie

The Checklist Manifesto by Atul Gawande: We in-

Share, Learn, Execute

“Huddle.” During our huddle we discuss: The

top three things needed to be accomplished

that day; Challenges standing in the way of achieving goals; And we spend five minutes discussing our book of the month.

The world is changing fast; fortunately there are

great books and video blogs letting us in on some of

the secrets. The three books below are, in my humble opinion, key to success. Not “should reads”—they are MUST READS:

Exponential Organizations by Yuri van Geest and

Michael Malone: The inspiration for this article and

ABOUT THE AUTHOR: A career as a stock

broker brought Drew to California from Chicago in 1990. In 2005, after having funded a few private money loans through a broker, Drew resigned his position with Wells Fargo.

Together Drew and his wife Liz began building what was to become Del Toro Loan Servicing.

As a lender and broker, Drew funded over 500 loans through 2010. Around that time, the focus of the company switched from brokering to that of a service provider to private money brokers and lenders. Since then, Del Toro has provided loan processing, loan documents, loan servicing, and loss mitigation work on over 5,000 loans exceeding $1B in UPB. Recently Drew is in demand as a consultant to investors and brokers and expert witness to law firms.

www.originate.report 15

FEATURE STORY

The

Best Seat at the Table:

LENDER

By Wendy Sweet, Carolina Hard Money

R

eal Estate transactions have several

In turn, housing is exploding with new builds and

they need to fully complete the rehab project.

who are responsible for the success of

by an unorthodox lender called “hard money.”

the higher rates is short-lived and makes sense to

participants seated at the closing table the deal and that make a profit from

the deal. If you were to sit down and figure the hours spent working on the project, and divide

that by the profit received for each participant, you will find that the lender not only makes the most per hour, but they also hold the least amount of risk. Being the bank may not make your friends and associates get goose bumps when they drive

by the house you are financing. However, when you measure the risk, time spent working on the project, and all that it takes to complete the deal, you will find that being the bank is by far the best position in any deal.

You may have noticed that the real estate mar-

ket in the Carolinas is one of the top in the country. With the influx of millennials and our new-

found diversification of jobs, we have attracted hundreds of new residents to our state each week.

16 Originate Report | July 2017

rehabbed homes. These houses are being financed

What is hard money?

Hard money is a short-term, high-interest loan that allows a rehabber or builder to buy a house, fix it up, and sell it for a profit. Some will knock the house down altogether and build a new home on the “infill lot.”

Many people have money in retirement accounts, and unless you are earning at least 8% in-

terest on your money, you need to consider being the bank. Investors need to borrow money from

private lenders because banks will not lend all the money needed to buy and rehab, or build based

on the after repaired value. Private lenders loan purchase money, but also lend funds to rehab the house as well. Investors are willing to pay pre-

mium interest rates because they get the funds

The terms are six to nine months long, so paying the borrower and lender. Borrowers calculate the

higher fees into the deal and still can make a tidy

ABOUT THE AUTHOR: Wendy F. Sweet is Principal

at Sweet Carolina Houses, LLC and Carolina Hard Mon-

profit.

ey, LLC. Wendy has been

so a savvy lender will lend no more than 70%

since 2001 as both a con-

the house sold quickly at a discount, and get their

partner/brother, Bill Fair-

Remember, there are risks in every investment

lending money primarily in

tate Investor Association such as MetrolinaREIA

builders. They manage a real

To learn more about lending or being the bank,

vestors in addition to “other

italreservefund.com or www.carolinahard-

Wendy is a 35-year licensed

The house serves as the collateral for the loan, of the after repaired value, making it easy to get money paid back.

you make. Getting involved in your local Real Esis the best way to learn how to make smart moves. accredited investors can visit www.carolinacap-

money.com.

lending money to investors ventional lender and Hard Money lender. She and her man have been successfully North and South Carolina to investors, rehabbers, and estate fund for accredited inpeoples money.”

real estate broker in both Carolinas.

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 17

SPOTLIGHT

Industry Spotlight:

Brew Johnson Co-Founder & CEO, PeerStreet

18 Originate Report | July 2017

OR: What excites you about the Fintech industry?

BJ: ‘Democratization’ has recently become an important movement in fintech. It refers to the way technology provides investors access to opportunities, data and information historically only available to large, sophisticated institutions. I think that’s very important.

