Originate Report - May 2020

MAY 2020

THE OFFICIAL MAGAZINE OF GERACI

LEVERAGING TECHNOLOGY TO SUCCEED IN THE AGE OF COVID-19 www.originate.report 1

2 Originate Report May 2020

CONTENTS MAY 2020

Features 15 [COVID-19] Deed in Lieu of Foreclosure What You

Need to Know

By Mustafa Kadri Esq., Geraci LLP

6

22 Surviving and Thriving in the Era of COVID-19:

Industry Leaders Share Tips For Private Lenders

By Steve Pollack, Anchor Loans; Rocky Butani, Private Lender Link;

Erica LaCentra, RCN Capital; Bobby Montagne, Walnut Street Finance

32 Culture Corner: Appraisal Nation

12

Originate Report Staff

38 [COVID-19] Forbearance Agreements 101

What to do When Your Borrower Can’t Pay

By Nema Daghbandan, Esq. & Melissa C. Martorella, Esq., Geraci LLP

Who To Know 6

ProDeal: Leveraging Technology to Succeed

Originate Report Staff

19

12 Wisdom From The Ceo

Lee Arnold - CEO, Secured Investment Corp

22

19 Industry Spotlight

Erica LaCentra - RCN Capital

In Every Issue 40 Upcoming Events 42 Lender Directory

38 www.originate.report 3

4 Originate Report May 2020

CEO Geraci LLP ANTHONY GERACI Anthony@Originate.Report Vice President Geraci Media RUBY KEYS Ruby@Originate.Report Editorial Director MAX BERGER Max@Originate.Report Art Director LYNDA HIGHT L.Hight@Geracillp.com CONTRIBUTORS Mustafa Kadri • Steve Pollack Rocky Butani • Erica LaCentra Bobby Montagne • Nema Daghbandan Melissa C. Martorella • Lee Arnold

FOUNDING UNDERWRITERS

MARK HANF President, Pacific Private Money ORIGINATE WEBSITE www.originate.report GERACI LAW FIRM www.geracilawfirm.com MEDIA WEBSITE www.geracimediagroup.com CONFERENCE WEBSITE www.geracicon.com

Letter

from the

Editor “Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” -William Pollard Welcome to the May Edition of Originate Report! As of this edition’s release, the COVID-19 pandemic is still ongoing – but there is a light at the end of the tunnel. Multi-phase plans are being put in place all around the country to relax quarantine guidelines and reopen businesses. It is our sincere hope that, by this time next month, the country will be on the path to recovery.

In the meantime, we still need to navigate economic uncertainty and keep our businesses running as smoothly as possible. Since travel and large social gatherings are still out of the question, it might be time to consider something new: like attending Lender Connect 2020, taking place on May 20th. Geraci Media will be providing an Online Conference to create education and networking opportunities for lenders, brokers, investors, and service providers in the Non-Conventional, or Private Lending space. This oneday conference will provide valuable educational sessions, networking opportunities through an online virtual platform, lobby, and exhibit hall, and most importantly, the convenience to continue making deals and raising capital.

Find out more at https://geracicon.com/conference/lenderconnect-2020/. We hope to “see” you there.

Stay healthy and safe, Max

Max

Max Berger Originate Report Editorial Director www.originate.report 5

PROFILE

The ProDeal team at their exhibitor booth at Captivate 2019

PRODEAL

seamlessly close more than $45 billion in transactions facilitated by customers including Fortress

Leveraging Technology to Succeed

By Originate Report Staff

I

estate deal closing process. That’s

when you bring together a

the origin of ProDeal, a Manhattan-

former

based

amazing real

what estate

finance

software

executive, a former commercial

transforming

real

chaotic

estate

attorney,

a

Silverstein, Emerald Creek Capital, RCN Capital, Private Lender Law, and AmTrust.

happens

t’s

Investment Group, Paul Hastings,

great

company

the

commercial

complex real

that’s and estate

What Exactly is ProDeal?

ProDeal is the only commercial real estate tech platform built for the business to business needs of lenders, borrowers, title companies,

software development team and a

closings into a simple, fast and

mortgage brokers, and lawyers.

founder with 32 years in the title

scalable process. In just under three

ProDeal’s

business who has his heart set on

short years, ProDeal has helped the

combines

transforming the commercial real

commercial real estate community

document sharing, and a real-time

6 Originate Report May 2020

software deal

platform

communications,

closing checklist all in a secure

company and product.

platform,” said Patrick, “It takes

and user-friendly digital room that

the three tools used to close real

has changed the way commercial

Turning Experience into Value

estate

real estate deals are getting closed

Patrick Janson has a very unique

closing checklist, a data room to

across asset types and up and down

perspective given he’s spent over

store and exchange documents and

the capital stack.

ten years working in a number of

a centralized communications tool

positions in commercial real estate

that helps with eliminating mass

Changing how the real estate finance

finance and technology. Patrick has

emails.

and

community

been a loan originator with a NY-

calls are done online in a fraction

transacts was ProDeal’s mission

based credit fund, a marketing guru

of the time, ensuring everyone is

from the get-go: close more deals

in the private lending community,

viewing the right document and

in a shorter period of time, replace

a software developer, and product

correct status of each item in the

lengthy

eliminate

designer.. Patrick was introduced to

closing checklist.”

unproductive conference calls, get

ProDeal’s Founder Michael Bebon 3

rid of spreadsheet closing checklists

years ago and realized it’s potential.

ProDeal

and say goodbye to cluttered data

“I saw the ProDeal platform and

complete a variety of tasks all in a

rooms designed for M&A buyer due

thought it was something that

seamless and secure collaborative

diligence. Essentially, provide real

could change the way commercial

deal room including:

estate professionals with software

real estate closes deals,” recounted

for work that matches the type of

Patrick, “Since that time, we have

efficiency and user experience we

recruited a collection of real estate,

ents can create customized deal

expect outside of work from sites

legal,

experts

rooms and invite all the parties

like Uber and AirBnb. Simple, clean,

from all over the world to build a

on a deal to ProDeal with a sin-

and powerful.

platform and company to see that

gle click of their mouse for a

transformation through.”

quick sign-up

private

lending

email

chains,

and

technology

Let’s take a peek behind the curtain

•

•

transactions

including

a

With ProDeal, checklist

enables

its

users

to

Gathering stakeholders: Cli-

Managing

checklists:

Users

at ProDeal, a company that’s thriving

Since 2017, ProDeal has assisted over

are able to track ongoing tasks

and on the forefront of deploying

700 entities complete commercial

technology that is transforming the

real estate transactions across all

and pertinent documents using

deal closing process from the old

asset types. The ProDeal platform

way to a much better way. This past

is extremely versatile and easy to

month, we had the opportunity to

use, as Patrick explained: “It’s an

catch up with Ian Group, ProDeal’s

intuitive SaaS-based platform, so

Head

Success;

it’s accessible via the web or your

company’s

iPhone and can be easily adopted by

Patrick Chief

of

Customer

Janson, Operations

the

Officer;

and

Andrew Damico, ProDeal’s recently

minutes.”

ProDeal

such a unique company with the

efficiency

added ambition of helping the real

participants are sharing the same

estate finance community navigate

documents and the same checklist

complications

items in a secure shared deal room

the

al-time •

improves by

COVID-19 pandemic and their vision

in the cloud.

and outlook for the future of the

centralized

deal

ensuring

closing all

deal

Distributing documents securely: ProDeal makes uploading, reviewing, and keeping track of multiple versions of documents

•

to discuss what makes ProDeal

from

checklist that is updated in re-

business professionals in just a few

appointed Chief Executive Officer

arising

a simple and intuitive online

Eliminating cluttered inboxes: Users can replace messy and disorganized email chains with secure, real-time messaging to enhance the flow of deal communications

“ProDeal offers a web-based

closing

ProDeal: Continues on pg. 8

www.originate.report 7

ProDeal: Continued from pg. 7

Prioritizing User Experience Providing an organized deal closing platform isn’t the only appealing aspect of the ProDeal platform. All of ProDeal’s features and capabilities would be under utilized, if clients didn’t find the platform simple and easy to use, as Andrew pointed out: “Our customers find ProDeal’s interface

very

intuitive.

