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Issue 062 September 2012

For Mortgage Origination Professionals



The JOBS Act and How it Impacts Hard Money Lending


FEATURE ARTICLE International Banking and Commercial Real Estate Finance


Working as a Team Tips from a mortgage lender.

Stage 36 Center with Streetlinks The Niche Report talks with President Tom Hurst.

“We have utilized the Stoneybrook Publishing newsletter program as a key component in our marketing for over 10 years. Our Loan Originators always know when their publications have arrived to their clients because the calls start flooding in ! The product is very cost effective, eye catching, and keeps our name in the minds of our clients, increasing customer retention and providing a great value to our business. In fact, we encourage our Loan Originators to use their service and even contribute towards the expense for each LO. They have a pleasant, reliable staff and a great product !”

Heather Mager , Assistant Operations Manager

First Home Mortgage Corporation Client since 2001

“I can’t believe you can create such a great newsletter for what you charge ! This has really helped my business. I get about 5 calls every month my newsletter goes out. It’s already paid for itself for the next 10 years !”

Sandro Mungioli, Dallas, TX Client since 2006

“I’ve been sending out the Stoneybrook newsletters since 2000 and it is the one source that is guaranteed to bring me consistent high quality leads. We always know when the newsletters get delivered because the phones start ringing. We do heavy radio advertising that brings us a lot of leads but since October 2007, the newsletter alone has generated 50% of our business ! The profits from these loans, in just one month, not only pay for all the newsletters for the year... it also pays for a great deal of our overhead ! Thanks Stoneybrook for giving me something to look forward to every month...GUARANTEED.”

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Issue 62


September 2012

International Banking and Commercial Real Estate Finance The stagnant banking situation within the United States has opened the door to foreign investment.


richard russell and Patrick Corcoran

Publishers Robert Pegg David Pegg MANAGING EDITOR Stewart Mednick

10 20 24 27 29 6

The JOBS Act and How It Impacts Hard Money Lending Andrew Woodruff, esq. general council golden omega

Can I Sue for Denial of HAMP Loan Modification?

32 36

Regulator Rabble-Rousers

What's the Difference ralph lovuolo, Sr. president, mortgage motivator Superstars didn't start out producing large volumes of business.

Realtor速 Marketing Secrets doren aldana mortgage marketing coach Secret #3: Partner with Top-Producing Realtors速 September 2012

Working as a Team kathryn pedersen Mortgage Officer/VP Yampa Valley Bank Tips from a Mortgage Lender

Center Stage with Streetlinks the niche report The Niche Report talks with President Tom Hurst.

brian Mahany mortgage trainer gordon schlicke mortgage trainer I'm not against more regulation. I'm against more piling on.

Associate Editor Cathy Johnson



from the editor's desk


Keeping up with the Jones


what's your mortgage iq?


advertiser DIRECTORY

ACCOUNTING MANAGER Shawna Ingram Advertising Director Jessica Grizzle Advertising sales Hilary Bateman Production Manager Henry Suchman Production Assistant Dawn Exner Cartoonist Martin Bradford COLUMNISTS & Contributing Authors Doren Aldana Patrick Corcoran Karen Deis Chris Jones Ralph LoVuolo, Sr. Brian Mahany Kathryn Pedersen Richard Russell Gordon Schlicke Eric Thomas Andrew Woodruff

pg 41 pg 41 pg 41 pg 42 pg 42 pg 42 pg 43

Which would you rather show up in?

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From the editor's desk

I live in a small town that was graced with the privilege of having the President of the United States come to visit on his campaign trail. Now, some of The Niche Report readers are favorable to the current president and I am sure some are not. I am not here to take sides nor to pass judgment. Anyway, he was in town for perhaps an hour tops. I was surprised that Air Force One, a 747 jumbo jet, was even able to land in our little regional airport. He rode in his motorcade to the high school, spoke, and then rode back to the airport. He boarded the jet, his entourage and security force did as well and the jet buttoned up, taxied, and Air Force One took off in a ten minute timeframe from the president boarding. I watched the jet in the air, flying off and was visibly gone in minutes. The public exposure of the visit was less than an hour. The event was a success with no issues. His visit was at four in the afternoon, he was gone before five o’clock. So why is the Managing Editor talking politics in a mortgage publication? Well, it is not the politics on which I choose to focus. It is the preparation and planning on the presidential visit than impresses me. At six-thirty AM I was driving by the high school on my way to the gym. Blockades were already on the curb lining the street in front of the high school. By eleven AM, Secret Service Police was on site with trucks, heavy equipment to block driveways, sheriff vehicles were on site, media trucks were present and the video/satellite uplink trucks were hooking up their cables. Believe it or not, people were just then starting to gather at the entrance on the policetaped sidewalk. When the President flew in, two C-17 Air Force transports preceded him with the motorcade; his limo and a host of black Suburban security vehicles. When he left, these transport jets stayed on to load the vehicles and then fly on to meet the President at his next location. Perhaps eight different government agencies were present to provide security for the event: local police, county sheriff, state police, secret service police, the President’s secret service force, a host of undercover law enforcement, SWAT, airport security, etc. Logistics, crowd control, traffic control, airport security, and other detailed planning that I cannot even comprehend all took place for weeks in advance to make a 50 minute visit look effortless. As a mortgage professional, the customer sees the results of your long, behind the scene efforts, not ever knowing what you go through to make their experience effortless and pleasant; same as a Presidential visit. You will not gain recognition for all your efforts and do not expect anyone to understand what agony you may brave to perform a closing on-time and as expected. The end result should always be a closing that was easy, painless and pleasant for the client. Don’t expect to ever receive a “thank you” all the time, but always know that the community of The Niche Report recognizes your efforts, pains, sleepless nights, sixteen hour days, loan-lock frustrations, documentation nightmares, and scheduling challenges to make the closing day look easy. You have my referral in a heartbeat. Keep up the good fight.


Stewart Mednick




The JOBS Act and How It Impacts Hard Money Lending California AB 2081 would follow federal JOBS Act and permit advertisement of securities issuances. Could your hard money lending fund benefit? by Andrew Woodruff, esq.


arlier this year, the U.S. House of Representatives passed the Senate version of the Jumpstart Our Business Startups Act (“JOBS Act”) and President Obama signed the bill into law. Among the most consequential provisions of the Act is the elimination of the prohibition on general solicitation or advertising contained in Rule 506 of Regulation D. People and businesses seeking to raise capital, including private or “hard” money lending funds, without enduring the burdensome process of Securities & Exchange Commission (“SEC”) qualification, most often rely on Rule 506 for exemption of their issuance. The Rule allows the issuer to raise an unlimited amount of money by selling securities to an unlimited number of investors as long as no more than 35 of the purchasers are non-“accredited investors,” as defined by Rule 501(a). In other words, Rule 506 exempts from SEC registration private securities offerings to investors with the sophistication and financial resources to make informed investment decisions and bear the risks thereof (for as a practical matter, offering securities to nonaccredited investors involves disclosures so extensive as to


September 2012

defeat the purpose of the exemption). Historically, the prohibition on general solicitation or advertising was a primary restriction aimed at limiting abuses of an otherwise liberal rule. Some welcome the freedom to advertise a Rule 506 offering as a further liberalization of the private securities market that heralds fundamental change in the nature of private fund offerings. To others, it amounts to a reckless abdication of the duty of governments to protect vulnerable individuals, especially the elderly and retired, from falling prey to unscrupulous fund managers who recently cost investors their life savings, in some cases, when the private money lending and housing bubbles burst. It is important to note, however, that the JOBS Act permits general solicitation only if the securities are ultimately sold to accredited investors exclusively. This limitation may not affect a fund greatly if it is already selling only to accredited investors. But if a pool of investors includes non-accredited investors (up to 35 in number), then the prohibition on general solicitation remains in place.

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And in fact, the prohibition remains in place for Rule 506 until the SEC adopts final rules regarding, among other things, the “reasonable steps” that a private securities issuer must take to verify that all purchasers are indeed accredited investors. Judging by the remarks of SEC counsel, it appears that the SEC will make the verification process deeper and more involved than the current checkbox questionnaire requesting unsubstantiated representations that the prospective investor meets certain rigid criteria. Such enhanced verification requirements would please critics who claim that the thresholds for accredited investor status are outdated in their focus on net worth, and thus correlate best with advanced age, not investment sophistication. Depending on what the SEC ultimately prescribes, though, fund managers may be able to advertise in various media, solicit through open websites, and conduct general investment seminars, so long as the ultimate investors are all accredited. That all remains to be seen, but in the meantime the new provision will allow professional placement agents in organized offerings to reach out to prospective investors more easily. Amid the uncertainty surrounding the implementation

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of the federal JOBS Act, California State Assembly member Michael Allen has proposed to follow its substance on the state level by sponsoring AB 2081. This bill exempts from the qualification requirements of California Corporations Code section 25110 private securities issuances made in conjunction with general solicitation or advertising, as defined in Rule 502(c) of Regulation D. However, the state bill places greater restriction than its federal counterpart on the means of solicitation by forbidding unrequested telephone calls to the residence or mobile phone of a person unless reasonable inquiry leads the issuer and caller to believe that the target is an accredited investor. A further condition on the availability of the state exemption is the accredited status of all securities purchasers at the time of sale, so here the proposed state law follows the federal. But AB 2081 goes beyond the JOBS Act in requiring also a reasonable inquiry into the “suitability” of the investment for each individual purchaser. It defines suitability to mean “that immediately prior to the sale, the offering is suitable for the person, based on the person's financial status, objectives, investment experience, time horizon, risk tolerance, and any other information the issuer deems relevant to determine whether the offering is suitable to the person.” While this standard may sound vague, California securities issuers have particular experience with suitability determinations, and if AB 2081 becomes law, you should consult with your attorney and financial advisor before advertising your hard money lending fund’s securities issuance. California SB 978 would impose suitability and filing requirements on real estate-related securities issuers. Could your hard money lending fund suffer? Opposite in spirit and simultaneously working its way through the California legislature is SB 978 sponsored by Senator Juan Vargas. This bill seeks to address perceived abuses in private securities issuances by hard money lenders by imposing certain filing and suitability requirements on issuers “engaged in the business of purchasing, selling, financing, or brokering real estate” and who sell securities to non-accredited investors. Specifically, the bill requires an issuer relying on an exemption from securities qualification to file a notice of transactions with the Department of Corporations. Mercifully, the proposed statute has been amended to eliminate the conditioning of the availability of the exemption on the timely filing of such notice. However, the basic requirement remains in place under threat of noncompliance penalties that are unclear.

