Author: Brian Brady (page 25 of 27)

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Ardell over at Rain City Guide has been posting some good, consumer-friendly stuff about lending. It’s refreshing to see an agent work through the lending process.

In an earlier post, Ardell and I exchanged comments about hard money lending where she claimed ignorance; that couldn’t have been farther from the truth.

Ardell wrote a consumer post about pre-payment penalties. In the third and fourth paragraphs, Ardell explains the essence of private mortgage lending.

It really is that simple.

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Brian Brady of World Wide Credit Corporation will be offering a free conference call and presentation:

“How to be a Hard Money Loan Broker “

Tuesday, April 24, 2007

4:00PM Pacific Daylight Time (7:00 PM EDT)

SIGN UP IN THE COMMENTS SECTION (8 spots available) . Make sure that your e-mail is correct when leaving a reply in the comments section. We will be using Go To Meeting technology. I will e-mail you the conference call phone number and link on Monday evening.
Topics Covered will be:

1- What is “Hard Money” ?

2- Who are these new “hard money lenders” ?

3- What is trust deed broking?

4- How do I find investors for private mortgages?

5- What is a California mortgage pool ?

6- How do I price my loans?

7- How do I market my new private mortgage product line?

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I’ve been wondering about this Certified Mortgage Planning Specialist ( CMPS ) designation some of us loan hacks are displaying now. I remember hearing Barry Habib discuss “strategic equity management” back in 2002. I thought , “It’s about time! ” when he discussed that strategy. I had a securities brokerage background so the concept of a mortgage as a financial planning tool wasn’t alien to me.

Then they created this designation, the CMPS. I often chuckled at the litany of letters that followed a Realtor’s name on a business card. I used to think that they were somewhat narcissistic but now realize that they do represent a commitment to lifelong education. I considered the CMPS designation as one more racket.

Papa Joe (my father) used to tell me that you should wear your education like a watch; for use and not for show. I was taught that the mark of an educated man was his comportment not his resume. I still believe that but have realized that many originators whom I respect display the CMPS designation.

The CMPS designation marks membership in the Certified Mortgage Planning Specialist Institute. It means you’ve completed 18 hours of education in the areas of taxation, financial markets, cash flow and debt analysis, and most importantly, equity management. It means you’ve subscribed to a Code of Ethics that exceeds the state requirements and commit to using mortgage products as part of, what Jeff Brown would call, a purposeful plan. It means that you’ll carefully scrutinize the suitability of the mortgage recommendation to a borrower’s financial situation.

I’d like to think I practice those principles now.

I’m starting to think this is a step in the right direction for our industry. Perhaps the designation is somewhat obscure right now but it might be quite popular if ethical originators committed to such practice. The designation may be the first step to taking back our industry from the boiler rooms and point mongers. Responsible originators should build the “brand”. That’s what I’m thinking today.

So, I ask the audience? Is this designation useful? Would you prefer dealing with a CMPS? Is it worth the $1,400 Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I’m pleased with the first week’s run of my EZ Ads on Zillow; my hypotheses were mostly correct and I received a $500 loan commission from the ads. I’m making ten times the investment so that works for me.

From Zillow:

Let me walk you through my initial analysis:

1-I picked Long Beach, CA (first two ads) because I do business there. There aren’t a lot of posted listings and the price point isn’t that high. The OC Register suggested that higher price point neighborhoods attract higher users on Zillow . Long Beach has an active historical district so I need to ask Laurie Manny about the right zip codes.

2-Verrado is an upscale neighborhood in the suburban Phoenix city of Buckeye. I picked it because Tony Marriott lives and works there. It is not fully developed which accounts for the low impressions. I did receive an e-mail from a seller discussing lease options so one of the three was a real inquiry. There aren’t many posted listings there so this success is an anomoly to me. This neighborhood has promise because most professionals will forget it and it has a high price point.