Even

infrequent users who periodically access ProDeal during a deal closing can find the checklist status, their assigned

tasks,

and

associated

documents--the ProDeal checklist looks just like the checklists they use today in Excel or Word but it is accessible online and updated in real time keeping everyone on the same page. Our users can adopt the tool in minutes.”

The fact that ProDeal is intuitive and is implemented in minutes is directly attributable to the deep

Ian Group shares industry insights during a tech panel at Captivate 2019.

experience and domain knowledge of the team that designed, built, and

customers and build things that they

the right checklist item, and mark

supports the platform. “It’s not just

really need and want,” explained

it closed.”

about having great software that

Andrew, “It’s instant gratification

addresses a need,” Andrew is quick

when we build out a new capability

ProDeal’s clients play every role

to point out. “It’s also about having

and it gets immediately adopted and

in a real estate deal from law

domain expertise and a customer

used by our clients. Tailoring the

firm partners to title insurance

success team that understands the

user experience to accommodate

underwriters to capital providers.

deal closing process. We understand

less tech-savvy clients is what

The diverse nature of their user

the industry and the pain points

we’re all about.

Sometimes all a

base means that ProDeal has to be

very well which allows us to meet

deal participant is required to do

user friendly for tech savvy firms as

the unique needs of our customers.”

is to upload a single document,”

well as companies that have yet to

Andrew shared “and so the team

go through a digital transformation.

Going

the

for

our

came up with an idea of being able

The focus on user experiences

worth

the

to securely email documents (file

is what initially drew ProDeal’s

effort, it’s all about delighting our

attachments) into a ProDeal folder

current Head of Customer Service,

customers. It allows us to develop

so that the deal administrator can

Ian Group to get involved with the

an

review the file, associate it with

company back in 2018.

customers

extra is

intimate

mile

well

relationship

8 Originate Report May 2020

with

Ian first

encountered the ProDeal platform

The

COVID-19

while working as a commercial real

completely

pandemic

has

are well positioned to continue their

how

operations without any issues or

estate attorney: “I had just closed a

businesses are operating and the

friction while working from home.”

$1 billion refinance transaction and

private

it was really complicated. There

exception.

were a lot of moving pieces and

the transition to remote based

time

documents and we were working

operations for the ProDeal staff and

increased reliance on web-based

with another law firm on the same

are looking to help other companies

applications, cybersecurity is at

side of the transaction. I would have

make the same transition to a remote

the forefront of everyone’s mind.

loved a platform like ProDeal, it

first workplace. “Over the past three

ProDeal’s

would have streamlined everything

years, we’ve built a distributed

tremendously and provided a great

team and an agile remote working

very diligent and thoughtful about

experience for everyone on the

culture,” Patrick explained. “This

deal team.”

has allowed us to take many of our

transformed

lending

industry

is

no

ProDeal has facilitated

remote working best practices and Navigating the Challenges of

include them in our product design

COVID-19

philosophy. As a result, our clients

With privacy concerns at an allhigh,

especially

technology

implementing

robust

with

team

the

was

security

features on the platform.

The

software offers clients the security of encrypted email plus additional ProDeal: Continues on pg. 10

www.originate.report 9

ProDeal: Continued from pg. 9

security in the form of multifactor authentication, best-in-class

clients can rest assured that their

“Our private lending clients are

sensitive information is adequately

small

safeguarded at all times.

resources making it harder for them

businesses

with

limited

to transition to a WFH environment.

encryption for data in transit and at

The company saw the coronavirus

rest, suspicious activity monitoring,

We are laser focused on helping them

epidemic as an opportunity to

with this transition in a seamless

user

and

assist the private lending and the

and secure manner by leveraging

transparent event logging. ProDeal

commercial real estate community.

ProDeal”, explained Andrew.

permissions

controls,

ProDeal wanted to “lead from the front” and help the community and

their

employees

navigate

the transitional period to remote work.

Patrick explained, “I think

right now the general ethos and mindset of the entire industry is that we have to lean into adopting technology. We have to lean into online collaboration platforms like ProDeal, in order to adapt to the new normal of not being able to walk down the hall and work on a deal with a colleague.”

As far as the future of the product, ProDeal

is striving to completely

transform commercial real estate finance

deal

management

and

is continuously engaged in user research with a host of leading firms in real estate to design features that will optimize workflows and provide immediate value to their users. “We have a well researched product roadmap,”

Patrick

shared.

“Our

technical team has been working together for over three years on the platform and

has designed

an innovative set of new features coming out between now and year end. We continue to work toward our goal of becoming the “best in ProDeal wins the Innovative Impact award (which recognizes a product or service that has led to success through innovation and technology) at Captivate 2019.

class” platform for helping the commercial real estate community run their entire closing process. But

10 Originate Report May 2020

we’re not stopping there, we want

Patrick explained. “One example is

perceive our culture and come away

to help the commercial real estate

we run a mindfulness program for

from the experience of interacting

community manage assets, report

our staff to help them cope with

to investors and perform loan pool

the additional stress brought on by

monitoring and workouts”.

COVID-19 and to learn to hold better

To support their ambitious plans, ProDeal is an agile company with a unifying set of corporate values, something the company’s leadership holds to be key to their success and management philosophy. “There’s a big emphasis here on being a workplace of choice and destination,”

with us realizing that ProDeal is both a software platform as well

space for collaboration with their

as an inclusive and diverse team of

colleagues even in times of pressure

people committed to the success of

and stress.

our customers in the private lending

education training.

We also run a ton of and

Our

cross-department close-knit

culture

results in a high quality end product for ProDeal users”, as Patrick put it.

“Based on the feedback we get from our clients, it’s easy for them to

community and more broadly, the commercial real estate community as a whole.”

FOR MORE INFORMATION VISIT: https://prodeal360.com/

LOOK WHO’S HIRING!

INDUSTRY JOB WATCH

Looking to fill a position? Advertise it here in Originate Report’s Industry Jobs to get it in front of thousands of qualified candidates. Contact us at (949) 629-3961.

Fidelity Mortgage Lenders, Inc. has been funding real estate loans in Southern California since 1971.

Founded as Fidelity Home Loan Co. Inc., we originally specialized in residential equity loans, and later expanded in to commercial lending. We make loans on both commercial and residential properties in the state of California, providing first trust deeds, refinances, and/or purchases.

Now in our fifth decade, Fidelity Mortgage provides loans to borrowers which larger institutions are unable to fund. We grew by responding to the needs of a changing real estate marketplace while serving a growing community of property owners and investors.

Our reputation for fairness and reliability brings us referrals from our borrowers and other professionals. As a result, we service a network of real estate brokers, attorneys, accountants and business managers who seek our professional help for their clients. All of our combined departments work together to completely service loans. From loan advisers to escrow officers to loan servicing, there is only one goal… our clients’ total satisfaction.

The Role: We are seeking a candidate with knowledge of commercial lending to be part of our loan servicing team.

Responsibilities: • Service Loans - Monthly payments processed and scanned - Monthly check to investors • Collections - Track and file late notices - Read fees and statements, and conduct appropriate follow-ups - Use judgement to escalate concerns to immediate Manager or to the Company’s Chief Operating Officer • Insurance - Read and understand Property Fire Insurance - Track insurance notifications - Monitor requisite insurance on properties - Communicate to investors and property owners • Customer Service with Investors and Borrowers - Answer general questions, and display problem-solving skills • Knowledge “The Mortgage Office*” loan servicing software system Qualifications: • ~3 years Real Estate Loan Service Specialist • Knowledge “The Mortgage Office*” loan servicing software system • Familiarity with foreclosures • People skills and rapport with borrowers, customers • Computer skills: proficient in Word, Outlook and excel.