The bill further requires the issuer “to make reasonable efforts to ensure that the investment is suitable for the investor, as specified, to provide the basis upon which the issuer shall make that determination, and to maintain the information used to make the determination for 4 years.” Likewise, it commands an issuer to ensure that: (1) all purchasers “have the capacity to understand the fundamental aspects of the investment, by reason of their educational, business, or financial experience”; (2) all purchasers “can bear the economic risk of the investment”; and (3) “the investment in the notes or interests is suitable and appropriate for the purchaser, given the purchaser's investment objectives, portfolio structure, and financial situation.” The SB 978 “basis upon which” the issuer determines suitability should be comparable to the standards described in AB 2081 or Rule 260.218.2, so again, consult with your attorney and financial advisor to ensure compliance should the bill become law. Finally, SB 978 requires the securities issuer “to provide information regarding the nature of the proposed

offering on a form prescribed by the commissioner.” As with so many aspects of these potential new laws, we will have to wait and see what the Commissioner hands down, but at a minimum the issuer will have to produce the disclosure documents given to prospective investors and the names of corporate officers and directors. The tumultuous times in hard money mortgage lending continue, and thus so do the legislative changes. Stay tuned as the new laws develop. By Andrew Woodruff, Esq., General Counsel, Golden Omega. Mr. Woodruff is In-house Legal Counsel for Golden Omega, LLC, a software provider of loan document preparation, loan servicing, fund management, trust accounting and other modules for the mortgage and construction industries. He can be reached at andrew@ or by calling (916) 939-7083. For information on the software products, please visit www.

How we see it


September 2012

International Banking and Commercial Real Estate Finance The stagnant banking situation within the United States has opened the door to foreign investment by Richard Russell and Patrick r. corcoran


y most standards the world is interconnected in more ways than Christopher Columbus, Napoleon Bonaparte, and even Ronald Reagan could have ever imagined. Technology is one of the driving forces behind this global interconnectedness – as social media triumphed most forms of traditional communication, Wall Street has morphed into a global marketplace where effects are felt from Kuala Lumpur to Riyadh to Boston. The speed of business activity and news reporting has multiplied exponentially. The internationalization of the global finance sector is the new norm. This piece is seeking to answer two questions: First,

what role do international banks play in the U.S. realty lending market? Second, how does one assess that role from a cause-and-effect model? These two questions are related, because if we operate on the assumption that the global banking sector’s role in domestic real estate is an effect of globalization, then all things should be settled. In other words, there is a harmonious meshing of global finances (assuming the EU were not in a stage of crisis management) and lending was internationalized rather than regionalized. However, I propose that the reason internationalization is happening is that U.S. banks do not want to shoulder commercial lending as they once did, for a variety of reasons – some of which include uber-risk management policies, extremely low interest rates, and long-term economic growth. This article will be broken into several parts. First, it will explore the current commercial lending market in the United States. Second, it will assess international banking strategies within the United States. Third, it will attempt to offer an explanation for the behavior of various actors within the context of commercial real estate.

Commercial Lending Two common commercial lending products are used in the marketplace. Similar to residential, there are those that hold the loan on their balance sheets, better known as portfolio lenders, and then there are those that sell the loan into the secondary market, better known as conduit lenders. These are two distinct types of lending, and both generate profits through different methods. The portfolio lender generates a profit from a lending transaction from the spread or margin above the interest rate index (e.g., adding points on top of market interest rate). The majority of the lending for these types of transactions is performed by insurance companies and commercial banks. Additionally, portfolio lenders could also include real estate investment trust funds, pension funds, and savings and investment funds. The second option is a conduit lender. A conduit lender generates profits through a path of transactions. First, part of the profit comes from the difference between what the lenders can sell the bond at, combined with the value of the sum of all the loans in the pool. In some cases, a conduit lender may decide to also service the loan; however, all the interest payments are collected on behalf of the investors. But it is important to note that because interest rates are at historic lows, commercial banks are not making enough money to cover the expense of the transaction – the net interest margin is so low that it creates more of a loss than a gain. It appears the only way commercial lenders are making a profit is through charging more and more fees, which is a turnoff to certain consumers, particularly when the demand is at an all-time low. Now that we have a basic idea of how products are generated in the commercial loan market, we can begin to explore historic commercial lending rates in the United States. As you can imagine, during the 2008 financial crisis to the current times, commercial real estate financing by banks has been reduced – and by the same token, the demand for those types of transactions has decreased. Demand has fallen because of the underemployment and unemployment rates, declining individual wealth and assets, increased debt load held by companies and individuals, continued global economic uncertainty, and a host of other factors that show us a direct relationship between supply and demand with regard to access

to commercial lending. It is also true that banks have changed their overall lending policies in response to increased legal framework and their own internal risk management reevaluation in attempts to remain solvent. Nearly eight out of ten banks have tightened their lending standards with regard to commercial real estate (but we know this also to be true for residential, particularly with the onset of Dodd-Frank and changing tax code). Most banks have also increased their loan-rate spreads, more common in the United States but also done by international banks. The banks only appear to be lending, in any significant way, to those institutions that have a large amount of cash on hand, to minimize their own risk. Additionally, there are many medium and smaller banks that remain undercapitalized and in some cases totally insolvent, which also increases larger banks’ risk. Those that have lent now have balance sheets with assets where the economic valuation is substantially lower than when the transaction took place. Obviously, the banks’ foremost policy is to gain a handle on the underappreciated assets before committing themselves to new projects and expanding their transaction rate. The scenario just described is not, of course, unique to the United States; it is also taking place in the EU, and as a result, international banks and private investors have filled the gap.

International Bankers In our firm’s conversations with different commercial brokers and private equity firms within the United States, many of them have indicated to us that international loans are often a strong alternative to U.S. commercial lenders because they are unafraid of the risk that the U.S. lenders insulate themselves in, and often have more capital on hand. In a policy paper by VOX’s research unit, they argued, “While many advanced country banks are less likely to be active investors in the near future, banks from emerging markets, being in much better financial positions, are likely to step into the void, increasing their relative importance as foreign investors, especially within their geographical regions. As such, the foreign-bank landscape is likely to change substantially in the future.” Both emerging economies and also parts of Europe are moving capital into the United States faster than ever. According to the Wall Street Journal, “Foreign investment in the U.S. last year totaled $234 billion,


a 14% jump over $205.8 billion in 2010, with around two-thirds of the cash coming from Europe. The government initially estimated that investment flows dropped 4% last year. Foreign investment in the U.S. has now exceeded its average of the past 10 years in 2010 and 2011, suggesting America's lure for capital has recovered from the crisis.” It is also true that continued drops in U.S. home prices are attracting much of the foreign investment along with increased acquisition of companies by international capital. The question we sought to answer concerns itself with the realty lending market within the United States. What we have learned up until this point is that the commercial lending market in the United States is much more regulated (both self and imposed), and it becomes increasingly harder to qualify for large financing, unless one went a mortgage broker route where relationships play a very important role in originating a loan. We have also learned that interest rates and decreased capital, combined with individual wealth drops and issues of employment, can create a supply-and-demand decrease for these types of projects. All these negative factors combined have created an interesting market for the international financial system to play a role in not only lending in the United States, but the overall healing of the U.S. economy. We saw this through increased foreign direct investment numbers and a diversification in asset acquisition within the United States by international banks and investors. A depressed market in the United States allows such foreign investment to thrive, which in turn can create opportunity within the domestic market due to a fresh infusion of global capital and a relief of the feelings of uncertainty within the United States, which, as all who watch the stock market realize, is important for growth. To the question of

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globalization, which is the cause and what is the effect? I think the case is clear that despite globalization, the weakness in the U.S. economy and the stagnant banking situation within the United States has opened the door to foreign investment – in many forms. The internationalization of parts of the transactions domestically is an effect of the economic conditions – and should not be linked as a cause or product of globalization. This is important to understand from a brokering perspective for several reasons: 1. The increasing regulation on the part of the government to the banks, and the banks to the consumers, forces brokers to continually update their frame of reference when deciding to take on a potential commercial client and know exactly what lender to place it with. 2. Expand your lending rolodex to include international assets and banks; do not limit yourself to domestic lenders. 3. Think outside the box in terms of obtaining financing. Banks are not the only option for brokers, though they always want it to appear that way. 4. Grow patience with this market and realize that these transactions will be under enormous scrutiny before being closed, and your staff must be equipped with the adequate research skills and foresight to handle these types of loans. The market may make it difficult each and every day, but remember that you have options as a broker, and understanding the global political economic climate has never been as important as it is in today’s world. You may want to consider rereading your 11th grade social studies textbook, or hiring a PhD in international business before continuing to operate in the commercial lending market – global market. By Richard J Russell / CEO and Patrick R Corcoran / Managing Director. We are a registered mortgage brokerage firm with the New York State Department of Financial Services and have been for the past twenty years. Our primary function is real estate financing. We are able to transact mortgages for both residential and commercial through wholesale and retail channels. Our residential business dealings are focused solely on New York State, but we are in the process of extending our geographical footprint.