3-F.Q. Story is an historical neighborhood in Central Phoenix where Greg and Cathleen market. I originally picked this zip code as a juvenile prank so my mug would show up next to Cathy’s listing; I wanted to needle Greg. What I didn’t count on is that the homeowners there are maniacal about real estate. FQ Story homeowners pour so much of their heart and money into their restored homes. They are well educated and tech savvy. FQ Story is the perfect target market for Zillow. I’m going to stay in this neighborhood and amend my ad to say “No Cost Historical Renovation Loans”. The homeowners have good credit, plenty of equity, and a need for a home equity line of credit for remodeling. It helps that Greg uploaded some 30-40 listings.

4-The final advertisement is targeted at zip codes near where I live. I uploaded 60-70 listings to Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Are Option ARMs the next casualty in the non prime mortgage meltdown war? Wall Street fired the shot heard ’round the world in the mortgage default war by demanding repurchases from subprime lenders. Lenders either closed their doors or waved the white flag and allowed the conquering army to annex them.

The next battle in the mortgage default war may have already been fought and decided long before the soldiers have time to lace up their boots. That battle is the “dirty bomb” that we call the Option ARM. I think Friday afternoon was the equivalent of Paul Revere’s midnight ride.

I received an e-mail from IndyMac Bank, a respectable non-prime and prime lender and leader in the negative amortization loan products, that said:

1- IndyMac Bank is retiring all 12 MAT products over the next few weeks. This is the traditional low start rate, negative amortization loan.

2- They are increasing the minimum payments and reducing the max price. No more four point rebates for mortgage brokers on an intentionally vague product.

3- They cite the popularity of the FlexPay 5/1 ARM for the 12 MAT demise. The Flex Pay 5/1 ARM has a fixed rate for five years with an option to pay less than the interest due which does defer interest. The advantage to the Flex Pay 5/1 ARM is that the potential negative amortization is completely predictable and not subject to the whims of interest rate fluctuations.

Now, three initial thoughts cross my mind:

1- Option ARMs are dead. That’s hard to believe. Jeff Brown states a great case for alternative loan products last week when he says that builders build and lenders lend. He’s been around long enough to know that opportunists capitalize amid fear and vacuums. Lenders with high exposure and nebulous underwriting guidelines will be decimated when the piper comes calling in the form of higher defaults. Lenders with cogent underwriters will survive and cherry pick the good borrowers with this useful loan product.

2- Wall Street is not at war with lenders but is betting on Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I am a regular contributor to the Active Rain Real Estate Network. I was perusing the posts on Active Rain the other day when one jumped out at me with the title

FREE REAL ESTATE LEADS

This is an advertisement, but important that you read:

Real Estate Agent Directory
The most beneficial feature of this directory is that all leads generated in your area will be forwarded to you in real-time at no cost -ever. You can add a link to your website in the directory (more search engine exposure) and receive the leads that way as well.

*A FREE directory listing for 3 months (and only $9.00 per month thereafter-you may cancel at anytime)
*FREE LEADS from buyers and sellers (This will never change/completely free leads)
*No further commitments listed by county

This drew some fire from the good people at Active Rain. The real estate agents didn’t like the idea of a lead aggregator advertising their wares on the network. A few of us pointed out that advertising was permitted by the network and that many of the critical comments were coming from serial advertisers on Active Rain. Nonetheless, the lead aggregator was criticized for deceptive advertising and everyone poked holes in her business model.

Everyone knows that lead aggregators are the scourge of the industry; why do I defend them?

I thought back to my Principles of Promotion class from business school and I remembered the importance of having a mix in your promotional efforts. The appeal to a mortgage originator is that he might capture potential homebuyers before they contact a real estate agent; it allows him to control his destiny. There are many ways for a mortgage originator to promote his business: direct mail, telemarketing, hosting a web log, search engine optimization, seminars, co-hosting open houses, and even the old method of buying donuts for the real estate office and handing out rate sheets.