• Able to manage multiple projects, deliverables, milestones, and schedule

www.originate.report 11

WISDOM FROM THE CEO

Lee Arnold CEO, Secured Investment Corp

12 Originate Report May 2020

This family of companies is among the fastest growing private money mortgage firms in the United States.

Key to the company’s values is integrity and trust. These values are founded on a deep commitment to biblical values. Lee is personally dedicated to helping others and leads the He’s The Solution ministry.

Looking back to when you started your first business – how did you know when you had the right idea?

When I started working in real estate

there

were

several

key

indicators that I was on the right track.

• Obviously, the first indicator was that I was making a lot of money.

• I started developing a ‘herd.’ My ideas, methods, and information were being adopted by others and through our marketing of great products and services, people began to experience the same successes I was, which created a base of raving fans.

• I also created something we call Lee Arnold, CEO Secured Investment Corp

L

ee Arnold is an international

national financial literacy companies.

speaker, trainer, author and licensed broker who has spent

As a master of networking, Lee

many years perfecting the real estate

connects

and private money mortgage lending

borrowers from across the United

process

of

States and Canada. To leverage

transactions. Lee is a leading expert

the power of these relationships

on private money mortgages and

Lee and the Secured Investment

has been featured as an investment

Corp’s executive leadership team

strategy expert by Forbes, the Boston

have created Cogo Capital – The

Globe,

Private

through

Market

thousands

Watch,

Reuters

private

Money

investors

Company,

to

Lake

and Business Week. He has also

City Servicing and The Lee Arnold

consulted and taught for a number of

System of Real Estate Investing.

the Circle of Wealth. This has become central to our business.

We teach people how to do real estate the right way, we lend them the money to put this learning into real action steps, which provide a return on their investment, and then over time, through this method, they earn enough money to lend capital (through one-off investments or through one of our high yield funds) to other real estate investors seeking the same success. Our philosophy

Lee Arnold: Cont. on pg. 14

www.originate.report 13

Lee Arnold: Cont. from pg. 13

is that we only do well when our customers do well, or “We get more of what we want by helping others get more of what they want.”

What was one of your greatest failures, and what did it teach you?

During the Great recession I received the

most

painful,

but

valuable

lessons of my life, “Don’t be caught naked when the tide goes out.” When I entered real estate EVERYONE could make money. I not only invested in properties, I leveraged them to the hilt to lend money to other investors. When the bubble burst, all my properties were upside down. I couldn’t pay what I owed, and the investors I lent to, couldn’t pay what they owed me. It was a

ever before. We continue to create

invest their time in?

value for our clients and celebrate

• Become an avid reader of books

with them their victories.

about business. Start out by reading Rich

Dad

Poor

Dad

by

Robert

What was the most difficult

Kiyosaki.

period of time during your startup

• Make sure you challenge yourself

journey and why? What helped

regularly.

you to work through it?

smarter than you. Be open to their

As mentioned before, the Great

feedback and constructive criticism.

Recession

Set lofty goals for yourself and your

was

an

intense

and

Hire people that are

enduring lesson! Although initially

business.

painful, I learned how to responsibly

• Identify clearly the one thing you’re

manage

my

great at doing. Uncover for yourself

business focused on my customers,

the one thing you can do better than

create products and services that can

most and continually develop that

withstand recessionary periods, and

talent.

employ core people in my business.

• Find your why.

I also learned that unless I focused

to know why you do what you

on what was really important, God, I

do.

was ultimately lost, no matter what

truly drives you, you will never

was happening in the economy. After

achieve your goals.

the recession, I took a long, hard look

your why, will lead to burn out.

my

assets,

rebuild

If

you

It’s imperative

don’t

know

what

Not knowing

negative feedback loop and left my

at my personal and professional life

real estate business in shambles.

and rededicated it all back to God.

What does it take to lead a remote

Now I understand how to leverage

That laser-like clarity gave me great

team effectively?

my properties correctly. I have

peace of mind and allowed me, my

During this COVID-19 pandemic,

financial safety nets and I only lend

wife, and my staff to work toward

more than half of our staff has

when it’s a wise investment, invest

a common goal of being bold in the

been working remotely. The use of

in properties that will bring me

workplace.

technology has been instrumental in

the quickest ROIs, and make sure my

investments

are

salvageable

maintaining our success throughout What has been your favorite

the crisis.

regardless of what happens in the

aspect of being an entrepreneur?

video chat heavily to stay in constant

economy.

I

communication

truly

enjoy

the

topsy-turvy,

We have relied upon and

to

hold

all

problem-solving nature of it all. The

scheduled meetings that would have

How did you go about building

co-founder of LinkedIn said it best,

normally occurred in the office.

a customer base for your early

“An entrepreneur is someone who

have made a concerted effort to

ventures?

will jump off a cliff and assemble an

have contact with each direct report

I began by having local seminars.

airplane on the way down.” I enjoy

through daily texts, phone calls

Eventually I built a product, a sales

the journey. I love sinking my teeth

or video conferencing.

floor, and created nationwide events.

into a new venture and watching my

maintaining fluid communications

Once I established a name, I began

staff work for a common goal. I can’t

has been essential to our success.

to build joint venture relationships

imagine doing it any other way.

I’ve

also

managed

I

Overall,

expectations,

maintained a positive outlook, and

with other like-minded real estate entrepreneurs. Our customer base

What key activities would you

focused primarily on outcomes and

grew and is more robust now, than

recommend entrepreneurs to

not just activity levels.

14 Originate Report May 2020

FEATURED

[COVID-19] Deed in Lieu of Foreclosure WHAT YOU NEED TO KNOW

By Mustafa Kadri Esq., Geraci LLP

D

ealing with a financial crisis

during

uncertain

times creates significant

challenges

for

many

lenders

and borrowers.

What is a Deed in Lieu of Foreclosure?

A deed in lieu of foreclosure (“DIL”) is a deed instrument in which the borrower conveys all interest in the secured property to the lender. This is

During the current COVID-19 crisis,

done to satisfy a loan that is in default,

a significant number of borrowers

and to avoid foreclosure proceedings.

are having difficulty making their mortgage payments, leaving lenders

Advantages to a Deed in Lieu

with no choice but to move forward

of Foreclosure

with foreclosure. However, there

Advantages to the Borrower

may be an alternative to foreclosure

The DIL offers several advantages to

that offer advantages to both the

both the borrower and the lender.

lender and borrower.

The main advantage to the borrower

is that it immediately releases them from all the indebtedness associated with the loan that is in default. The borrower avoids the having the public be aware of a foreclosure proceeding on their record. Furthermore, the borrower’s credit hurts less with a deed in lieu than with a foreclosure.

Advantages to the Lender Advantages to the lender include a reduction in time and cost to repossess the property, ownership of property with direct control of its operation, and lower risk of borrower damaging the property to exact revenge against the lender.

It should be noted that lenders will need to evaluate a borrower’s facts and circumstances to decide whether to proceed with a DIL instead of a foreclosure. It is important to consult COVID-19: Cont. on pg. 16

www.originate.report 15

COVID-19: Cont. from pg. 15

with your counsel whether a DIL is the best option, and if it is, to properly document the DIL agreements and any ancillary documents.

Preliminary Steps by Lender Here is a simplified checklist to consider as a lender if you are considering a DIL: 1. Confirm that the proposed terms of the offer from the borrower are in writing. If the proposed offer is not in writing, require a written offer from the borrower.

2. Confirm the following: •

Nature and extent of all existing borrower defaults;

•

Accrued and unpaid interest, default interest, and late

•

step to make sure you are on track.

Draft and Negotiate the Deed in Lieu The lender’s counsel typically drafts and sends the DIL to the borrower’s counsel for review and negotiation.