In the case of real estate lending, I’m most excited about fintech’s ability to empower and democratize access to both technology and capital for small businesses/lenders. If we can provide world-class technology to any lender to make their business more productive, those lenders now have more time to find borrowers, underwrite loans, and service those borrowers. If that same platform can also connect those lenders to worldwide capital markets and investors to fund their loans, those lenders can now compete with incumbent institutions in terms of capital as well. We believe this creates a domino effect—by democratizing access to technology and capital for small lenders, those lenders can make more loans to quality borrowers, who in turn help improve communities and create asset value. This ability for fintech to provide infrastructure to reduce overhead and costs, and more efficiently distribute capital in a way that creates value throughout the entire chain is incredibly exciting.

OR: What emphasis do you place on technology?

BJ: Technology is essential to our business. Our efficiency and ease of use would not be possible otherwise, nor would the combination of speed and depth of underwriting we do. We’ve built a tremendous amount of technology into this business, and there is so much more we still want to do, which is what continues to motivate everyone here at PeerStreet.

OR: Where do you see technology in the next 12 months for PeerStreet?

BJ: We’re continuing to build out tools for lenders to help them work even faster, more accurately, and more efficiently.

OR: What tools are essential to PeerStreet? i.e. Slack, SalesForce, etc.

BJ: Internally, we use Slack, Salesforce, Amazon Web Services, G-Suite, Asana, Trello, and Chrome. But we’ve also built a lot of internal software for interacting with lenders, our customers, banks, and other partners, so it’s a combination of external and internal technology resources.

OR: What CRM software do you use and why do you use it?

BJ: We use Salesforce combined with our internally built software. Our head of retail operations has a deep background in Salesforce and is a powerhouse at using it. Salesforce can be extremely powerful with the right expertise.

B

rew is the visionary leader behind PeerStreet. His experience in technology platforms, real estate, and law culminated in the unique concept that is PeerStreet. Prior to PeerStreet, he worked as general counsel at VirtualTourist, where he oversaw the company’s $85 million sale to Expedia/TripAdvisor. Before that, he was a real estate attorney at Allen Matkins Leck Gamble & Mallory and a technology attorney at Brobeck Phleger & Harrison. At Allen Matkins, Brew advised some of the largest real estate development and investment firms in the country on a wide variety of complex real estate transactions. He continues to advise startups and is an active real estate developer, investor, and private lender. Brew graduated from USC with degrees in international relations and history and earned his JD from the UCLA School of Law.

Originate Report: What made you want to start PeerStreet?

Brew Johnson: I’ve always loved private money lending because it fulfills an important niche in the market. I also loved that good lenders could make smart loans to good borrowers in short time (as opposed to banks that could take months to make a lending decision) and get paid higher returns doing it. Over the years, I

made loans directly to borrowers, invested in hard money and private money loans, and represented lenders and borrowers as a real estate attorney, and found myself frustrated by the inefficiencies and friction for lenders and investors created by fragmentation in the market.

Many high quality lenders didn’t have access to the right type of capital and most sources of capital were administratively burdensome. As an investor, I felt the options for investing in hard money loans were limited—there was either enormous complexity in underwriting the deal or analyzing the legal structure, or enormous commitments of time and money. There was also little to no transparency into what was happening with the loans.

After leaving real estate law, I helped build and sell a technology platform to Expedia, and it became clear to me that technology could change the private money lending market. If we can create a platform that connects high quality lenders to investors in a more systematic and transparent way, everyone wins. So we built a platform to do exactly that. Investors get better access with less complications, and risk mitigation through greater diversification and transparency. Lenders get access to a new and efficient source of capital, with technology that automates administrative functions and is focused on making more quality loans and servicing borrowers. As we’ve grown as a platform, the value we provide to lenders also increased—with more powerful technology, access to new and lower sources of capital, and better loan products.

OR: How could a lender or loan officer work with you?

BJ: Our mission as a business is to provide lenders with technology and capital to help them outperform the competition. We are creating more tools for lenders and loan officers to use in their day-to-day business, and if they need it, we can connect them to capital to lend.

OR: Where do you see the mortgage industry one, three, and five years from now?

BJ: I see it returning to a more local market. Today’s banks have removed the local aspect of mortgage lending and underwriting, often to the detriment of communities. I think private lending will continue to expand and, with technological innovation and easier access to capital, local lenders will be able to compete on increasingly more types of loans against the banks. Technology is empowering more local lending and it’s a trend we are invested in.

OR: Do you feel that PeerStreet is a disruptor?

BJ: In a way, though we like to think of ourselves not necessarily as disrupting the industry, but transforming it for the better for stakeholders in the system. There’s no doubt that certain elements of the system will be disrupted, but the positive transformation and value creation we intend to achieve is absolutely worth it.