Can I Sue For Denial Of HAMP Loan Modification? by brian mahany


an I sue for denial of a HAMP loan modification?” is a question we frequently hear. Some lenders (Bank of America, Citi, Wells Fargo) seem to run borrowers through the wringer only to ultimately deny them a mortgage modification. That’s a shame, since Congress authorized the Home Affordable Modification Program as part of the economic stimulus legislation. Luckily, it is often possible to sue your lender if wrongfully denied a modification. [Ed. note: We can only provide general guidance, and are not able to dispense legal advice by a blog post. The law on suing for modification denial changes weekly and varies from state to state – and sometimes even within a state!] HAMP was rolled by the Treasury Department in 2008 as part of a larger federal stimulus package. That law, the Emergency Economic Stabilization Act of 2008, gave billions to Wall Street and big banks but also set aside something for struggling homeowners unable to keep up on mortgage payments. Congress wanted to “maximize assistance for homeowners” and “minimize foreclosures.” $50 billion was set aside to induce lenders to lower interest rates or monthly payments. On paper, the program seemed ideal. In reality, however, the program was and continues to be a disaster. Some homeowners who are down on their luck simply can’t 20

September 2012

make any payments. For them, a modification just isn’t going to work. For many, however, a small reduction or reprieve may make the difference in allowing a family to remain in their home. Lenders are supposed to offer modifications to borrowers who qualify. Often those modifications require the homeowner to supply documentation to establish eligibility for the program, and then to make a few trial payments to ensure that they can make the minimum payments necessary to avoid foreclosure. The intended practice is far different from reality, however. We are contacted daily by homeowners who try to make their trial payments only to have them refused, who make all the payments and are subsequently denied, who keep sending in their documents over and over only to be told they were not received and, in a few instances, given telephone numbers to call that are either disconnected or never answered! We could write a book on the problems encountered by homeowners trying to get a modification. It’s incredibly demoralizing, considering the bank first holds out a carrot and then pulls it away for no reason. People who are wrongfully denied a HAMP modification may be able to sue their lender, however. That’s a dirty little secret the banks don’t want you to know. The only federal appeals court to consider the issue is

the 7th Circuit which covers Wisconsin, Illinois and Indiana (Wigod v. Wells Fargo). The 7th Circuit Court of Appeals said that although Congress didn’t include a provision allowing lawsuits for denial of HAMP modifications, their intent was certainly clear in wanting to minimize foreclosures and promote maximum assistance. A subsequent Treasury directive also acknowledged state law. The court also said that state claims against lenders for breach of contract and deceptive business practices were not pre-empted by the federal law. Not all courts agree with the 7th Circuit, including courts in California where the mortgage crisis is particularly acute. Prior to the appeals court decision in Wigod, California courts had already decided there was no claim for denial of a modification, but there is some evidence that suggests California courts are rethinking that pro-lender position. Just a few months ago a federal bankruptcy court judge refused to throw out a claim against CitiMortgage based on a HAMP denial. In order to bring a case for denial of HAMP modification, it’s important that you keep an accurate phone log and copies of all your correspondence. That includes any messages or letters you receive from the lender. Often

these cases turn on who is the better record keeper, and you shouldn’t assume that the bank will provide everything. After all, many of these claims are those brought by homeowners alleging that they sent requested documents to the banks three and four times – only to be told they were denied for not sending in the requested documents (our record thus far is a whopping 42 times!). Don’t be afraid to record conversations either. You should check local laws first, however. The Reporters Committee for Freedom of the Press has a pretty comprehensive website for that. We don’t know how often they update it, but they do have a state-by-state list. In our opinion, many of the larger banks and servicers only pay lip service to the HAMP law. Unless you complain (and sometimes sue), you may find yourself with no modification and still facing foreclosure. Brian Mahany is a partner at Mahany & Ertl, a nationwide boutique law firm that sues lenders for predatory and abusive foreclosure practices, HAMP denials and wrongful lockouts. Brian welcomes questions and comments and can be reached at or by telephone at (414) 704-6731. If you are facing an immediate foreclosure, contact your local bar association lawyer referral service.

How we see it


September 2012

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Regulator Rabble-Rousers

I’m not against more regulation. I’m against more piling on.

by Gordon schlicke


uddenly, regulators that should have been paying attention know eighteen new ways to stop lenders from bilking hapless consumers. We all knew what should have been done. Regulators just couldn’t be awakened to listen. A mortgage regulator on the bridge of the Titanic would have sent a note to the Captain that there was a possibility of a collision, but it was being studied. Because this crash involved government employees who can only be fired if they murder their boss in front of twelve witnesses, Congress held hearings designed to protect any bureaucrat who caused the disaster and made everyone else look bad. There is no penalty for piling on, so even the Department of Agriculture showed up. Wall Street absolved itself claiming no one could have foreseen a market collapse. Congress claimed it wanted to make the American Dream possible for everyone. Fannie and Freddie claimed they had to follow the market or lose 24

September 2012

dominance. HUD said it warned the industry but sadly the memos were only circulated internally. The hearings determined that it wasn’t the Beltway’s fault. The fault was that there were thirteen different government agencies with authority over mortgage lending. What was needed was a fourteenth with more authority. Spreading blame meant that each person was only a teeny bit guilty rather than a loyal government employee. “That’s why Congress has so many members,” one Senator explained. For mortgage lenders this is the “Wait-till-your-father-gets-home” minute. We know what’s coming. Legislative bubble machines will drain all the water out of mortgage pools and lift another few thousand from our net profit. Loan originators have been assured that industry input will be solicited in the Federal Register, a pulp magazine with no pictures. If you want to comment on proposed rules you’ll find an address so long it won’t fit on the envelope. When responding I often found the title: “Deputy Assistant Secretary to the Deputy

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Assistant Secretary.” DA’s read all comments and compile an executive summary which goes something like this: In mortgage finance, anyone working in a carpeted office is good; anyone working with borrowers whose office floor has a hard surface is bad. When I talk to people in Washington about overregulation they often refer to “the big picture.” We aren’t in the big picture. We are in the small picture. If you were shown the big picture you’d see a big check from Kreplach Mortgage Corporation with Cash and the Right Point-ofView. I checked with the Supreme Court, which recently ruled that corporations are persons. They told me they are thinking about also making mortgage lenders persons. Today there are two kinds of mortgage regulators: Those who think their job is to see to it that the rest of us don’t enjoy our work, and those who think all mortgage loan originators have tats and a parole officer. Both have an army of auditors – people who had a wretched birth, a vile and degrading childhood and a failed career in accounting. Some will be visiting you soon. When they arrive, rent some folding tables and wobbly metal chairs and put them in an unheated hallway. Remove a few bulbs from the hall

lights; pull the plug out of the refrigerator in the break room and stick an Out of Order sign on the nearest restroom. Never try to be funny. The only time auditors smile is when they find a mistake. We have been assured that sufficient time will be allowed for us to adjust to the new regulatory environment. Your interpretation of new rules and guidelines may differ from your regulator’s, in which case you lose. Regulators get their interpretations from Mt. Sinai on clay tablets. They’ve promised a fresh approach to consumer warnings and have new ideas, like mandatory government disclosure forms that make everything clear. Several hundred lawyers will reduce an explanation of annual percentage rate to just fourteen words that anyone can understand. Finally consumers will eagerly read everything at closings and pat us on the back. I can’t wait. I have just one reminder for those writing the new rules: A disclosure is a piece of paper that tells you what the next piece of paper is all about. It’s a lot easier to just start with that second piece of paper. Gordon Schlicke is a mortgage trainer in Seattle. He can be reached at or (206) 972-3091.

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Superstars didn’t start out producing large volumes of business by Ralph LoVuolo, sr


his past week was a perfect time for me with my clients. After reviewing their week, asking questions about what sources were the best for them, asking them to continue to focus on target marketing, inquiring as to their next week’s calendar, pleading with them to be sure to connect with their past clients and referral sources, I knew that I had one more subject to broach. A few of my clients and I have worked together for years. Every time they contact me, send me an inquiring email or agree tacitly to continue to work with me and allow me to coach them, I truly get a feeling of gratitude. “It’s time to take stock,” I said to many of them. “It’s time to review what you did this past six months.” It was then that questions started to come from the depths of my inner being. An exaggeration? No! Not at all! I just started to ask questions that interest me, have previously interested me, and more than likely will continue to haunt me till the day I die. Here are the questions and the form I sent to them all, exactly as I wrote them:

“These questions are designed to make you think about your business. They should be answered seriously and with more than just one word. • Did you reach your six-month goals as you set them in January? • If yes, why? • If no, why? • What do you think is holding you back from achieving your goals? • Are you following your marketing plan? • What marketing are you doing that works? • What marketing are you doing that should be trimmed/cut/deleted? • What separates you from the others who do what you do? How are you different? • Do you have enough good referral sources? • Do you have referral sources that you spend time cultivating/marketing to people that do not produce business for you? • Do you continue to learn/study more about the business? • Is there anything you wish you would have done to generate more business?