I started thinking that I might be falling victim to the old “ivory tower syndrome” that success sometimes breeds. I’ve had good results with writing articles for Active Rain. Myspace, and Bloodhound. It has generated 20-30 loan inquiries each month which Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Are you a victim of predatory coaching?
There are many advice gurus available to Realtors and loan originators. I watch our industry grow and am amazed at the cottage industries that have hatched from that growth. It reminds me that the only people really making money in multi-level marketing sell the books and tapes on how to succeed in MLM. I can think of three or four gurus who offer real content and provide “how-to-do-the-business” knowledge that comes from personal experience…

…but…….THERE ARE PREDATORY COACHES

There is a vacuum in the real estate and mortgage brokerage industry when it comes to training. A new licensee signs up with a brokerage and the broker says “Get to work!” Many have figured out how to make an above-average income doing just that. Hustlers love vacuums, though. They “prey” upon the weak and their booty is an annuity of fees extracted from an unsuspecting and well-meaning Realtor or originator.

Let me give you a real life example. In 1999, a good friend of mine opted for a career in real estate brokerage over her corporate recruiting career. She approached me to secure a line of credit for her so she would have ample reserves to meet expenses in an irregular income environment. The predators started circling like hungry buzzards on a hot desert day.

1-She was encouraged by her broker to “invest” in training. (What the hell does the broker do?).

2-She was encouraged to take out full-color ads borrowing other people’s listings. (Good for the brokerage; free advertising.)

3-She enrolled in coaching programs at $500/month.

The best marketing advice she received was from SCORE (Service Corps of Retired Executives). The cost was $79.00 for the six-week consultation.

We have a new vacuum and that vacuum is in marketing. Realtors and loan originators are having increasing difficulty learning how to market themselves. The new buzzards are circling. They come disguised as “online marketing experts”. They sell and resell “online leads” to us. They hold seminars and follow-up with pushy sales people who try to make Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

We received an inquiry today :

I am a Wholesale Lending Account Executive and work for a bank. After the subprime market plummeted, it has been hard for me to get loans from mortgage brokers. What do you think is the best route to re-pump loans back in the pipeline, not necessary the same volume as before, but at least a reliable broker source that keeps funding mortgage loans through me?

I don’t need to tell you that loan originators are a suspicious breed. Now, more than ever, we are hesitant about trying new capital sources.

Here are five tips I have for a Wholesale Lending Account Executive:

1- You MUST have a unique selling proposition. Price, service, or product niche. Define that USP in your first ten seconds very specifically.

EG: “I am Brian Brady with Gateway Bank and I offer the perfect 100% loan solution for teachers, police officers, or firefighters. You’ve heard about the collapse of 100% loans but this loan program has been around for 9 years and I know exactly how to get these loans approved with my bank.”

Don’t worry about limiting yourself. Start with the niche and let the conversation develop.

2- Don’t focus your efforts on a few brokers; market to many originators. If an originator is worth one $200,000 loan a month and you want to fund $10 million a month, you’ll need 50 good originators considering you. You should have four times that amount in your “prospect file”. Spread it out over at least twenty accounts.

3- Write a web log. You can get a free web log at Active Rain Real Estate Network (click the link). There are 2000 loan originators registered there. Point a domain name at the web log and make it catchy (www.placeyourloan.com is available). That will cost ten bucks a year. You can start by posting programs that go out on your e-mail. Try to accompany the loan program with a story about how you funded the loans. Instruct your originators to read it.

4- Visit the originators at least Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Are you trying to be all things to all people?

I think a great career can be built on serving underserved but profitable niches. Russell Shaw’s post made me think of Allen Domb. I was a young securities broker, fresh out of college, when I met Allen Domb. He was serving as a “condo specialist” in downtown Philadelphia in 1990. Needless to say, here was a man with a plan (and vision). Nobody was buying condos in downtown Philly at the time and agents eschewed the property class.
He did four simple things:

1- He was a big fish in a small pond. He set himself up as the expert in a market.