Lender’s counsel also typically drafts and sends to borrower’s counsel for review and negotiation the following documents: •

DIL

•

Covenant not to sue

•

Release of claims

•

Escrow agreement

•

Bill of sale

•

Assignment of leases, rents and security deposits

•

warranties, permits, and licenses A non-foreign status certificate

•

Tenant estoppel certificate

to the transaction; and,

•

SNDA, if required by the lender

The outstanding amount of

•

Tenant notice letter advising

Prepayment fees applicable

the debt under the loan.

3. Review the loan documents

Prepare a Closing Checklist The lender’s counsel should prepare a closing checklist to keep organized

Assignment of contracts,

•

fees, if any; •

consult with your counsel at every

and know the current status of the due diligence process and the deliverables needed to close the transaction. It is important that the lender’s counsel review the entity

the tenants of the change

DIL agreement for all actions and

in ownership

items needed to close, calendar

to make sure you have a

•

List of permitted exceptions

important dates and actions, set

complete loan file, that the loan

•

Itemized list of amounts to

alerts or reminders leading up to

documents are enforceable, and

be paid by the lender to the

each date and action, and include a

that there are no deficiencies

borrower or borrower’s creditors

working parties list with all of the

in the loan documentation that require amendments before closing.

4. Obtain and review a current

parties involved in the transaction.

Pre-Closing Matters During

the

pre-closing

period,

the lender and borrower should

title search to determine status

communicate

of title and whether there are

problems can be resolved quickly.

any tax liens or judgments.

Also, it is important to determine the

5. Inspect the property and applicable public records.

6. Order and review an independent appraisal.

Remember, it is important that you

16 Originate Report May 2020

frequently

so

any

party signing the closing documents and ensuring they are available for the closing. This will provide for a

Handle Ownership Matters If the lender is taking title to the property in its own name, the title company

typically

requires

the

lender to produce an incumbency certificate to issue a new owner’s title insurance policy.

smoother transaction between the lender and the borrower.

If the lender’s nominee is taking

title to the property, the lender’s counsel should ensure that the entity has properly been formed and has

•

that lender agrees to pay

The lender must make sure that a DIL

Credit for outstanding loan

is the good choice for the particular

escrow balances

circumstance, and must evaluate

the requisite authority to own and operate the property.

Conclusion A DIL can be beneficial for both a

all the facts of the situation. The lender must also be sure to make a decision after consulting with an

Prepare the Closing Statement

lender and a borrower. This will

The initial draft of the closing

help avoid expensive foreclosure

statement is typically prepared by

costs and negative consequences

the title company and then reviewed

of a foreclosure. It is important

by counsel for the borrower and

to keep in mind that lenders must

lender, but counsel may prepare the

maintain proper documentation and

initial draft of the closing statement.

provide for sufficient consideration

mortgage. If the above are taken into

to protect the DIL against claims of

consideration, a DIL transaction may

duress from the borrower.

be the best choice for both lender

Closing Statement Tips The closing statement should: •

Account for security deposits under the property leases delivered by the borrower

•

Include disbursements that are paid at the closing (i.e. title costs, escrow fees, etc.)

•

Account for payment of counsel fees

•

Account for additional sums

attorney. The borrower must verify that all required documentation is fully executed and all consideration is fully paid so that they are released from

personal

liability

on

the

and borrower.

ABOUT THE AUTHOR: Mustafa Kadri, Esq. is a Transactional Associate in the Banking and Finance section of Geraci Law Firm.

Mr. Kadri obtained his Bachelor of Arts degree in Economics from the University of California, Irvine. Thereafter, Mr. Kadri working in the banking industry for over 8 years, having participated in the growth and development of several community banks. Mr. Kadri graduated from Whittier Law School while working full-time as a commercial banker. Prior to joining Geraci Law Firm in 2018, Mr. Kadri was Vice President and Senior Credit Officer of a commercial bank in Los Angeles. Mr. Kadri joined Geraci Law Firm to lend his expertise and knowledge of banking and finance to the firm.

CONTACT: m.kadri@geracillp.com

www.originate.report 17

SPOTLIGHT SPOTLIGHT

INDUSTRY SPOTLIGHT Erica LaCentra

RCN Capital

18 Originate Report May 2020

lending specifically?

Honestly, my start in real estate and private lending was a case of being in the right place at the right time.

I was working as an administrative assistant in the ticketing industry right out of college and I connected with a female executive that was in charge of planning and executing one of the largest annual conferences for their space. She ended up becoming one

of

my

early

mentors

and

ultimately gave me the opportunity to fly out to Las Vegas to be a member of her conference staff.

It was at the closing event for that trade show in Las Vegas that I inexplicably met a Loan Officer from RCN who struck up a conversation with me about my background in marketing. RCN had a marketing vacancy at that time and that Loan Officer ended up introducing me to RCN’s then Managing Director, now CEO, Jeffrey Tesch. He lined up an interview for me when I got back from Las Vegas, which resulted in me getting the Marketing Associate job at RCN, and the rest is history. I like to think that RCN opened the door to the world of real estate and more

E

Erica LaCentra, Director of Marketing RCN Capital

specifically private lending for me.

Q: How have you seen RCN grow

rica LaCentra, Director of Marketing, is responsible for planning, developing,

brand. Erica currently serves as a

and implementing RCN Capital’s

Advisory Committee, the Marketing

marketing plan as well as overseeing

& Communications Chair for AREAA

the company’s marketing department.

Boston, and a member of the REI INK

Joining RCN Capital in 2013, Erica led

Editorial Board. Erica holds a B.S. in

a strategic rebrand to position the

Advertising with a minor is Fine Arts

company for nationwide expansion.

from Suffolk University in Boston, MA.

member of the American Association of Private Lenders’ (AAPL) Education

Erica’s ongoing efforts have rapidly expanded RCN’s customer base and

Q: How did you first get involved

elevated the company to a national

in real estate, and private

and expand in the last few years?

The growth and expansion that RCN has gone through over the last few years has been nothing short of incredible. When I started at RCN back in 2013, I was employee #11 and we closed out the year just shy of $50M in originations. Fast forward to today. The company has grown to over 100 employees with 2019 being the best year RCN has had since its Erica LaCentra: Continues on pg. 20

www.originate.report 19

Erica LaCentra: Continued from pg. 19

inception, closing over half a billion dollars in loans for the year. Being involved in RCN’s evolution from a small regional lender that was only originating on the East Coast to a nationwide lender with a full suite of loan programs for real estate investors is definitely a huge point

about you?

conferences. When the company was

I think people might be surprised to

founded in 2010, it was operating

learn that working for RCN was my

under the name Rehab Cash Now (still

first “real job” out of college and I have no background in real estate or finance. I’m very thankful that I got the opportunity I did at RCN and that they were willing to take a chance on me almost 7 years ago.

of pride for me and I look forward to

Q: What is something that most

seeing and being a part of company’s

people don’t know about RCN

future growth.

Capital?

Probably what the “RCN” in RCN

Q: What is something that most

Capital stands for. I get that question

people would be surprised to learn

pretty often at trade shows and

utilizing the acronym RCN) because, at the time, it was focused solely on providing funding for fix and flips. In 2013, right around the time I joined the company, there were discussions of starting a complete rebrand so that as RCN made efforts to expand, it could project a more professional identity and be taken more seriously in the industry. As an homage to the company’s humble beginnings, we rebranded as RCN Capital so as to never forget where we started.

Q: What advice would you give your younger self?

I would say to trust yourself more and stand up for your ideas. You know a lot more than you give yourself credit for. This industry will take time to learn, but your marketing skills and knowledge are strong and that gives you the foundation you need to succeed.

I would also say, don’t be so hard on yourself. I was very critical of myself when I was starting out because I thought I should immediately have a full working knowledge of the industry, and that often led me to think about changing my career path because I wasn’t getting it as quickly as I thought I should be. I’m so glad I stuck it out though because I can’t imagine doing anything else.