• Is there any class of buyers/borrowers that you would like to pursue? • Are you setting new goals for the balance of the year? What are they? How will you accomplish them?” Then I dropped the bomb, which came down to this. “What separates you,” I asked, “from those who produce $200,000,000 in volume a year?” I continued with, “What makes them more successful than you? How do they produce such great volume? Do they sell rates? Do they pay for the business? Do they have weekly meetings with referral sources? Is it because of their superior knowledge of the business? Do they cheat somehow?” Ok, everybody relax, because I am sure they do have some combination of certain skills that do not include cheating in any way. “They” have too much to lose. But if you took the time to think about it, most of you would explore the following: these superstars didn’t start out producing large volumes of business. They had to start somewhere, with something, probably something special. What was it? What did they think and then do that put them on a path to having an income of a million dollars a year or more? Too many of us focus on and search for only one reason why people do the things they do. Mikhail Gorbachev, former General Secretary of the Communist party of the Soviet Union before it was broken into separate countries, wrote a book published in 1988 entitled Perestroika. The literal meaning of the word is restructuring or rebuilding. In this book – and I remember this very clearly – he chastised Americans for one of their failings. He wrote that the American psyche seems to most often seek one answer to why things happen, instead of realizing that there are always multiple reasons why things happen. If you’ll think about recent conversations that you’ve had with friends and relatives, you will recall that most often we try to figure out why something happened. I

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wonder why Joe and his wife split, I wonder why the Joneses bought that car, I wonder why Amanda does so much business – and finally, what is the secret to success? I’ve often spoken of this really bad habit to many audiences, but it’s very difficult to change the perception that most of us have. We really think there is one reason why something happens. Well, there is no one reason “why” to almost anything. It’s not like, as parents we’ve told the kids, “cause I said so,” and that is the only reason. People who do what they do have multiple reasons for their actions. But really successful people seem to have one very strong psychological part of their being that is different than most of the rest of us. They are driven to succeed. It is a very strong desire to be the best at what they do. And they sacrifice almost everything else in their lives to achieve their desired goal. I laugh when I hear an Olympic champion, having just won the event that they have trained for the past 20 years to succeed at, say to a TV interviewer that they never believed they would win, all they wanted was to participate. If that were true, why did they spend the greater majority of their life training? They want to win, every one of them. It’s a burning desire they have. They sacrificed any semblance of a normal life. Are there exceptions? Sure, but the exceptions are negligible. Are some people born with the silver already in the bank? Sure – but not many in comparison. And then there are those who had the silver at birth and blew it. But let’s concentrate on you. Let’s think about you becoming successful. Then let’s put it into perspective. What do YOU want? What will YOU do to achieve it? Have you listened to the Strangest Secret by Earl Nightingale? If you believe it, it will be. If you want it badly enough, you’ll sacrifice almost everything to acquire it. What do you want? How badly do you want it? Read the questions above and write out your answers – not one-word answers, but sentences. You’ll learn a lot about yourself. Ralph LoVuolo, Sr., is President of Mortgage Motivator, a consulting firm on the cutting edge of the mortgage business to help people achieve their true potential. He is one of the founding fathers and a two-term president of the New York Association of Mortgage Brokers. Additionally, he served as Parliamentarian for six years on the Board of Directors of the National Association of Mortgage Brokers. LoVuolo, Sr. can be reached at, or visit him at

Realtor® Marketing Secrets Secret #3: Partner with Top-Producing Realtors

BY doren aldana


ne of my coaching clients was telling me recently that he literally "HATES" working with Realtors®. That's a strong word. When I asked him why he felt so strongly about that, he said it's because they're "flakey and waste his time." He continued by saying he'd "rather work with consumers" because he sees himself as more of a "Consumer Broker" than a "Realtor Broker." Can you relate? Do you ever wish you could attract more purchase business WITHOUT having to wait around for Realtors® to send you the odd referral here and there? If so, this article will point you in the right direction. When it comes to Realtor marketing, you essentially have two options: you can go after anyone with a pulse who can fog a mirror, or you can be a bit more selective and target top producers. The first option may seem like the safer, easier, more comfortable option; however, the second option – while being admittedly more challenging – provides the most leverage and the highest income potential.

Here are eight unique characteristics of the top 10% highest-producing Realtors® (and why you want to partner with them): 1. They have automatic lead-generation systems and full pipelines! Their automated marketing systems allow them to generate full pipelines of buyer clients and listing clients. They understand that systems allow them to save time, energy, money and stress. Their systems work even while they're not working. 2. They understand the importance of building clients for life. Low producers get a customer to make a sale while top producers, on the other hand, make a sale to get a customer – a customer for life! That's why they're so big on controlling the quality of their client's experience; they understand that it is inextricably linked to the amount of repeat and referral business they receive. 3. They understand the "Team Concept." For the most part, top producers "get" the fact that they can't do it all on their own. They know teamwork makes the dream work. As a result, they're always looking for top-notch professionals who can help leverage their time and money. 4. They have iron-fisted client control (high influence). Based on the previous point, they place a high


priority on leading, guiding and counseling their clients throughout the entire home-buying process to ensure their clients have the best experience possible. To achieve that outcome, they need professionals like you – the mortgage professional – to help provide their clients with the best experience possible. 5. They don't need to be resold. You don't have to sell them on Monday and then resell them on Wednesday and then resell them again on Friday. Once you prove your unique value and you consistently deliver on your promises, chances are they'll be partners for life. Admittedly these are generalizations, but based on my experience, top producers tend to make decisions quickly and reverse them slowly. 6. They control the area's inventory. When it comes to listings, they hold the lion's share of the inventory in their market area. What does that mean to you? Well, remember this important truth: LISTINGS ARE THE ULTIMATE BAIT TO ATTRACT HOMEBUYER LEADS! In other words, the more listings they have, the more buyer leads that you'll attract into your pipeline. This is especially the case if you are able to show your Realtors® how to increase their buyer leads using lead-generation technology such as Text Capture and Call Capture (more on that in a future article). With that said, you obviously have more leverage if you work with real estate professionals who have lots of inventory. The more the better! 7. They control a large and responsive database. They understand the importance of compiling, maintaining and utilizing a database. They understand that the only true equity they have in their business is their database of prospects, clients and referral partners. That's why they guard it with their life and ensure they communicate in such a way that their "relationship equity" continues to build over time. They position themselves as a trusted advisor who always has their clients' best interests at heart.

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8. They have many more opportunities for joint promotion. For all the reasons listed above, there's a lot higher likelihood that they're going to be able and willing to join co-marketing initiatives that produce profitable results for all parties involved. As you can see, there's HUGE leverage in working with top producers! Now the pregnant question is how do you attract them? Before we get into the details, let me give you an overview on how you can gain the right posturing and positioning so they actually start chasing you instead of you chasing them. Courting Realtors® is just like dating – if you don't have absolute clarity about who you want to attract in advance, chances are you'll get swept away with the emotion of the moment and end up settling for a dud instead of a stud. Bad example, but you get the idea: clarity is power. One helpful fact to remember is that you don't need many Realtor partners to make a life-changing impact on your income. For example, if your average commission per deal is $2,000, all you need are four Realtors® sending you one measly referral per month to add an extra six figures to your bottom line. Why is that important to know? Because it reminds you that you can afford to be selective in choosing your partners. Here are six criteria for qualifying your Realtors®: 1. Rapport/attitude. Since you're looking for a longterm "partner" and not just a short-term "fling," you want to be very aware of the level of rapport and connection you have in your initial meetings. And obviously, that's something you can't really contrive; it's something organic that happens serendipitously. Sure, there are lots of techniques for building rapport, but when it comes to natural rapport, it's either there or it's not. Here are a few questions to ask yourself after your initial meeting: • Do you have good rapport with that person? • Do they have a positive, upbeat attitude? • Are they someone who gives you energy or sucks energy from you? Be cognizant of those often-overlooked elements because you only want to work with positive, upbeat people who inspire you to greatness. You want to work with someone who has an eye for opportunities instead of obstacles, who breathes life into your sails and propels you forward instead of holding you back. 2. Number of transactions. How many transactions or ends are they doing per year? Quite frankly, if they're not

doing at least one transaction per month, they're probably not worth your time. Top producers usually do two or more transactions per month. Remember, anyone can send you a referral, but you shouldn't invest your valuable time with just anybody. You want to be purposefully selective because it's going to require a significant amount of time, energy and money to cultivate a high-level relationship with your key partners. 3. Number of listings. As you may recall, listings are the "bait" that attracts buyer leads – so if they don't have listings, they're not going to provide you with many buyer leads. For that reason, I wouldn't bother courting potential Realtor partners who have fewer than four listings. That's an absolute minimum. Top producers typically have dozens of listings. 4. Annual sales volume. Determine in your own mind what your minimum criteria should be. Five million? Ten million? Twenty million? You decide. Again, this is just another helpful performance indicator to help you determine if they're a real player or not. Generally speaking, the more sales volume, the more leverage they can bring to your business. 5. Coachability. Are they coachable? Are they willing to work within a system? Are they someone who values what you're bringing to the table and is willing to do their part? And are they willing to learn? Are they humble or do they think they know it all? If they think they're God's gift to the world, they're probably not the right fit. You need

to find someone who is humble, coachable and a lifelong learner. Admittedly, those qualities aren't easy to find in top-producing Realtors®, but they're out there. You just need to find them. And don't settle for anything less. 6. They recognize and appreciate the value you bring to the table. If they don't appreciate and respect you and the value you bring to the table, they're probably not the right fit. A strong win-win alliance is built on the foundation of mutual respect. So, as you start to interview Realtors® as potential referral partners, keep those six criteria in mind and give them a private score accordingly. If they meet the mark in all six of those areas, you've got someone worth investing a significant amount of time, energy and money in, to make yourself an irreplaceable asset on their team. In my next article, I’ll teach you seven simple steps for building a strong, profitable partnership with topproducing Realtors®! Stay tuned… Doren Aldana is considered by many to be the nation's leading Mortgage Marketing Coach. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free online workshop, "How to Turn Your Realtors®' Listings into a Flood of Red-Hot Mortgage Leads," visit: www.