OR: What do most people not know about you?

BJ: I do a hell of a Neil Diamond impersonation.

OR: What is one piece of advice you would give loan officers in general?

BJ: Quality over quantity.

www.originate.report 19

ered a joint-venturer when it acts as a working partner with the borrower rather than merely as the lender. This type of business relationship also can expose lenders to liability.

Generally, four elements are necessary for a lender to be considered a joint-venturer: (i) intent to create a joint venture; (ii) community of interest (usually defined in terms of a common business purpose or undertaking); (iii) mutual right of control of the business; and (iv) sharing of profits and losses Legally, it generally is hard to prove that a lender is sharing profits and losses. But when the construction lender takes total control of the project, takes stock as security, and eventually forecloses on the property, the court might view the lender as a joint-venturer.

Lenders and developers also may be seen as sharing their profits and losses when the lender requires a shared equity arrangement from the proceeds. In other words, the lender agrees to make the loan for a low or no interest rate in exchange for a percentage of the proceeds from the sale of the developed land. It can be hard for the court to prove that a lender is part of a joint venture, but it’s not impossible. As such, lenders must pay attention to this risk because of the ways many subtle nuances could come back to haunt them.

FEATURE STORY

Protect Yourself

Construction Lenders Beware: Taking Over Problem Projects

By Dennis Baranowski, Geraci Law Firm

W

e all know construction projects don’t always go as planned. But if you think that lending institutions and brokers aren’t liable when such projects go awry, think again. Avoid surprises by knowing the potential liabilities can surface for private construction lenders—and by extension, for you.

By its nature, making a loan to a borrower is risky business.

Private construction lenders face even greater risks than typical lenders. Besides having the more difficult mathematical and social equation of figuring out what the property will be valued if it is constructed as planned, these lenders take on the risk of additional liability on construction loans that don’t pan out. Generally speaking, if they provide only project financing to borrowers, construction lenders probably will not be liable. Indeed, many states have statutes protecting lenders from lawsuits in these cases. But what happens when lenders foreclose on a half-constructed project and have to finish the property in order to sell it? Most lenders are in a Catch-22 position at this point. They cannot sell for the value of the original loan because that was the as-constructed price, and the uncompleted project is worth nowhere near that value. And if they finish the construction, they could be liable for defects in the property construction. Brokers and borrowers must be aware of the liability that private construction lenders can face. The threat of this liability can impact these lenders’ decisions to make loans. At times, brokers also can be on the hook for potential loan violations.

Two of the most common ways unsuspecting construction lenders can create third-party liability are: 1. When the lenders take over as the general contractor and finish the project; and 2. when the lenders act as a joint-venturer with the project developer.

Lender as General Contractor

Many lenders decide to take over a construction project after they have foreclosed on the property. Other times, they work out a buyout of the development tract — not because they want to, but generally out of necessity. In this case, they take over as the general contractor and hire subcontractors to finish the job

20 Originate Report | July 2017

started by the original developer. This situation exposes lenders to liability, especially in terms of construction defects. Some

lenders have tried to solve this problem before having to foreclose on the property, thereby attempting to avoid liability for

any resulting construction defects. For instance, one construction lender created a corporation to market and sell its borrower’s

housing units as an alternative to foreclosure. The plan backfired.

Inspections revealed that the roofing constructed on the units by the borrower was defective, and contrary to recommendations

by roofing contractors to replace them, the lender merely had them repair the defective roofs. Homeowners sued the lender.

But the lender said it wasn’t liable because it only lent money to the borrower. The court ruled that even though the lender only provided financing, it also directed companies to repair the roofs.

Although the lender had no liability with the original roofs, it did

have liability with those it had repaired. It owed due care to the homeowners to repair the defective roofs effectively. This would

probably play out the same way in most states. For instance, one California statute protects lenders “unless such loss or damage is

a result of an act of the lender outside the scope of the activities of a lender of money.” Acting like a general contractor would be outside a lender’s scope of activities in lending money.

Lender as Joint-Venturer

For the purposes of this article, the construction lender is consid-

Brokers who place loans with private construction investors can protect themselves from liability. Two ways to do this are to ensure that lenders are not acting outside the scope of a lender lending money, and to make sure to draft complete, well-written loan documents. First and foremost, brokers’ lenders should think twice about taking over a project because of foreclosure or as a bailout remedy. Although they may take a loss on the subsequent sale of the unfinished property, it may be better than facing the liability. Of course, this option may not always be feasible. Lenders might have no choice but to finish the project to get paid.