Q: In your opinion, what sets RCN apart from other lenders in the industry?

What sets RCN apart from all other lenders in the industry are our people. While RCN has values

Erica working from her home office

that it was built on, it’s our people that carry those values through

20 Originate Report May 2020

everything they do for the company.

Jeff Tesch, founded the company

all our outreach efforts to our clients

Our people believe in providing

with the intention of legitimizing

excellent customer service and they

hard money and pulling it out of

since the virus hit.

care about our customers and their

the shadows. Providing our clients

businesses, not just the sale. We have

with transparency throughout the

such a great group of diverse and

origination process and a superior

talented people that are constantly

customer

introducing new ideas and pushing

core values and those values were

to move the company forward and

carried through into every aspect of

make the company better. I can honestly say I work with the best

experience

are

RCN’s

the business. In 2019, when lenders’ rates

and

terms

were

almost

people in our industry.

identical across the board, that focus

Q: What mistakes have you seen

RCN an advantage and continues to

on customer service is what gave

others make in this industry?

How does RCN avoid making those same mistakes?

The biggest mistake I see other lenders making in this industry is not being upfront with their customers throughout the origination process.

This could be anything from hiding fees,

to

not

providing

accurate

timelines and process expectations, to changing terms and not disclosing

keep our clients coming back time and time again.

perform during the ongoing global pandemic and financial crisis?

Overall, I think RCN has been performing very well during this Executive

global Team

pandemic. was

Our

extremely

proactive and had a comprehensive

until the last minute.

plan in place to deal with a lot of the

With how competitive the space is,

once things really hit the fan. For

challenges that presented themselves

I think many of these lenders are trying to lure customers in with these gimmicks; saying their rates are lower but tacking on numerous fees throughout the process or at closing, or saying they can close faster knowing

than

competitors

those

timelines

while aren’t

realistic. At face value these things sound good, and these lenders may get the initial business, but the process becomes such a nightmare that not only do they lose any chance of repeat business but you’d better believe that the customer is going to tell everyone they know in the

still be closing loans, we were fully transparent about what was going on. We then refocused our efforts on trying to be able to provide our clients with educational resources, articles, webinars, regular emails, etc., that would keep them informed as to what was happening in the industry. We may not have been able to originate but we were still trying to help our clients in whatever way we could.

Q: How are you seeing RCN

ongoing

Unlike some lenders that claimed to

one, we made sure employees had

We have already established new interim loan programs and are rolling them out slowly but surely. I don’t think we would have been in nearly as good of a place if we hadn’t approached the situation the way we did and had such strong leadership.

Q: Before the shelter-in-place rules kicked in, what did you enjoy doing with your free time? How

everything they needed to work

has that changed?

remotely long before shelter-in-place

It’s a little funny because before the

orders went into effect, so they weren’t

shelter-in-place rules kicked in and

scrambling when that time came.

the pandemic affected every aspect of our lives, I was so busy with work

That’s not to say that we haven’t seen

and work travel that I had very little

substantial challenges because of the

free time. I’m actually enjoying

pandemic though. RCN did have to temporarily suspend lending, much like many other private lenders in our space. I think the reason we were able to handle that particular challenge so well was because of the strong foundation RCN was built on.

RCN was founded on the belief that

having this extra time to be able to do a lot of the things I wasn’t able to get to before. I’ve been doing a lot more cooking, channeling more of my creativity into crafting, painting and drawing, and getting outside much more. I also think I’m seeing family and friends more frequently

industry about their experience.

our clients deserve a transparent origination process with a superior

person which has been really nice –

RCN has avoided making those

customer experience from start to

although nothing really beats seeing

mistakes since day one. Our CEO,

finish. We integrated that belief into

people face-to-face.

through video chat than I ever was in

www.originate.report 21

FEATURED

A

Surviving and Thriving in the Era of COVID-19:

few mandatory evacuations over the

INDUSTRY LEADERS SHARE TIPS FOR PRIVATE LENDERS

tinue to operate in order serve our

Dear Readers,

W

e have received a lot of inquiries in the last few weeks regarding how we set up a remote office.

Rather than just responding to people individually with our own experiences, we thought this topic warranted a deeper dive and a more thorough examination. In Part 2 of this series, we will be sharing more insights from industry leaders

22 Originate Report May 2020

who are working through the same challenges., but we will also be sharing insights from other industry leaders who are working through the same challenges. Regardless of where you live and work, the

nchor Loans is headquartered in a high fire-risk community and we have had a

years. Long before the coronavirus pandemic hit, our management team created a remote workforce continuity plan to protect our staff and conclients during an emergency.

In early March of this year, when it became clear that the spread of the novel coronavirus presented a threat to the health of our staff and their families, we immediately transitioned our people out of the office

and

implemented

work-

mandatory quarantine looks to be

from-home protocols for our entire

the new normal for at least a while

operations. On March 19th when the

longer; so in the meantime, let us

governor issued California’s stay-

help you make the most of it.

at-home order, Anchor was fully

operational — with the vast majority

lesson—in every crisis, there is

of our team already at home serving

an opportunity to learn and grow.

our customers remotely.

After that downturn, we assembled a team of real estate and IT experts

will get a rare opportunity to learn the true patience, resilience, and commitment of the people on your team.

That’s not to say there weren’t

to develop a custom AI fintech

- Steve Pollack, CEO/President &

platform to support our expansion

Co-Founder, Anchor Loans

challenges a

plan

involved

for

in

business

turning continuity

into a real-world shift of lending operations from 20,000 square feet of offices to the individual homes of over 150 employees. Transporting workstations, providing IT support, and

successfully

across

multiple

departments

communicating teams

presented

and some

headaches, late nights and long weekends

–

but

our

resilient

staff rose to meet and exceed all expectations.

goals. We had no idea back then that a decade later our fintech platform would allow our staff to virtually seamlessly transition to working from home during a viral pandemic!

The saying goes, every setback is a setup for a comeback. Of course, being prepared for the unexpected helps,

and

having

a

business

continuity plan in place is essential, but

our

takeaway

from

this

experience is really about people.

When you have a management team and staff that are committed to the core values of your company, you

During

the

2008-9

economic

can achieve great things—and when

downturn, we learned a critical

unexpected challenges arise, you

Steve Pollack, CEO/President & Co-Founder Anchor Loans

Industry Leaders Share Tips: Cont. on pg. 24

www.originate.report 23

Industry Leaders Share Tips: Cont. from pg. 23

I

mprove Your Quality in Virtual

to mount the webcam on a gooseneck

Meetings

stand which is placed in front of my monitor so that I’m always at eye

Being an online marketing company, Private

Lender

Link

has

level with the camera.

not

experienced any challenges working

Tip

remotely

crisis.

microphone. Audio may be more

What’s changed in the past 2 months

important than the camera. Most

is the frequent use of my webcam. I

of

invested in a nice webcam setup for

laptops and webcams do not sound

my home office last year and never

good because of the distance from

used it much before the shutdown.

the subject. I highly recommend

Like everyone else in the industry,

purchasing an external microphone.

I’m getting used to being on camera

Headsets are great if you don’t mind

and learning how to use all the web

looking like a DJ

meeting platforms. From what I’ve

person. If you use Apple products,

seen so far, not enough people make

AirPods are a great alternative. I

an effort to improve the quality of

use a USB microphone that sits on

their presence in online meetings.

my desk. These can cost up to $200,

I’m not referring to dress codes

but it’s not necessary to spend that

and haircuts. Those are important

much. A budget of $50 can get you

too, but there are a few other items

a good quality product to improve

I had in mind that can help people

your audio quality. If you can’t buy

look more professional in virtual

an external mic, you may be able to

throughout

the

meetings.

Tip #1 is to be at eye level with the subject. Most people are using a laptop which has a camera built in to the monitor, and people typically look down at the screen which results in an unflattering look. I recommend creating some sort of platform to raise the height of the webcam.