How we see it


Working as a Team Tips from a Mortgage Lender

by kathryn pedersen


ender and real estate relationships are now more important than ever. While lending guidelines, timelines and documentation are changing weekly, there are fewer mortgage lenders since the housing meltdown. It requires a strong partnership to guide a borrower from contract to closing. As home purchasing continues to strengthen across the country, here are some tips and tricks that I’ve learned as a lender. First, as a real estate agent, be in close contact with the lender prior to negotiations over the purchase contract. When you are writing the contract deadlines, consult with the buyer’s lender on the timelines for the appraisal and loan conditions, document delivery and closing. This will set up correct expectations for the seller and buyer and make the transaction much smoother. I received an executed contract recently and the dates were extremely tight. I immediately told the buyer and buyer’s agent. They went straight to the listing agent, but it took weeks to sort it out with the seller. All parties had problems trusting the 32

September 2012

deal would close. Communicating about the dates may be vital if the lender is aware of a situation that will increase the timing on the loan. For example, if an additional party on the loan is out of town, it will take longer to get financials and have documents signed, increasing the time that the loan takes. It is also key for a real estate agent to ask how responsive the borrower has been up to that point in getting needed financials to the lender. This will give an agent insight into the timelines to complete the other tasks throughout the buying process. Also, in contract negotiations, if the buyer and seller are within a few thousand dollars of an agreement, agents should call the buyer’s lender. Sometimes points paid by the seller to lower the rate can increase the qualifying, or the interest rate has dropped and the buyer can qualify for a higher purchase price. To keep updated on the ever-changing market, real estate agents should regularly meet with their preferred lenders to discuss timelines, major changes in lending, and recent issues and successes. Second, have a communication plan in place. Sometimes this is an organic process that evolves throughout the

We lend on distressed Real Estate Investments! purchase, but I like to be crystal clear. For example, I may say, “The appraisal came in today for at least the purchase price. I will be sending the appraisal to the buyer today and giving them a call as well.” An agent needs to know the lender will be communicating with the buyer. If the buyer does not hear from the lender, they may blame the agent for not letting them know. The lender should also state to the borrower, “We have your appraisal. I already let your real estate agent know.” This helps the borrower know that the agent and lender are working as a team. It is also important to set up realistic expectations. One statement I make is, “You will be married to me for at least a month. I will be giving you a honey-do list. It is important that you having a good relationship with me and my team because we will be asking you for a lot of items over our marriage.” If the borrower comes in thinking that the lending process is five pieces of paper over two weeks, they will be sorely disappointed when things go differently. Any lender can give an agent a sample list of what is needed and a description of the mortgage process. Negotiations may continue from the original acceptance of the contract through closing. It is imperative that any change, no matter how small, be communicated to the lender. I have discovered upon reviewing the settlement statement that a seller was crediting the buyer for closing costs due to an inspection item, or even that the purchase price changed. It can delay the closing when major things change, so keep everyone informed. As a lender I go through a pre-closing call with the buyer to review all of the final terms of the loan. This helps prevent issues at the closing, but if a lender is not aware of something that changes the numbers, they cannot prevent an issue from popping up at closing. Being in close contact prior to negotiations, communicating well, and setting up realistic expectations are three things that can make a real estate agent and a lender a solid team throughout the lending process. They also make the transaction smoother for the buyers and help close more purchases successfully. We are all in this together, and when we work as a team to complete transactions, we all win. Happy buyers equal happy closings – and happy closings create more closings! Kathryn Pedersen, Mortgage Officer/VP at Yampa Valley Bank, Steamboat Springs, CO. She can be contacted at

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keeping up with the jones

A Regulation We Could Actually Use by chris jones


aving by now established in this space my virulent hatred of all things regulatory, I am going to present a heretical idea: there is some regulation that might actually work. Now, personally, I don’t think it would work better than borrowers actually paying attention to what they are doing when they borrow hundreds of thousands of dollars, but since it is clear that they are going to treat buying a home the same way they treat buying a breakfast sandwich, it is up to us as an industry to at least leave them without excuses when they do something stupid. Most of the regulatory increases imposed on mortgage professionals over the last few years has focused on registration and licensing. Almost every state has seen a dramatic increase in licensing requirements, from increases in stringency of background checks – as if someone’s bankruptcy four years ago has anything to do with whether they will do a good job of filling out a 1003 – to fingerprinting, to huge increases in pre-licensing education and continuing education hour requirements. All of this is then compiled into a national database run by some of the clunkiest and least-intuitive web interfaces in the history of the internet. It has cost millions 34

September 2012

of dollars in new fees to loan officers and brokerage firms, and contributed to the exit of over 75% of mortgage professionals since the peak in 2007. It has essentially forced small brokerages to either close or to consolidate with larger firms; in economic analysis this is always indicative of over-regulation – leading inevitably to downgrades in customer service and satisfaction. The kicker is, impact on fraud in the industry has been, charitably speaking, nonexistent. In other words, the government has essentially drained half a million or so jobs out of the mortgage industry to provide ten thousand or so bureaucrats with guaranteed work. But since this is what the government does, it’s no surprise, and most of us that are left are shrugging our shoulders and trying our best to ignore it, rather than screaming at the insanity of it. Since the overlords at the CFPB are no doubt reading this and looking through the database for my phone number (it’s at the end of the article, fellas), let me make a constructive suggestion as an olive branch. Once upon a time, I was 16 years old. My children do not believe this, but I have photographic proof. At that tender age, I obtained a driver’s license. Having now gone through the process three times with my own children, it appears that the requirements for that are pretty much the same as they were 30 years ago. There is an in-class

keeping up with the jones education requirement, followed by an extensive written test. And then they issue the license and turn the kid loose. Of course not. After the classes and written test, there is a lengthy practice period. The practice is done partly under parental supervision while the youth has a learner’s permit, and partly in an accredited practical environment, both virtual and live on the road. Then there is a practical test. And THEN the kid gets a license. It’s a system that has worked pretty well for several decades. Yes, new drivers are not very good and cause accidents, but on the whole, the way the licensing requirements work, people with drivers’ licenses are at least minimally competent to operate motor vehicles. City First has a corporate plane (don’t get visions of Bruce Wayne’s corporate jet here), and an in-house pilot, Leith “Maverick” Grasteit. I asked him what the requirements are for obtaining a pilot’s license. Although they are rather more substantial in terms of hours, they are also broken into two parts: a written, class-based component and a practical, in-the-air component. No one would expect a pilot to be able to fly an airplane without having actually done so many times under supervision. Taking an example closer to home, look at appraiser licensing requirements. Now, I’m going to mostly ignore the fact that appraiser regulations are beyond ridiculous by any possible measure, and forbear to mention that there has never – not one time in recorded history – been any correlation between the length of time one has to sit in class and the amount of fraud one commits once one is turned loose in the field. I’ll simply point out that appraisers have two components of their licensing curriculum as well, a class component and a (massively, cartoonishly oversized) field apprenticeship component. For mortgage people, well, what we have is a continual ratcheting up of the amount of time we have to spend in class. I ask those of you that are branch managers or functioning as supervisory personnel: have you detected any improvement, however microscopic, in the quality of loan officering performed by newly minted loan officers since the amount of time they have to spend in class has multiplied by a factor of ten? The question is rhetorical. Of course you haven’t. There is no possible way you could. Everyone knows that the education and testing components of the licensing requirements are hurdles to be jumped, and spending the time to get an 85% instead of an 80% on the licensing exam is wasted, absolutely wasted time. The exam has not one blessed thing to do with being a good loan officer.