If that is the case, they should enter into a specific agreement with the contractor hired to finish the work. They should include an agreement indemnifying them for any damage caused by their work on the project. In addition, complete and well-written loan documents also can mean the difference between making or losing money. Your loan documents should include a hefty indemnification agreement from the developer and possibly a personal guaranty and indemnification. This ensures the lender has some assets outside of the development company and constructed property in the event a construction project goes south.

Conclusion

Brokers who place loans with private investors may think they don’t have to worry about liability because they think the private investors actually control the nature of the loan. But brokers can be liable as well, as they owe a fiduciary duty to their private investors. Because of this, the investors will place the broker on the hook for the loan’s violations. You should consult with your attorney before deciding whether to partner with a developer or to complete an unfinished construction project. Prudent underwriting and contract drafting will help to protect you against any additional liability that you may be facing when making construction loans.

ABOUT THE AUTHOR: Dennis Baranowski has extensive experience in helping

banks, credit unions, mortgage funds, private lenders, brokers, developers, and loan servicers navigate through complex transactions, including negotiation of terms, transaction review, and drafting of documents. Mr. Baranowski reviews, negotiates and drafts custom loan documents, construction loan agreements, loan workout agreements, leases, loan purchase and sale agreements, subordination agreements,

intercreditor

agreements,

hypothecations,

loan

servicing

agreements, investor agreements. He has authored articles on loan purchase and sale agreements, investment in private loans, and loss mitigation after default.

www.originate.report 21

FEATURE STORY

What is Coming for the Loan Originator Compensation Rule

By Jaspreet Kaur, Geraci Law Firm

22 Originate Report | July 2017

According to the CFPB, the purpose of the Rule is to enhance oversight and enforcement of Regulation Z requirements and to restrict “double dipping” by unscrupulous mortgage brokers and loan originators who are more concerned about commissions than the consumer’s well-being. The primary goal of the rule is to disrupt the correlation between loan terms and the amount of compensation an originator receives. The CFPB felt that pricing tools such as the yield spread premium, along with other bonus structures, provided a tempting pathway for loan originators to financially benefit to the detriment of the borrower.

Additional CFPB Enforcement Examinations

T

he Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) has had a tremendous impact on the financial services industry since its passage in 2010. The law, drafted as legislation aimed at protecting consumers, has unintentionally (or perhaps intentionally) disrupted the daily operations of businesses from Wall Street to Main Street. One aspect that is radically affected is that of residential mortgage loan originations.

Through Dodd-Frank, the Consumer Financial Protection Bureau (“CFPB”) has been armed as the single-director arbiter of the new myriad of financial regulations being implemented under the expansive law. Last November 28, the CFPB released a bulletin warning financial firms to be cautious about incentives offered to company representatives over products and services they provide to their clients, and the “intended and unintended” effects and risks they pose.

The notice amounted to a warning shot to the mortgage industry. The bulletin comes on the heels of a 2015 memo from Calvin Hagins, deputy assistant director for originations at the CFPB, where he alerts the industry that loan officer compensation will be a top enforcement concern of the CFPB moving forward.

The main driver of this enforcement is Subtitle A of Title XIV of Dodd-Frank, which amends the Truth-In-Lending Act (“TILA”) with regards to mortgage loan originator compensation. The CFPB has issued a slew of new rules under TRID, HMDA, and other regulations; however, no significant changes to the loan originator compensation rule have been issued just yet.

The Loan Originator Compensation Rule

The CFPB issued its final loan originator compensation rule (“Rule”) back on January 20, 2013. The Rule attempts to restrict loan officer compensation and so-called “steering” tactics, where the loan originator tries to place a borrower into a more expensive product that generates more commission. The final rule revised the TILA requirements above the existing prohibition that loan origination compensation not be tied to the terms and conditions of the transaction.

CFPB’s final rule went into effect January 1, 2014, and clarifies established compensation provisions of Regulation Z as follows: Defines “a term of transaction” as “any right or obligation of the parties to a credit transaction.” This requirement stipulates that a mortgage originator cannot receive compensation based on the interest rate, terms of the loan, or by steering a consumer to a third-party affiliate, such as title insurance or appraisal.

Prohibits compensation based on a “proxy” for the term of a transaction. The stipulation is meant to prevent evasion on the part of a broker to receive compensation based on the originations of another individual.

The purpose of the loan originator compensation rule is to enhance oversight and enforcement of requirements and to restrict “double dipping” by mortgage brokers and loan originators who are more concerned about commissions than the consumer’s well-being.