#2

the

is

to

use

microphones

an

external

built

into

or tech support

use your phone for audio instead of the computer. Most virtual meeting platforms have this capability.

Tip #3 is to shine some light on your face. I see so many people in virtual meetings with poorly lit environments, and it doesn’t look good. If your desk is not in front of a

Rocky Butani, Founder & President Private Lender Link

A

djusting to this “new reality” has certainly been challenging, but overall I

think the leadership team at RCN, myself included, has done a great job keeping employees motivated and connected while working remotely through these uncertain times. The biggest thing for us has been stressing the importance of communication. It’s so much easier to feel isolated while working from home if you aren’t making an effort to reach out to your team and fellow coworkers.

Before working remotely, my team was all together in a large open office so that we could easily collaborate

window, I recommend placing a lamp

and talk to each other throughout

close to your desk to brighten things

the day. In an effort to keep some

up. I use a LED lamp that shines a

semblance of that alive, I have at

webcam that is meant to be mounted

white light similar to fluorescent

least one video call daily with my

on top of a monitor. With this setup I

bulbs in office spaces.

team to check in to see how everyone

would be looking upward, which also

- Rocky Butani, Founder &

is doing, and all of our internal

looks unflattering. My solution was

President, Private Lender Link

department meetings are held as

Placing a stack of books under the laptop is an easy solution. I use a desktop computer with an external

24 Originate Report May 2020

video calls. Having consistent face-

communication, the vacuum can get filled with misconceptions, fear, or people going in the wrong direction.

Using video conferencing, morning huddles, and end of day wrap ups help keep everyone connected. We have had both formal all-hands company video calls as well as casual virtual lunchtime get-togethers with no agenda. One little morale booster we did was to send out GrubHub meals to our employees, just as a little pick-me-up.

to-face interaction definitely helps keep the team motivated. It gives us the opportunity to make sure projects are on task, talk about other projects we can focus on now that had previously been backlogged, and just be social and talk about things other than work like we would if we were still in the office.

To keep the optimism going, we’ve had themed video calls including wacky outfits, onesies, and even one based on Tiger King (yes, I did dress as Joe Exotic). I’m trying to keep our interactions as positive as possible and I’ve been willing to let my team have a laugh at my expense during this because seeing them happy makes me happy.

My team has also been trying to keep all members of the company connected by sending out regular quarantine

activities

that

our

coworkers can participate in such as “Quarantine Mad Libs”, where you provide specific words to fill in the blanks of a story that Marketing wrote, and “My Coworker is Doing What?!”, where folks refer to their pets, spouses, roommates, children, etc.

as

their

“coworkers”

with

hilarious results. RCN was like a big quirky family before all of this, so it’s important to keep that dynamic going even when we’re apart.

- Erica LaCentra, Director of Marketing, RCN Capital

Erica LaCentra, Director of Marketing RCN Capital

W

orking remotely was not usual for Walnut Street Finance, but our first focus was to keep everyone safe so the decision to have everyone remote was an easy one. It was not difficult to continue our normal business functions since we have strong systems and business processes in place. Technology has given us the ability to continue to serve our customers and investors, whether we are physically working in the office or not.

The bigger challenge for us is not to lose our great company culture.

We have always been proactive and deliberate about our company culture. Luckily, we started this uncertain time with a great foundation, but it is easy to see culture slip away when the team is not together day-to-day. In order to help stay connected, positive, and engaged, we have incorporated a few tactics.

The other important decision we made during this time was to look internally on ways to improve. As the whirlwind of uncertainly swirls around outside, we are taking time to advance our foundational capabilities. Additionally, we are encouraging everyone to build their own skills through online learning.

All uncertain times eventually settle, and we will be better, faster, and stronger when it does.

Bobby Montagne, Founder & CEO, Walnut Street Finance

Bobby Montagne, Founder & CEO Walnut Street Finance

First, we make sure we are overcommunicating. Without constant www.originate.report 25

Revenue diversification

Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial

TODAY’S MARKET OPPORTUNITY: •

•

•

100 billion dollar non owner-occupied investment space SFR ’s 1-4 Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial Diversify product offering and add new revenue opportunities you may be missing out on Legally compensate your most prized relationships (Realtors) for referrals

WHAT TO LOOK FOR IN A BROKER + CAPITAL PARTNER RELATIONSHIP: • • •

Concierge across product offering with underwriting, training, service and support Dedicated call center for loan origination support and fund control Marketing materials provided including product tear sheets, pitch decks and web banners

In today’s market, refinancings have limited availability and there’s not much new housing inventory to lend against. For mortgage Brokers, this means the obvious; there are a lack of transactions in the market to profit from.

For shops that are only doing refinance or traditional mortgages, opportunities only come around every 5-7 years. You’ve got to have a big client base to have volume. With financial products across SFR ’s 1-4 Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial, the sales cycle is faster, there is significantly higher recurring business, and a few lenders have teams dedicated to helping you succeed.

BROKERS, PARTNER TODAY

26 Originate Report May 2020

Think of it as a new product offering which results in the diversification of your potential revenue. All of this is well within reach, and much easier than you may think.

The NON-O/O investment space is a 100 billion dollar industry that has come full circle since the last market downturn. Over the last decade private lending has been growing, and the comeback of property investors is at an all-time high.

Here’s what it takes to do these types of loans and a good private lender will handle these things for your Brokerage…

• • • • • • •

Review and process loan applications Document collection Facilitate Appraisal Coordinate Title & Escrow Complete underwriting Facilitate Funding Pay you

Traditional Realtors and Mortgage Brokers have the misconception they need an NMLS license to be a lender in this product space. The main point in dealing with a private lender is while they primarily fund SFR’s, these loans are governed under commercial guidelines.

Thus we are not governed under RESPA, TRID or TIlLA. These loans are funded only into business entities allowing 7-10 business day closings and can pay anyone under a Brokerage license a referral fee or commission on the HUD at closing.

There are two avenues a Brokerage launching this type of product to Real Estate professionals can expect to see. You can be a Correspondent Partner (the lender would fund in your name)

http://triumph.capital/brokers

or an Origination Partner (the client would see the lender’s name on the HUD). Most deals are funded under a single set of product guidelines allowing training, underwriting and servicing to be easily understood.

CORRESPONDENT PARTNER (CP): You look and feel like the lender, a complete white-label product.

ORIGINATION PARTNER (OP): Traditional Broker + lender relationship, lender shows on HUD. A full concierge service for Broker partners handling everything from A-Z is an entirely new model for private lending and Mortgage Brokers / Real Estate professionals. Working with a direct lender enables Mortgage Brokers to keep the lion’s share of the profit and have the potential to earn from the yield spread as well, all while monetizing on much more frequent lending transactions, instead of the normal 5-7 year customer lifecycle.

There many private lenders chasing this strategy and it’s safe to be wary of who to work with.

While choosing a partner, look for someone who understands the business and has a strong reputation for closing transactions. You’ll also need support with marketing materials. Having the right documents and product tear sheets (one-pagers) for conversations, trade shows, etc. is helpful in positioning the opportunity with your existing book of referral business from Realtors.

For more information call

877-450-9741

ROB JENNINGS robert@triumph.capital

GEORGE O. FLINT goflint@triumph.capital

www.originate.report 27

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28 Originate Report May 2020

PRESS RELEASE

ABS Appoints Jasen Portero as Chief Operations Officer LONG BEACH, Calif., May 5, 2020 - Applied Business Software, Inc., (“ABS”), leader in loan servicing and origination software in the private lending space, announced today that Jasen Portero, its current Vice President of Development for the last 12 years, has been appointed Chief Operations Officer.