Knowing whether the Equal Credit Opportunity Act was passed in 1974 or 1874 is totally, completely, and in all other ways irrelevant to doing a good job matching a client to an appropriate loan, or explaining the loan terms in ways that are intelligible (a job made harder by the new GFE, the single stupidest form in the whole ridiculous 70-page packet). Being a good loan officer doesn’t depend on being able to do an amortization on a calculator. That’s illegal anyway, because compliance mandates that we use loan origination bloatware to make sure our dates match on our GFE and TIL, and it does all the calculating for us. It doesn’t depend on knowing the regulations for how many hours an interest rate quote is good for. It depends on being able to work well with and explain complex terms to actual human beings ... which is no part of the licensing requirements. Of course. Let me help out here. The apparatus for a practical component of the licensing process is already in place, with the Branch Lending Manager license and its subsidiaries. So do this: get rid of the pre-licensing education requirements altogether. Keep the test if you must – although I’d change its content – but add a practical component. Audit the first five loans for every loan officer for their performance, and require the BLM to certify the loan officer’s work and stand behind it. After six months, a year, whatever, if the loans are good, issue the permanent license. Presto. A much higher likelihood of professional competence in your average loan officer. Once someone gets a permanent license, lenders will have a lot more confidence that this is a person who at least knows how to do the job correctly. We’ll probably end up here eventually anyway, but without eliminating the other regulations that would become obsolete because of the practical requirement, so perhaps this idea would only make things worse – but it would at least add a real-world component to regulations that are right now both pointless and destructive. Chris Jones is a branch manager with City First Mortgage Services and a ten-year veteran spanning the best and the worst of times in the industry. He is the author of the book Even Your Mother Won’t Call You Back, a primer on how to use the Six Channels of Marketing to do business more naturally and efficiently (available at Chris arrived in mortgages after careers with tech startups, stockbrokering, and running a presidential campaign. He’s a sought-after speaker and a part-time opera singer, which he insists isn’t as impressive as it sounds. Chris and his wife Jeanette live in Lehi, UT with their eight children. He can be reached at 801-850-3781 or at


center stage

center stage with Streetlinks The Niche Report talks with President Tom Hurst

the niche report

The Niche Report talks with StreetLinks President Tom Hurst about the launch of their Automated Examination & Valuation Division and its first product, StreetLinks QX. Contact StreetLinks by email at or by phone at 1.800.521.6926 to speak with a solution consultant. Why is StreetLinks getting into the automated valuation and review space? There is an industry-wide lack of confidence in automated collateral review products. This has compounded in recent years given the increased complexity of the real estate market, as well as, stricter lender-specific underwriting and property appraisal requirements. Appraisals, by nature, are subjective. Value opinions among equally experienced and competent appraisers can vary as a result of their market perspective or varying lender appraisal guidelines. 36

September 2012

So how does a lender know that they’re making a sound lending decision? Well, they complete what they hope to be a comprehensive collateral review which commonly incorporates a traditional AVM. For years the industry has had an over-reliance on AVM products. These products typically use a static model to pool hundreds of property sales. For example, we see AVMs where sales ranging from $90K to $400K are lumped together to tell the lender that the subject is worth $197K. No amount of arithmetic can make up for the monumental differences between a $90K and a $400K property. With that kind of variance, lenders aren’t getting answers – simply more questions. They cannot make a “one to one” comparison on the appraisal. Just think - what would happen if an appraiser provided an appraisal with 125 comps with sale prices spread that wide? They would be placed on a DNU list as fast as someone could type their name! Yet, because there aren’t other alternatives, lenders use AVMs that do just that. We believed there could and should be something better. We believed and executed on the concept of

center stage developing advanced proprietary technology to replicate an appraiser’s thought process when reviewing an appraisal. It took over three years to evaluate the flaws of traditional AVM models and build the RIGHT model the RIGHT way. QX was born from our desire to offer our clients a consistent and reliable appraisal review tool. We invested millions of dollars and thousands of hours of the best appraiser and technical minds in the business to accomplish this. Tell us about QX. QX (Quality Examination) is a comprehensive collateral underwriting review utility that combines a sophisticated automated rules engine, automated valuation review model and manual review manager. Residential appraisal principles and practices were infused in QX directly by certified residential appraisers, computer programmers and mathematicians. QX’s rules engine and valuation module supports a comprehensive, automated report validation of the standardized, itemized components of the appraisal while analyzing real-time local market data. Every administrative and correlative component of appraisal review is intelligently automated leaving only specific narrative elements that require human interpretation for manual review. All components of QX work together to deliver a customized appraisal review report that meets each lender’s specific review and regulatory compliance objectives. QX presents appraisal review examiners with the data and verifications needed to focus their expertise on validating the narrative construct and support of the appraisal in a cost and time efficient manner. To put it simply, in a matter of minutes, it does everything that you would do manually in a collateral review if you had the time to do it with every file. So is it an Automated Valuation Model (AVM)? Lenders have been using AVMs for a long time so it’s easy to want to lump QX in with them. While there’s an automated valuation component to it, QX is not fully automated and it wasn’t intended to be. The ValueComp component of QX is an automated valuation model but it is diametrically different than traditional AVMs in how it processes and decisions the data that is used on the comparable selection and how the final valuation estimate is rendered. Additionally, it is an automated appraisal

review valuation – it must consume the appraisal data to present results. What’s the difference/advantage over what they’ve been using? There are several key components of QX that make it very different from the other examination tools available: Consistent Review Interpretation – With traditional AVMs, the reviewer is put under a great deal of pressure to decide if the data is accurate enough to base their decision and every reviewer may feel differently about what is “accurate enough”. QX uses a scoring methodology that eliminates that subjectivity; plus, it presents results in a transparent way that clearly explains the level of risk involved to the reviewer so that they can make a decision based on facts instead of guesses. Simple vs. Complex Review Rules – Traditional rules engines use simple rule sets or “unchained” rules that simply check if a given question is answered or not. They can’t check whether that answer that may present or justify itself in another section of the appraisal. In a human review, not every question is a simple “Yes” or “No”. If that’s all a review tool is doing, it’s not enough. QX’s review rules can be chained together conditionally to account for any number of “If > Then” situations to make it more like a human review. Fewer, Closer Comparables - QX uses appraisercreated logic to distill and exclude comps, presenting only the best, most relevant comps for analysis versus a large group of widely ranging sales, which tightens down the accuracy of the analysis. What’s the net result? QX eliminates confusion by providing clear answers and directives on appraisal quality, administrative

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center stage construct, comparable selection and valuation. There is no other product on the market that takes this approach and drives these results - period. The objectivity created by QX is driven by the fact that lenders can standardize questions, compliance check points, and validations performed across all of their appraisals to establish a consistent review process regardless of what appraiser or AMC the appraisal comes from or which underwriter reviews it. That consistency helps lenders to establish a measurable performance baseline both for underwriting staff and AMCs. As a bonus, QX also allows lenders to reduce their underwriting and correspondent review times by up to 60%, which saves money since staff can be more productive. What was it about the market or customer demands that made you say “Now’s the time” for this product? The need existed – it’s that simple. We refused to replicate or resell a traditional AVM because we just couldn’t stand behind them. We believe in creating products that address a need and bring real value to our clients. For us, profitability has always been a byproduct, not the reason for market entry. Lenders have been forced to perform collateral review with a blindfold and one hand tied behind their back by using products that are not transparent and not built to give a logical and accurate comparison. Lenders need assurance that the best comps are being used, that the valuation is accurate, and that the appraisal construct meets all industry standards – QX does that! So this was a long time coming. What was the process behind it? QX was built by appraisers to “think” like an

appraiser would. We’ve developed thousands of review rules that are combined into very complex analytic scenarios and regression models. Our internal quality control staff has been using it on live appraisal orders and weighing in with feedback for over six months as part of our beta program. That type of real life experience, along with significant testing, has helped us to see where to adjust and enhance the platform. It’s a thrill to finally see the hard work of hundreds of people come to fruition. What does the future look like for AVMs? How do you see this changing the game? Revolution might sound like a dramatic word but if you look it up it means “a sudden, complete or marked change in something,” and that’s really what QX is poised to be for the automated valuation space. Do I think traditional AVMs will go away? Maybe, over time. They have been around for over 25 years but often oversold or misunderstood in their capabilities. Users that simply want inexpensive data to evaluate against another valuation product will continue to use them until they realize the time, cost, confusion and questionable reliability of these products. However, the industry is in need of a change. I believe that the current use of AVMs will significantly change and products like QX will replace them in making collateral decisions. We hear that StreetLinks continues to expand. How do you see this fitting into your bigger picture of products? QX is the first product in our Automated Examination & Valuation Division. We will continue to blend advanced technology with our valuation expertise to launch more revolutionary products to meet needs that aren’t being addressed and bring value where it didn’t exist prior. QX will also be a part of our offering for our current LenderPlus (AMC) and LenderX customers, as well as a stand-alone product, to bring transparency to and save time on collateral review processes. QX is engineered for residential collateral review, but it can be easily scaled and tailored to apply to any form of document and/or process examination. We see it growing to support other mortgage industry analytic processes in the future. StreetLinks provides a suite of lending services and technology solutions for mortgage lenders, servicers, appraisers and other mortgage professionals.

What's your mortgage iq?