2- He limited his expertise to one geographical market area and a specific property type.

3- He lived his mantra. There was no bigger cheerleader at that time for the downtown Philly condo than Allen Domb.

4- His staff was dedicated to his cause. Agents who worked for him or support staff all felt that they would be changing the Philadelphia skyline; they did.

Here are some underserved markets for Realtors or loan originators:

1- Manufactured Homes. Perhaps the fastest-growing property type in real estate.

2- Vacation properties as an investment Investors with an eye for a retirement home make great clients. You’d probably have to have the property management piece figured out but you’ll have some 20-30 potential buyers coming through each property each year.

3- Golf properties. You better know the lingo and live the life.

4- Historic Homes. You should have excellent resources for rehabs.

How about underserved markets by buyer-types?

1- Non-resident aliens. I know a Realtor who sells lots of property to Mexican Nationals in the US because she understands their needs.

2- Refugees. An agent in Phoenix I know specialized in Bosnian refugees in the late 90s. He has a steady stream of business from this dynamic group now.

3- Firefighters or Police Officers– some cities require that they live in the city limits and some offer tremendous financing programs. (Cop-Next-Door Program).

4- Teachers– same as firefighters or cops but an even more referral crazy group.

5- Professional Athletes– you’ll need to develop national contacts with sports agents but Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

I can’t wait to see the blue-vested, loan originating octegenarian explain the truth-in-lending statement to the first-time home buyer at this new entrant to the mortgage business.

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Q: What do mortgage originators and used-car salesmen have in common?

A: Their customers like to negotiate.

Wanna hear about how I screwed up this week?

I read Jeff Corbett and think highly about what he preaches; mortgage transparency. I read Pat Kitano and think he is on the right track with transparency in real estate. I have practiced and written about transparency since I started originating mortgages. I used to do it this way:

Mr. Customer, there are certain fixed costs associated with every loan. Appraisal, underwriting, etc.. Then there is our margin. We like to make $X,000 per loan. If I am able to retain that margin, and close 8-10 transactions each month, I can make a pretty good living for me, pay the light bill, the broker, the supplies, etc., and give you a pretty good deal. Now, I’m about to let you in on a secret…

We all do this in the mortgage business. I choose to do this upfront and give you access to my wholesale ratesheets. I’m going to “pull back the curtain” and give you “access to the great and powerful Oz” (The great and powerful Oz is Wall Street). Let’s get in the game together and make this happen. I think you’ll get a really good deal if we do this.

Some people love this transparency approach; many do not.

I ran this idea past Laurie Manny today. I’m helping one of her customers with an investment property purchase in Long Beach, CA. Her comment ?

“What-ever! I trust you to do my client right.”

Laurie further cautioned that not everyone practices transparency in the mortgage business and I could be eliminating myself from the transaction by my inability to flexibly negotiate terms. She brought up a great point; people LOVE to “get a deal”. She reminded me that the reason I “captured” her client was because of the way I confidently quoted terms and “closed” her.

I was in Phoenix earlier this week to meet with a would-be home buyer; I Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

There are so many ways we were taught in mortgage sales training to answer that question:

1) Well…that depends on your…credit…income…equity…purpose for the loan , etc.

2) What rate are you trying to get?

3) It would be unprofessional of me to diagnose your problem…blah…blah…blah

I realize that when a guy asks you that question, on a plane from Phoenix to San Diego, he’s making small talk and wondering what the market is doing. I know that he means the 30-year fixed rate, for loans under $417,000, 1% origination fee, no points, full-documentation, 80% loan-to-value.

Most of America believes that God whispers that rate to Ben Bernanke every morning who sets it based on that daily divine revelation.

Without further wise-ass comments, that rate is 5.875% (for a 6.13% APR).

We are an equal opportunity lender.