As a Full Stack Developer, Jasen oversees the Development Department, manages all online services, and spearheads all new projects. As VP of Development he has created a multitude of Front-End Service capabilities: iPad app, electronic signature, online loan application and borrower portal, text notifications, loan geo-mapping, API, and the first fully browser based version of The Loan Office® servicing software. As a Chief Operations Officer he will be extending the online services and will oversee development of both products, The Mortgage Office® and the Loan Office®. Prior to joining ABS, Jasen spent 18 years working for Universal Music Group, WellPoint, Warner Bros., and Evite where he took part in developing some of the technology people around the world have come to use and love.

“I am honored and humbled to take on this new role and take ABS to a new level. Our software is a testament to hard work, excellence in coding, and continuous innovation. ABS as a trusted brand is experiencing incredible growth, and I am excited to be a part of it and take the company to the next phase.”, said Jasen Portero.

“Since joining in 2008, Jasen has been instrumental in our growth. He is an excellent addition to our senior management team and will play a critical role in ABS’ future product development strategy. His proven track record and ability to build a winning team are a great combination for what lies ahead”, said Carlos Nodarse, ABS’ CEO. About Applied Business Software Applied Business Software is a market leader and global provider of software systems and solutions to the lending industry. ABS offers a complete suite of software products designed from the ground up to specifically address the needs of those who originate and service loans. All our products are consistently rated superior in design, system interface, expandability, and ease of use. ABS is based in Long Beach, California. For additional information about ABS’s products and services, visit www. themortgageoffice.com or call (800) 833-3343.

Elizabeth Morales, Chief Marketing Officer www.themortgageoffice.com | (800) 833-3343 | elizabeth@absnetwork.com www.originate.report 29

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CULTURE CORNER

Appraisal Nation Keeping Company Culture from a Distance

By Originate Report Staff

A

lthough Appraisal Nation is

in-office workers with clientele—

A core component of Appraisal

physically headquartered in

creating

corporate

Nation’s internet-based operations

Cary, NC, the company has a

structure that made the recent

is the RingCentral platform, which

number of remote employees located

transition to all employees operating

enables employees to exchange real-

across the country. This dynamic

on a remote basis in light of the

time messages via a company-wide

work environment is facilitated by

COVID-19

comparably

chatroom that keeps teammates

a suite of customized technology

smooth as opposed to traditional

connected and informed. Prior to

to seamlessly connect remote and

business setups.

the coronavirus stay at home order,

32 Originate Report May 2020

a

unique

pandemic

Appraisal Nation

the company produced a monthly

updates about the company and the

hear stories about employees such

event calendar consisting of theme

world at large.

as “I worked with him back at my old company 20 years ago,” “I used

days, potlucks, contests and off-site gatherings to foster a collaborative

Appraisal

work

significantly

of

environment.

those

events

With

now

many

rendered

Nation since

has its

grown

to know him when he bartended,”

founding,

or even “I’m married to her sister.”

yet the company provides itself on

unfeasible due to the public health

maintaining

a

“small

company”

crisis, Appraisal Nation now utilizes

family-like

corporate

culture.

RingCentral and a company-wide

Members

chat box to maintain a spirit of

company—from the owners to the

interconnectedness. This chat box

front-line team leads—share mutual

has provided a place for people to

connections fostered by years of

send each other inspirational music

cooperation

/ videos, new ideas, funny / light-

work ethic, almost like a company

hearted content, as well as relevant

family tree. It’s not uncommon to

at

all

and

levels

of

the

uncompromised

Such a close-knit community creates shared trust that spans across the entire

company—a

characteristic

that has become a source of strength and resilience to draw upon in these challenging times. It is undeniable that working from home can be an isolating

and

lonely

experience,

RingCentral has made it possible Appraisal Nation: Continues on pg.30

www.originate.report 33

Appraisal Nation: Continued from pg. 29

for

Appraisal

to

provide

Nation each

“In Early March it was clear we

employees

other

with

emotional support and a feeling of companionship despite the inherent

were going to have to adapt very quickly. I am thankful that we have the infrastructure in place that allowed us to work through this,

lack of physical interaction.

that Leadership moved quickly to

A key facet of Appraisal Nation’s

that the train kept rolling.

prioritize everyone’s safety, but also

company culture is its proven ability to constantly evolve and adapt

We’ve

to stay relevant and sustain its

accountability. “Take ownership, don’t

remarkable growth over the years.

pass the buck” is something you will

The company’s flexible nature is

hear in all departments. Once it was

particularly important in the ever-

evident that our function as an AMC

fluctuating real estate industry that—

was going to need to accommodate

despite the advent of technology—

social distancing and keep up with

still fundamentally relies on physical

a developing situation, we quickly

encounters to complete transactions.

The necessity of social distancing has understandably complicated this aspect of the business. The creative thinking that has made Appraisal Nation so successful, however, once again rose to the challenge—with SVP of Strategic Partnerships, Dave Roberts, collaborating with a tech developer to produce a home buyer inspection application that captures images of properties and transmits them to off-site appraisers who can then complete their reports without ever setting foot inside the owner’s home. The company elected to provide this vital service on a complimentary basis to assist all

involved

COVID-19

parties

during

the

outbreak.

While

the

always

been

big

on

saw members of all teams becoming resources to all parties involved.

New information is constantly being presented from Lenders, Appraisers, Brokers, Underwriters, Executives, local and national news, and I am really thankful that our team has put such a high prize on collaboration.

Whether it was updated appraisal requirements from Fannie Mae, or Lender Specific requirements (how can we have interior photos if the appraiser cannot inspect?), our team has done an amazing job developing new

processes,

situations

as

troubleshooting they

arise,

and

ultimately doing our part in getting loans closed. Every day we have an all-hands-on-deck attitude, and I am constantly impressed how every team

future is inherently unpredictable,

member’s first reaction is, “How can

those

Appraisal

I help?” That type of attitude makes

Nation’s track record of creativity

all the difference in the world as we

and resourcefulness are confident

navigate through this.”

the company will continue to adapt

- Jason Wayne,

and overcome.

Appraisal Services Placement Manager

familiar

with

34 Originate Report May 2020

Jason Wayne Appraisal Services Placement Manager

“Appraisal Nation’s culture began and continues to evolve based on this principle: no matter your position with the company, we all share the same values, we all have the same mission, and we all do whatever it takes to get the job done.”

- Mike Tedesco, CEO

Mike Tedesco CEO

“The Appraisal Nation team is continuing to keep and promote a client focused environment. Despite the change of our locations, our mission to give our clients the utmost care has never changed. We have cultivated our employee growth and learning by expanding training to adapt to the changing environment. We are always there for our clients day and night and will continue to be our top priority.”

- Samantha Maillet, Client Services Representative

Samantha Maillet Client Services Representative

“Our CEO, Mike Tedesco, once told me that when he is looking at hiring someone their resume is not what he is focused on. He is looking for people who care. Many skills can be trained, but you can not teach someone to care about the work they do, the company they work for, the clients, and even the other employees. This plays a big factor in the core of our company culture. You can see that the employees of Appraisal Nation care, and I believe this can be felt by our clients and what makes our customer service top notch.”

- Valley Matlaga, Marketing Manager

Valley Matlaga Marketing Manager Appraisal Nation: Continues on pg.32

www.originate.report 35

Appraisal Nation: Continued from pg. 31

Ugly Sweater Crew

Secret Santa

36 Originate Report May 2020

AN Guys Golf

5 Year Anniversary

Red Nose Employees

2055s

www.originate.report 37

FEATURED

[COVID-19] Forbearance Agreements 101 WHAT TO DO WHEN YOUR BORROWER CAN’T PAY

By Nema Daghbandan, Esq. & Melissa C. Martorella, Esq., Geraci LLP

D

uring the current COVID-19 crisis, an unprecedented number of borrowers are

for the request, and supporting

the notice address for the borrower

documentation evidencing the need

provided in the loan documents.

for the deferral. These forms can

If the lender agrees to delay loan

requesting loan payment deferrals

facilitate the processing of many

payments, a formal Forbearance

from their lenders. These requests

requests into a condensed period of

Agreement needs to be used to make

are understandable: tenants aren’t

time.

sure the parties are agreeing on what

paying

rent,

skyrocketed,

unemployment and

many

is being waived and what is not.

has small

businesses are suffering.