Prohibits loan originator compensation based on the offset of the cost of a change in transaction terms. This is meant to prevent originators from receiving compensation by the changing of loan terms. However, an originator is allowed to defray compensation to offset borrower-incurred settlement costs.

Prohibits a loan originator from receiving compensation based upon the profitability of a transaction or pool of transactions. Simply put, a loan originator cannot receive bonus compensation based on a particular type of mortgage product.

A loan originator is not able to receive compensation from both a consumer and related party for the same transaction. Under this rule, however, mortgage brokers may still pay commission above that which they are receiving from the consumer (points), provided that compensation not be based on the terms of the transaction.

Section 1403 of the Dodd-Frank Act contains general verbiage that prohibits consumers from paying upfront points and fees on a transaction where compensation is paid by someone other than the consumer (i.e. mortgage broker).

However, Dodd-Frank also authorizes the CFPB to waive the requirement if it determines that doing so would be in the interest of the consumer.

There have only been a few major enforcement actions taken by the CFPB since the Rule was implemented, however, that should not forego the fact that the CFPB is keenly aware that some compensation rules are routinely not being followed.

The consumer watchdog agency has filed suit against several loan originators for compensation violations. These violations include: bonuses paid based on the interest rate of a loan; commissions and bonuses paid based on the loan profits and proceeds received from settlement costs; and payments made to affiliated marketing companies based on the amount of profits the mortgage broker received from the sale of certain loan types.

It is the view of the CFPB that the incentive programs of these companies violated TILA, and prompted loan officers and employees to steer consumers into lending products or services they would otherwise not have sought. The penalties for some of these violations amounted to millions in civil fines and tens of millions in refunds to consumers.

Effect on Daily Operations

It is clear that the CFPB, empowered with both investigative and enforcement authority under Dodd-Frank, is focusing squarely on mortgage origination compensation structures meant to incentivize the origination of new business. While we do not know yet what is coming down in the form of new rules or stepped-up enforcement efforts, we do know that the CFPB is expanding its oversight and investigation into the operational aspects of mortgage brokers to ensure compliance.

The main sticking point is compensation based on the interest rate and terms of a transaction. The CFPB is examining companies that attempt to mask their employee compensation through the use of bonus payouts, expense accounts, and other payments that are based on the specific types of products sold. In fact, the final rule is written so broadly that the CFPB can consider many compensation packages worthy of examination into how they contribute to a loan originator’s production habits.

Mortgage brokers and loan originators need to be well aware of the risks poised by complex compensation packages that may violate, or appear to violate, any of the provisions established under Dodd-Frank and the CFPB. The mere appearance of impropriety may invite more scrutiny from federal regulators. Mortgage brokers should familiarize themselves with the requirements of the Rule, and develop well-written and clear internal guidelines and pay structures that adequately compensate loan originators without crossing that fine line.

ABOUT THE AUTHOR: Jaspreet Kaur is an Associate in the real estate

finance section of the Geraci Law Firm. Ms. Kaur leads the firm’s consumer

compliance practice and is familiar with the vast array of state and federal consumer regulations, including TILA and RESPA. Ms. Kaur’s experience includes representing lenders and brokers, preparing commercial, residential, and construction loan documents, in addition to drafting assignments, modifications, subordination agreements, and custom agreements. Ms. Kaur also has experience with negotiating the terms of transactions, title matters, and closing loans.

www.originate.report 23

TREND ALERT: Social Media Influencer Marketing

Social Media Changes the Balance of Power

Influencer marketing can be loosely defined as a form of mar-

keting that identifies and targets individuals who have influence over potential buyers. It isn’t just characterized by having a lot of followers or fans. It’s also driven by expertise on subject matters and the relationship between the influencer and their followers.

It happens when marketers create a list of influencers: regular people – not movie stars – who have blogged, videoed or pod-

casted themselves into a social celebrity status. Those influencers have proven credibility and sometimes sales to specific target audiences.

It’s not only Lipstick and High Heels.

Most statistics about social influencers taught fashionista and

24 Originate Report | July 2017

17%

Organic Search

15%

Email

14% 9%

Display Advertising 5%

Affiliate Marketing

ne of the most powerful concepts in marketing is the voice of the customer. Today, the customers’ voices are projected through giant megaphones provided through social media platforms. According to a McKinsey Study, marketing-inspired word-of-mouth generates more than twice the sales of paid advertising, and those customers have a 37 percent higher retention rate.

Let’s start with framework.