What's your mortgage IQ? BY karen deis

Common sense may be dead and gone when it comes to underwriting a loan – but it helps to understand some of the reasons why some of the mortgage rules were implemented in the first place. That’s what we try to do when answering your questions. Keep up to date on some of the rule changes regularly posted on Facebook. com/MortgageCurrentcy. Fannie Condo Project Approvals: I am trying to get a condo project approved and the lender said I had to run it through the CPM program. What is CPM and are there any forms I need to submit? First, CPM stands for “condo project manager,” and it is a system related to the concept of automated underwriting for a borrower – but this is an automated underwriting system for condominiums. Just like DU for borrowers, the CPM system reviews the strengths and weaknesses of a particular project, and Fannie may approve a condo project using the Condo Project Manager system that would not normally be approved by FNMA because it does not meet FNMA’s requirements. There is not much that you can do other than to send the lender running the CPM system for you a completed HOA questionnaire that has been accurately completed by the HOA or management company. The lender will use this data to plug into the CPM system, and then it will

either approve or decline the project. If it approves it, then you are good to go. If it declines the project, that does not mean you have to give up, it just means that you will have to meet all of the FNMA requirements. Fannie/Freddie Disputed Accounts: I have a client whose credit score is 739. They have four disputed accounts, which they paid off years ago. U/W is saying DU is requiring these accounts to come out of "dispute" status, and that a new report has to be run through DU without the disputes. Is there any way around this? Answer: Unfortunately there is no way around this, and yes, it is accurate. If DU recognizes a dispute and provides a feedback message regarding the disputed account, the underwriter and lender are bound by these messages and must follow each message specifically. You might ask: What is the big deal?… Well, most ‘credit repair’ companies dispute all derogatory accounts, even the legitimate ones, hoping that the creditor will not respond or validate the debt within 30 days. If creditors don’t respond to the dispute within 30 days, the credit bureaus, Experian, Transunion, and Equifax, are required to drop these accounts from the consumer’s credit file … which may raise the consumer’s FICO credit score. The problem is when the mortgage lender runs the borrower’s loan application through Fannie Mae or Freddie Mac’s automated software loan approval system, it doesn’t read it or ‘grade’ the disputed derogatory account in the


What's your mortgage iq? credit report. This will cause the automated approval engine to give a ‘false positive’ approval. This results in an approval with less than the full credit profile … a big no-no in the secondary market where mortgages are sold to investors for servicing rights. It took a while, but Fannie Mae & Freddie Mac are onto this ‘scheme.’ Fannie & Freddie require ALL borrowers to have ALL disputes reported as ‘resolved’ on the credit report. Once the dispute is removed or resolved at the bureau level, the credit report must go through the automated re-run to see if it still approves the loan.

• USDA will finance special design features or equipment necessary to accommodate a physically disabled member of the household including but not limited to:

USDA EEM: Does USDA have an Energy Efficient Mortgage Program? RD allows for the rolling-in of the costs of energyefficient improvements as long as the home appraises for costs to be rolled in. For example, if the sales price was $95,000 and the home appraised for $100,000, then you could add $5,000 of energy-saving features. Eligible Repairs/Rehabilitation can added to the loan amount and completed after closing with the set-up of a repair escrow account. RD allows funds to be set aside (escrowed) for any repairs/rehabilitation that cannot be completed prior to closing, weather-related or not, subject to individual lender escrow requirements. WHAT CAN BE ESCROWED FOR? RD will allow those repairs required to meet HUD Handbooks 4150.2 and 4905.1. Optional repairs/ rehabilitation items a borrower wishes to do beyond those required to meet HUD Handbooks 4150.2 and 4905.1 cannot be escrowed for, other than those listed below. The loan may also include (subject to lender guidelines): • Funds for the purchase and installation of necessary appliances (new appliances):

FHA Streamline Rental Homes: Can we streamline an FHA loan which is now an investment property? Yes. You can FHA streamline an investment property but restrictions apply: 1. Not eligible for streamline refi to an ARM 2. Only streamline WITHOUT an appraisal allowed 3. Outstanding principal balance only may be refinanced – no interest may be added in Did you know that I can do a FHA streamline refinance on homes that are now rental properties? This will help clients reduce their monthly payments.

° ° ° ° ° °

Stove Refrigerator Microwave Washer Dryer Dishwasher

• Energy-saving measures including but not limited to: ° ° ° ° °

High-efficiency HVAC Weather stripping Storm windows and doors Insulation Programmable thermostats

• Storm cellars • Water and/or sewage facilities including reasonable connection fees for utilities which the buyer is required to pay. 40

September 2012

° ° °

Wheelchair ramp Door replacement Grab bars

Note: New carpet/flooring is possible if a waiver is requested from RD. Mortgage Talking Points™ Article: USDA & Energy Efficient Mortgages: How Homebuyers Can Save Big Money on Utility Bills!

VA Non-Borrowing Spouse Credit: Are there any VA rules about a non-borrowing spouse who has filed bankruptcy but will not be on the loan? Two points to share on non-purchasing spouses in community property states from Chapter 4 of the VA Manual. While VA only considers debt (not credit history) of the nonborrowing spouse, they also do not require CAIVRS. Chapter 4 – “If a married veteran wants to obtain the loan in his or her name only, the veteran may do so without regard to the spouse’s debts and obligations in a non-community property state. However, in community property states, the spouse’s debts and obligations must be considered even if the veteran wishes to obtain the loan in his or her name only.” Chapter 4 – “Lenders must perform a CAIVRS screening on all obligors on the loan (including IRRRL loans). The one exception to this policy is that CAIVRS is not required for non-purchasing spouses in community property states.” Written and contributed by Karen Deis of Mortgagecurrentcy. com. Provided monthly by www.mortgagecurrentcy.cominterpreting the Rules and Regulation Changes for loan officers, processors, underwriters, and owners/managers. Mortgage Talking Points TM, charts and checklists included.


Prime & FHA Icon Residential

National Wholesale Lender offering a full line of Conforming and FHA products. We offer personalized customer service where our client is our primary focus.

Pacific Union Financial Correspondent

Fannie & Ginnie direct conduit offering Niche Correspondent.

United Wholesale Mortgage 800-981-8898

Discover Lending Made Easy! UWM is a Technology Leader with UW to DU indings, Superior Customer Service, and an Expert Sales Force. The ELITE program provides the Best Conventional Rates & Pricing in the Industry! Signing up is easy! Join our valued Broker network at

Commercial NEW FundingEdge

Commercial Real Estate Finance, Business Finance and Oil & Gas Royalty Loans.

830-331-4030 & 210-249-2111 GreenLake Real Estate Fund, LLC 310-462-4637 Windvest Corporation 877-285-0777

Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today! Specializing in fix and flips, rehabs, income producing and rental investment properties throughout Southern CA. We lend on SFR residential and COMM property. Simple application process with generous broker commissions. Professional service with funding in 7 days. Call us today for a free quote or visit us online

REverse Mortgages ReverseIT 888-777-3311

Reverse Mortgages, fastest turn times in the industry. Training and lead support available.

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



HARD MONEY/Construction/Rehab Athas Capital Group, Inc. 877-877-1477 x 777

A True Wholesale Direct Hard Money Lender. Residential and Commercial lending, no lender point options and no upfront lender fees. Clear matrices and guidelines. All decisions, funds and processes in house. Hiring Wholesale AE's nationwide. www.


FundingEdge 830-331-4030 & 210-249-2111

FundingEdge is a correspondent for agricultural land & ranch financing and providing commercial real estate financing options through its network for private money and conventional programs.


GreenLake Real Estate Fund, LLC 310-462-4637

Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today!

Kennedy Funding

Specializing in nationwide fast, creative short-term bridge loans ranging in size from $1 million to more then $50 million. Loan commitments in 24 hours. Fast closings. Loans are available for note purchases, acquisitions, land development, construction, workouts, refinancing, bankruptcies and foreclosures.


Windvest Corporation 877-285-0777

ZINC Financial

Specializing in fix and flips, rehabs, income producing and rental investment properties throughout Southern CA. We lend on SFR residential and COMM property. Simple application process with generous broker commissions. Professional service with funding in 7 days. Call us today for a free quote or visit us online www. Investment Rehab Lender. We are a direct lender for Fix and Flip loans in CA, AZ and NV. Funding in as little as 7 days. Easy online submission @


JUMBO BofI Federal Bank 888-883-9672

Jumbo and Super Jumbo Loans 5/1 - 7/1 and 10/1 options.

MULTIFAMILY Apartment Bank 877-442-4003

Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. Apartment Bank’s flexible approach is key to freeing borrowers and brokers from the typical headaches and hassles of small loan transactions. Loan amounts from $250,000 to $10,000,000. Visit http://www.

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


September 2012


Service Provider Classifieds Branch Opportunities Hometown Lenders 888-606-8066

Our producers stay with us because they are supported and we don’t mess with their money. HomeTown Lenders is a debt-free, Full Eagle lender who believes in treating all employees and customers fairly. We take pride in being the best in the business.

Mountain West Financial

Consistent. Reliable. Competitive. With over 20 years of experience in Retail Branching, Mountain West Financial opens doors to limitless opportunities.


Residential Finance Corporation 800-785-6277

At RFC we believe the status quo simply isn’t good enough. We’re doing retail branching a little bit differently. We start out with an award winning culture and take care of our customers, both internal and external, like family. With that basic premise met, everything else falls right into place. Partner with us!

Training & education 800-231-4787

Interpreting the complicated mortgage rules in plain language (Fannie, Freddie, FHA, VA, Compliance, Credit) that ONLY affect the loan origination side of the business. Help Desk. Rule Change Calendar. Automatic Face Book posts & Mortgage Talking Points™ for your real estate agents. Online e-zine published 2X month. Try for $1.




Technology The Mortgage Office 800-833-3343

The Mortgage Office™ is a powerful suite of lending solutions for private lenders. With our comprehensive core loan servicing products and robust add-on products, you can custom build the most powerful and personalized mortgage software solution for your business. From Origination, through Loan Servicing, Mortgage Pools, Investor Access, ACH, email statements, and more. Your back office needs to be automated, and The Mortgage Office™ can help your business grow and expand without increasing your staff.

Byte Software 800-695-1008

Byte Software offers a complete mortgage solution from lead generation to selling loans on the secondary market enabling lenders to close more loans in less time with a SQL database, customization, enterprise scalability, compliance and security.