22%

Influencer Marketing

Paid Search

By Chrissey Breault, AAPL

O

Fastest Growing Online Customer Acquisition Method

makeup artists there is a large space for entrepreneurs. Many of

Influencer Marketing Budget Over Next 12 Months

others in their industries. These social influencers aren’t paid for

their comments from the advertiser’s brand—they look for and share information their audiences want.

In a poll conducted by Tomoson and reported in AdWeek,

marketers rated influencer marketing as the fastest-growing online customer acquisition tactic, beating organic search, paid

59%

Increase Budget

Maintain Budget Decrease Budget

11% 10%

Unsure

those influencers have grown so big that they actually get adver-

tisers to put ads on their content; they also act as influencers for

22%

Others

20% Data: Tomoson

mommy bloggers, why is it important for you to contribute to the web? By creating and contributing valuable content, you

highlight yourself as a subject matter expert, which builds trust and then sales or deals. Consider it an overall career enhance-

ment.

The same study reported 59 percent of marketers plan to

What’s the plan?

The buzz around influencer marketing continues to intensify,

ticles such as those found in Private Lender, Facebook, Twitter,

search, and email marketing. (See graphic at right).

increase influencer marketing budgets over the next 12 months. but more robust studies about its effectiveness and appeal are needed.

In a world that seems flooded with celebrities, teenagers, and

Playing a role in social media through blogs, awesome e-zine arLinkedIn, and the plethora of similar channels takes timeout of

your day. Effective posts by efficient bloggers can be created in twenty minutes. Don’t start off thinking that you will be effective

or efficient and not leave enough time for yourself to develop your voice. In many cases, it could take an hour or more. You need time.

Take it.

Create a “tool box” that includes: familiarity with SEO/SEM, other influencers who can act as role models to draw on, and positive,

supportive people around you. In the days where you are just start-

There are a variety of community building social channels that shouldn’t be underestimated. Look at channels like Facebook, LinkedIn, Pinterest, Twitter, and even Tumblr to build your fan base. You can repost your work to LinkedIn and Twitter to help distribute your writings. ing to get your feet wet, you have no audience, enough interest in a topic to keep deepening your knowledge base, and are working on

building your initial presence—you will need a state of mind that prioritizes your contribution to build a community on.

You know that you’re a gifted expert in what you do but are there enough people writing about what you’re writing about already? Do they cover your viewpoints? Is there really scope for a new voice? Do

your research...or due diligence! Good contributions come from peo-

ple who feel there is a certain spirit missing from the crowdsourcing pool.

When networking with other writers they might claim that they write simply for their own benefit and a community “accidently” grew. Well, that is possible—but it’s more likely that those people set

out with the objective of having an influence. Discovering your point of view allows you to stand out from the crowd.

When you are reading an article or blog post, do you think that author is a born writer? Honestly, some people are. Now, they have so many opportunities to exploit that talent. But, just like everyone else, those people need to practice – every day. Our elementary, ju-

nior high, and even high school teachers won’t be disappointed that we don’t all carry an understanding on everything that can go wrong in a sentence. It’s a lifetime’s work. Some social platforms don’t help

much, either. We are all guilty of hanging or fragmented sentences at some point. Say it: Dangling Participle. Fun to say, right?

Just a little bit ago finding your voice was alluded to. What is

your voice? Do you need to be a voice of your employer’s brand?

Is that authoritative, infused with detail, descriptive (with dangling participles), or conversational? The quickness of which people grab

information on the web continues to increase, so there is importance in finding a style that is to the point and clearly states the vital information of your post. Try different approaches early on – while your community is still on the small side.

Headlines can be daunting, but are the most important piece of

your blog – you will need to grab attention and evoke emotion.

Doing a simple Google search on how to write a headline makes it

seem like a skill that you need to go to the World’s best vocational school to learn appropriately – maybe there should be a MBA in

Headline Writing? One of the best practices to follow in your writing is to make your title and the first paragraph reflect what your post is really about—Bonus! That will also contribute to your SEO.

Let’s say you are writing like Hemingway, Orwell, Plath, Capote,

continued on pg 26 www.originate.report 25

continued from pg 25

or Seuss now. Where are you putting all this expert informa-

tion you have created? In a marketing world, most traffic should

be driven back to your website to help you with sales or deal conversion. Do you have a content driven website? You could

set up a blog on several platforms if you don’t have a website

created (slap on the wrist if you are running a business without one), or are just looking for a better home on the web. In the

past couple of years, the blogging platforms have changed dra-

matically; be sure to do some research to find the platform that

covers your needs the best. Consider things like integration with an existing website, ability to post video, ad placement, custom

plugins, the ability to schedule posts, storage capabilities, level of customizable CSS & HTML required, availability to your own domain, etc.

It pays to find professional platforms, like an online magazine in your industry. (Hint. Hint.) It can be tough to get on some

platforms if your approach doesn’t include writing experience.

Be prepared with some samples of your writing and a great pitch. It may be that you need to spend a few months blogging and then start to pitch platform editors to see if they’ll take some

of your work. Remember, if you don’t at least ask, you will never hear “yes!”

“On a Platform I’m Gonna Stand and Say”

There is no natural community building mechanism around blogging. Don’t let that discourage you. There are a variety of

community building social channels that shouldn’t be underestimated. Look at channels like Facebook, LinkedIn, Pinterest,

Twitter, and even Tumblr to build your fan base. You can repost your work to LinkedIn and Twitter to help distribute your creative, yet informative writings.

It could be as simple as acknowledging a post, “Thank you!” Pay

ways find a way to draw people back to your other work. Pow-

You can’t ever stop learning what your audience(s) value. Set

When you do score the opportunity to be a guest writer, alerful influencers are visible on multiple platforms. Be cautious as a guest writer, you may be agreeing to provide “exclusive”

Recommendations have always been the heart of any buying or deal process, much more than traditional media and advertising ever could be.

Social Media makes this even truer. content to the professional platform. Ask what the parameters

are for exclusivity. Those running the platforms also want to be influencers and should be willing to work with you.

In the earlier days of blogging or guest writing the comments

were used as an indicator of influence. Marketers and writers

alike believed that it was a sign that people were listening and engaged. Makes sense, right? Today, people are happy if their

work is retweeted or shared, so the skill lies more in the building of followers on the chosen platforms or social channels so that you can share your work and let it be shared.

Those who do leave comments and engage with you and your

writing shouldn’t be ignored. Interacting with your community is just as important as the original writing you posted. In many

cases, negative comments will be “policed” by your existing community. As the virtual leader, you will want a plan or strat-

egy for the best approach to cultivating your online community.

26 Originate Report | July 2017

attention to your audience and respond appropriately.

yourself some metrics around your audience, repeat visitors, and find writers who can be role models and benchmarks, too.

The very nature of the internet in the past few years has in-

creased collaboration and sharing. 2014 signaled a power shift in terms of influence, from brands to content creators. 2015

was about personalization and specialization, developing much

better systems for brand loyalty and ways for consumers to experience your brand.

With the emphasis on the interest communities, content cre-

ators become more important, and brands should seek ways to

create mutually beneficial and genuine relationships with brand advocates, who will create value for them.

As the consumers increase their confidence in user recom-

mendations versus brand advertising, users themselves should be entered in the marketing mix, at least as content producers.

Remember, people have always counted on recommendations from their peers when they have a decision to make. In fact, recommendations from parents, friends, and colleagues have always

been the heart of any buying or deal process, much more than traditional media and advertising ever could be. Social Media makes this even truer.

Social influencers create brand endorsements; their audience

(online community) drive endorsements through engagement with influencer content. So much so that higher levels of brand social engagement are now being linked to increased sales.

What are you waiting for?

Get out there and provide your followers with your phenome-

nal, premium content. Reward them with unique experiences,

and of course, don’t forget to provide unique viewpoints so they will talk about you on and offline!

ABOUT THE AUTHOR: Chrissey is the Director of Marketing & Member Services for the American Association of Private Lenders (AAPL.) Prior to joining AAPL, Chrissey worked in county government as a communications expert, where she delivered a research and insight based approach, combined with blow-your-brains out enthusiasm, expertly weighted to produce maximum awesomeness – while relentlessly bringing measurable results to constituents and colleagues on a regional and state level. Her 15+ years in communications and marketing started in the hospitality industry.

She holds an Associates Degree in Hospitality & Travel from Bradford School in Pittsburgh, PA, and Certifications in Adobe Web Design and Volunteer Management.

Chrissey lives in the Kansas City area with one good dog and one rotten dog.

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 27

FEATURE STORY

The Art of LEADERSHIP

By Elizabeth Morales, Applied Business Software

28 Originate Report | July 2017

A

very wise man—one I have admired for a number of

ting an answer. Remember you hired these people to think and do, not

have to be a good follower.” Thus, knocking down my belief

solutions to a challenge increases trust and further develops team mem-

years—once told me “in order to be a good leader you

that one is born a leader.

Being a leader is not hard; being a great leader is. Whether a parent,

executive, pastor, president—whatever capacity of leadership you find

yourself in means working with people, unleashing their full potential, not commanding or exercising power over them.