Calyx 800-362-2599

Affordable software that streamlines and optimizes all phases of the loan process – from loan marketing through closing.

DocMagic 800-649-1362

The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges.

title work & insurance

Entitle Direct 877-936-8485 or 877-9ENTITLE


Linear Title & Closing 401-841-9991 Scott Bond Services 800-365-0101

Hundreds of mortgage professionals have saved their borrowers up to 35% or more on their title insurance by recommending Entitle Direct.

Linear Title & Closing, Ltd., is a recognized leader and national provider of Closing, REO, Title Insurance and Settlement Services. Our streamlined RESPA compliant process utilizes flexible software tools that are easily integrated with your system

A leader in providing surety license bonds, fidelity, and E&O to the mortgage industry nationwide including investor required Special Mortgage Bankers Bonds. Offering a combination of expertise, service, value, and underwriting flexibility that’s second to none.



September 2012


marketing & lead Gen Best Rate Referrals 800-811-1402

Mailer Leads


Your mortgage marketing leader with many services available from Direct Mail & List Services, Telemarketing, Internet Leads, Mobile Marketing, and more.

866-783-4053 ext 14

Leader in FICO based lead generation, will help you increase your lead volume 150%. We've taken our highly responsive Mailer Programs and incorporated Personal Websites (PURLs) and QR Codes.

Stoneybrook Publishing Inc

Monthly client newsletters proven to generate new loans from referrals and repeat business


Right Side Marketing 800-456-4395

Titan List & Mailing Services, Inc 800-544-8060

Providing exceptional marketing materials for Real Estate and Mortgage professionals since 1985

Over 12 years of experience catering exclusively for the mortgage industry delivers consistent results from our turn-key campaigns. Our Pre-screened data, 24 hour turn around and custom pieces design continue to lead the industry for mortgage marketing efforts.

Appraisal & AMC NEW

United States Appraisals 866-562-0123

World-Class Service. Nationwide Coverage. Discover Confidence in Your Appraisal Partner!

StreetLinks Lender Solutions 800-778-4920

Providing lenders with a comprehensive suite of valuation solutions, including full AMC services, self-managed appraisal software, appraisal review tools and robust servicing products.



Advertiser DIRECTORY

Apartment Bank Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. 877-442-4003 apartmentcustomerservice@

Applied Business Software, Inc Loan Origination, Loan Servicing, and Mortgage Pool Software for Private Lenders. Powerful, flexible, compliant, and easy to use. 800-833-3343

Athas Capital Group, Inc. Direct Wholesale Hard Money Lender specializing in residential and commercial lending. Kevin O'Shaughnessy 877-877-1477 ext 777 46

September 2012

BofI Federal Bank 888-883-9672

Best Rate Referrals Mortgage Marketing Professionals. Raymond Bartreau 800-811-1402

Byte Software End-to-end Mortgage Loan Origination Software. 800-695-1008

DocMagic The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges. 800-649-1362

Entitle Direct Savings up to 35% or more on title insurance in 30 states. mortgage 877-936-8485 or 877-9ENTITLE

FundingEdge Commercial Real Estate Finance, Business Finance and Oil & Gas Royalty Loans. 830-331-4030 & 210-249-2111

Advertiser DIRECTORY

GreenLake Real Estate Fund Private Commercial Lender in CA & NV Kamau Coleman 310-462-4637

Hometown Lenders Our producers stay because they are supported & appreciated! Scott Smith 888-606-8066

Icon Residential National Wholesale Lender offeringa full line of Conforming and FHA products. We offer personalized customer service where our client is our primary focus.

Kennedy Funding Nationwide. Fast creative short-term bridge loans. $1 million-$50 million +. Commitments in 24 hrs. Edwin Urrego 800-342-8500

Linear Title & Closing Title Insurance & Settlement Services Nick Liuzza 401-841-9991

Mailer Leads Lenders and Brokers who use our mailers are not only surviving -- they are thriving. 866-783-4053 ext 14 Interpreting the complicated mortgage rules in plain language. 800-231-4787

RateLink Providing mortgage professionals with timely and accurate data as a means to a competitive advantage. 800-938-5193

Residential Finance Corporation Producing at least $3mm a month? Partner with Us! Expanding Now with Successful Branch Managers. Rick Pallo 800-785-6277


Advertiser DIRECTORY

Right Side Marketing Marketing Materials for Mortgage Professionals. Jill Fleischman 800-456-4395 x10

Scott Bond Services A leader in providing surety license bonds, fidelity, and E&O to the mortgage industry nationwide. 800-365-0101 Cary McFadden

Stoneybrook Publishing Inc Monthly client newsletters proven to generate new loans from referrals and repeat business 800-736-3632 48

September 2012

StreetLinks Lender Solutions StreetLinks offers leading valuation and servicing solutions driven by quality and service. 800-778-4920

Titan List & Mailing Services, Inc. Data provider, printing service & direct mail house. 800-544-8060

United States Appraisals World-Class Service. Nationwide Coverage. Discover Confidence in Your Appraisal Partner! 866-562-0123 brads@unitedstatesappraisals. com

United Wholesale Mortgage Discover Lending Made Easy! Conventional, FHA, USDA, VA, Jumbo, HARP 2.0, and Correspondent Lines. 800-981-8898

Windvest Corporation Hard money lender, specializing in Rehab Loans. NMLS # 394407. Andre Jimenez John Ermin 877-285-0777

Zinc Financial, Inc. Investment Rehab Lender. Todd Pigott 559-326-2509

- continued from page 50

Account. They would also be able to attract investors and savers to make deposits into their bank by paying them interest. They can still focus on quarterly profits from their ridiculous transaction fees. Those of us who choose to be responsible and save can no longer be ignored, especially the retirees who need the interest to survive. Here is another example of how this would work. Let's say a mortgage has a 4% interest rate. Two percent of the interest would be deposited into an Interest Rebate Account and the other 2% would be deposited into an interest-bearing bank account. Say your mortgage payment is $1,100. For simplicity, we can say $100 of this payment goes to principal and $1,000 is interest. The bank would rebate $500 in interest and pay savers $500 in interest. The bank will keep all interest earned on Interest Rebate Accounts. The end result is that savers receive interest, mortgage holders become savers, and banks lend money and pay interest. Aligning the best interest of savers with quarterly bank profits is vital to changing our broken system. Providing the same income stream to savers and banks culminates in the idea of Mortgage Interest Rebate Accounts. When

you consider that banks get their money for free from the Federal Reserve, Interest Rebates work! Banks need to start working for honest hard-working Americans. When banks get money for free, it is only right for our interest payments to be rebated to us. In a financial market that mandates pretend rules, Mortgage Interest Rebate Accounts are one way we can fix our broken banking system.

Harry Brokass (A.K.A. Eric Thomas), besides being a fictional character in his own book, is a Certified Public Accountant who played by the rules and did everything right when he bought a home. Unfortunately, like many other Americans, playing by the rules just wasn’t enough and now he is a homeowner whose mortgage is twice the value of his home. This experience was the catalyst for Capitaol: Buying Our Democracy with Stolen Money, his attempt to even the playing field against Wall Street and “Super Congress World.� Website: Capitaol: Buying Our Democracy with Stolen Money can be purchased at www.

Write for The Niche Report magazine or blog. Let your voice and knowledge be heard by writing for us. Tap into our huge audience of Mortgage Origination Professionals around the country.

We Want YOU!

Learn more by going to write-niche-report or call us at 866-964-2695

Giving Homeowners a Leg to Stand On Mortgage Interest Rebate Accounts (MIRA)

BY Eric Thomas


illions of Americans have gone broke by buying their dream home, and now financial innovation is needed to help savers and mortgage holders get out of debt. Wall Street and Congress have too much power – and they’re using it to keep corrupt individuals from going to jail. It's payback time. I would like to discuss my idea for the creation of what I’m calling Mortgage Interest Rebate Accounts. It is time to take back the American homeownership dream from the current “Wall Street-Super Congress World” scam. Banks have become fee-collecting machines. This is how they make their record profits. So how do we create a strong banking system to help the rest of us – the savers and borrowers? The answer is to allow homeowners to have Mortgage Interest Rebate Accounts. This concept would have banks rebating 50% of all interest back to the borrower. It is a 50/50 split between the borrower and bank so the banks are paying interest to their borrowers as well. A key part of this concept is that the mortgage borrower

gains access to the rebate money only after the mortgage is paid off. Also, the Interest Rebate Accounts will earn no interest for the mortgage holder. The bank will be allowed to keep all interest it earns on Interest Rebate Account balances. The biggest hurdle will be that mortgage interest will no longer be tax deductible. Going into debt should not be encouraged by our corrupt political system. With this plan in place, borrowers will have an incentive to never miss a mortgage payment. If they don't make a payment, they would lose all money in the Interest Rebate Account. For example, let’s say you paid $12,000 in mortgage interest last year. Imagine if half of this were rebated back to you. This $6,000 would add up to $60,000 in 10 years. Interest Rebates are a way to strengthen the middle class. This would bring enormous economic change by empowering consumers with cash. Right about now, you may be thinking: why would banks want to offer Interest Rebates? We all know they only want to charge outrageous transaction fees. The answer is that the banks can also charge a fee for the Interest Rebate - continued on page 49


September 2012




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International Banking & Commercial Real Estate Finance, page 16