If a company’s CEO is empathetic with his employees and is under-

standing of their needs, those employees will bend over backward to make that leader proud, and make money for that company as well. If leadership is autocratic, employees will

only be there until they find another place where they feel appreciated. Ev-

eryone wants to matter, at any level, in any scenario. Shining light onto em-

ployees and recognizing their strengths does indeed shine more light onto the leader.

So what exactly is a leader? The Dic-

tionary defines a leader as a “person who guides or directs a group.” I would

like to counter that definition and add that a leader is one who inspires, one who can communicate the end goal

to his group, and one who empowers

group members to do their very best in

accomplishing the task at hand. How many times do you see an organiza-

just to do—let machines do that. Letting folks come up with potential bers. Don’t just give orders. It is boring and disrespectful. Get people’s

input. If they are wrong, they are going to figure that out very soon in the process.

One important question you can ask yourself on this topic is if you know how people feel once they leave your office. There are only two choices. Great, or unsatisfied. If they feel small or belittled, do not expect

great things from this employee in the long run. If they feel like they are doing a great job, impressing their leader, and have things to work on

until the next meeting, those things will be

“Look for three things in a person: intelligence, energy, and integrity.

If they don’t have the last one, don’t even bother.” -Warren Buffet “Leaders don’t inflict pain, they share pain.” -Max Depreet

“Become the kind of leader that people would follow voluntarily, even if you had no title or position.”

-Brian Tracy “The growth and development of people is the highest calling of leadership.” -Harvey S. Firestone

tion that sets goals for each department

worked on to the point of surpassing your

expectations the next time you meet with them.

Remember, people always want to please

their leaders. Everyone wants to matter.

No one gets hired and says, “I am going

to do a horrible job at this company.” It is

similar to a marriage. People do not get married thinking, “I am going to be a hor-

rible spouse and I want to fight every day

over any little thing.” No, things go bad on the journey.

All relationships are based on trust—it’s

how you build it. On that note, always remember to praise in public and address

needs in private. Under no circumstance should a leader ever call a team member

out in front of his peers on anything that

without the department’s input? Then, the department leaders figure out

needs attention. It will always backfire. Do not humiliate people. EVER.

team’s input? It happens more than we would like to hear.

barrass people with a response that could easily be handled in a private

how they are going to keep the boss happy by creating goals without the If the company started by looking at the work performance, the pro-

cesses that need to be put in place, the working conditions, what matters to employees, and getting everyone’s input on the set goals, the end

result would be greater. Instead of saying, “this is how this needs to be

done,” saying, “this is where we would like to be, how do you all think we can accomplish that?” Guaranteed greater results.

Why? Because now people feel like part of a process; they own that goal, they have a sense of inclusion, they feel important, they feel like

they matter because their opinion was taken into consideration for the company’s big goals. Therefore, they will do whatever it takes to accomplish those goals.

The last paragraph could be summarized as communicating, including, and inspiring people. Can a leader over communicate? Is that coun-

terproductive? Yes and yes. Communication is a two-way street, and

although one would think the leader does more of the talking and the

team member does more of the listening, since he is getting mentored,

the truth is that the leader should ask more questions and let the team member answer those questions. If the leader is always providing answers, team members will learn to depend on their leader and not come up with solutions on their own.

The better way to approach a situation when team members have

questions is to let them find the answer you would have given them in the first place. If you have been properly mentoring, surely they will

arrive at the same conclusion you would. More powerful to the team member is to answer or decipher a problem on his own than simply get-

This also applies to email. There is no need to hit Reply All and emconversation.

If you happen to have a bad leader you report to, it is now your job to stop the behavior and not replicate it. We have all heard of the trick-

le-down effect; bad leadership starts at the top and rolls down. You have the power to stop it. The buck stops with you.

Questions: Are you passionate about what you do? Do you have great

ideas and the ability to inspire others? Do you feel that no matter how much you know there is always something more you can learn? If so,

you are on your way to becoming a great leader. Be one. The world needs you.

ABOUT THE AUTHOR: Elizabeth Morales is the Business Development Director for Applied Business Software, the leader in private lending loan servicing software. She has a proven record in senior operational roles and is known as an inspirational leader and a data-driven marketer. She has created full scale marketing platforms, handles media, public relations and brand management for ABS; she’s a strategic planner and forward thinker. Elizabeth has a Bachelor of Arts in Spanish Literature and a Masters in Business Administration.

www.originate.report 29

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32 Originate Report | July 2017