Formality is a Must That said, some borrowers may

Best Practices Regarding

submit

Forbearance Agreement Terms

their

payment

deferral

Lenders will need to evaluate a

request informally. Even so, the

particular

and

lender’s reply should be more formal

Best practices regarding terms

decide whether to proceed with

than just a simple email or telephone

during this time include:

a loan forbearance, and, if so, to

call. Formality is extremely important

1. Providing a 60-90-day

make sure the agreement is properly

when lenders are modifying or

payment deferral for

documented.

waiving any rights under the loan

borrowers in actual need.

borrower’s

facts

documents. Oral misrepresentations The Importance of a Forbearance

were often the cause of borrower

Form During the COVID-19 Crisis

lawsuits against lenders during the

Lenders are strongly recommended

Great Recession. As such, all calls

to put a forbearance form on their

should memorialized in writing, in

website for borrowers to use when

particular when rights are or are

requesting a payment deferral. This

not being waived. Lenders should

form should include information

follow up calls with an email, and,

about the loan, the borrower’s reason

in some cases, a formal letter sent to

38 Originate Report May 2020

2. Automatic lender discretionary extensions of the forbearance period.

3. No late charges or default interest on deferred payments.

4. Deferral of payment of missed payments to the maturity date of the loan.

The recitals in the forbearance

agreement should also spell out that

an entity certificate signed by all

the lender is making the forbearance

members,

as a gesture of goodwill to the

argument that the documents were

borrower. The agreement should

signed by an unauthorized party.

reaffirm

the

amounts

due,

should

clean

up

any

the

business purpose of the loan, and

Define Future Defaults

include itemization of the amounts

The forbearance agreement should

due under the loan.

specifically define what a future default looks like. For example,

Other Considerations For A Strong

the

Forbearance Agreement

clear that other defaults under the

agreement

should

make

it

loan will cancel the forbearance.

Address

What

the

Lender

is

Lenders

should

carefully

define

Forbearing from

out the following as additional

A strong forbearance agreement

future

should

what

and forbearance agreement: other

the lender is forbearing from (e.g.

defaults under the loan documents

recording

(e.g. transfer of property); other

include a

addressing

Notice

of

Default,

defaults

take

under

the

adverse

loan

charging late fees, or the accrual of

creditors

default interest) and for how long

seizure,

the forbearance will last. Prior to

adverse property action; and fraud

the forbearance agreement being

or misrepresentation.

repossession,

or

action; other

made effective, payment should be required for things like legal costs,

Require a Title Policy Date Down

processing costs, taxes, insurance,

Endorsement

and other charges. In the event a

To protect the lender and borrower,

borrower is not able to pay for such

the lender should require a date

costs at the time of the agreement, the

down of their Title Policy when

best practice is for lenders to cover

a

third-party costs where possible.

is established to ensure that no

new

forbearance

agreement

additional liens have been recorded Include a Release of All Claims

against the property, taxes are

Lenders will also want to include a

current, and no other surprises exist.

release of all claims in the agreement.

Lenders should also ensure that the

This way, if there is the possibility of

person who signs the forbearance

a dispute under the loan documents,

agreement is authorized to do so

the borrower will have released the

on behalf of the lender. Some loan

lender from any such issue, even as

servicing agreements do not allow

to unknown claims.

for loan servicers to sign for their lenders, so it may be prudent to

Evaluate the Loan for Any Defects

review

The forbearance agreement is also a

of time. The final protection for

great time to evaluate the underlying

lenders is to include a reaffirmation

loan file for any defects. For example,

in the forbearance agreement that

was signature authority clear in the

all other provisions in the original

original loan? If not, then including

loan agreement remain in force.

those

agreements

continue to put pressure on not only borrowers but also lenders, following the best practices and including the terms suggested above put both borrowers and lenders in a stronger position to navigate these trying times.practice and advises clients on all default related matters. He can be reached at n.daghbandan@ geracillp.com.

ABOUT THE AUTHORS Geraci LLP is the nation’s largest law firm which focuses on the representation of nonconventional lenders.

Melissa C. Martorella, Esq. is a senior Banking and Finance attorney with the firm and focuses on representing nationwide private lenders transact throughout the country by advising nationwide mortgage lenders on compliance and transactional matters. She can be reached at m.martorella@geracillp. com.

Nema Daghbandan, Esq. is a Partner in the Banking and Finance Practice. His practice encompasses all facets of real estate transactions representing mortgage companies and professionals throughout the country. Mr. Daghbandan also leads the firm’s non-judicial foreclosure practice and advises clients on all default related matters. He can be reached at n.daghbandan@geracillp. com.

ahead

reps and warranties that the previous signer was authorized, along with

Although

COVID-19

will

likely

Nema Daghbandan, Esq.

Melissa Martorella, Esq.

www.originate.report 39

UPCOMING EVENTS 2020 EVENTS CALENDAR

LENDER C M AY

2 0 ,

2 0 2M0

A• YO

NNECT

N L2I N 0 E2 C0O N F E R E N C E

MAY 20, 2020 | HOSTED VIRTUALLY • NATIONWIDE Geraci Media will be providing an Online Conference to create education and networking opportunities for lenders, brokers, investors, and service providers in the Non-Conventional, or Private Lending space. Lender Connect will take place May 20, 2020 and is currently seeking business professionals who would like to get involved. This one-day conference will provide valuable educational sessions, networking opportunities through an online, virtual platform, lobby, and exhibit hall, and most importantly, the convenience to continue making deals and raising capital.

Contact Alicia Carter at a.carter@geracillp.com for more information.

40 Originate Report May 2020

THE IMPORTANCE OF

results. This global reach creates networking opportunities for building relationships and partnerships. Your audi ence has invested time in registering and listening to the information you plan to share. They’re expecting valuable takeaways from the webinar, even some thing they can put into place at their own company. This positions you and your brand as an industry lead er, or expert. Webinars can give your audience the chance to ask questions and provide feedback. This how well it performed. These metrics include the is valuable because you can address concerns, reser number of attendees, number of those registered, vations, or any lingering questions they may have and total views. The webinar can and should be recorded about your training or product in real-time. You can Webinars have grown in popularity in recent years for you, the audience, and affiliates to share with customize your presentation to your audience based on and have become an important marketing tool. others, growing the results even more. Each time a their questions and feedback to keep them engaged.

These live web-based seminars can connect you with person completes your webinar’s registration form Ask them to take an action, such as completing a task leads from all over the world. They encourage interacti they should be considered a new potential lead, or answering a question. This will increase audience by allowing the audience to ask questions orJust how whether it be for a sale or a potential partnership. participation and interest. Include guest speakers, beneficial can a webinar be to your business? Here Webinars adds a personal interaction that videos and such as industry leaders or affiliates, to speak during are 7 reasons why webinars are a fantastic marketing commercials don’t. Webinars put a face and name your webinar. These individuals should be familiar strategy. Webinars are a cost-effective way to extend with your product making you approachable, human, with your industry and value of your product. They your reach globally. Rather than pay for flights and and someone they can trust. Educating them on how will be able to educate the audience on the benefits hotels to meet with individual leads, you can engage your product can benefit their company is the first or impact, validating information you have or will with a larger group over their computer screens. step in opening the door to future discussions and be sharing. By inviting a guest speaker, you can also People from all over the world can attend, providing partnerships. It is essential to show both new and increase the webinar’s attendance by including your your brand or product with the potential to see huge established leads how your product or service can guest’s audience and following. This can grow the results. This global reach creates networking opporimprove or enhance their workplace. Depending on number of leads you may gain substantially. Results tunities for building relationships and partnerships. the prospect, the sales process can be slow. Businesscan be seen quickly from webinars. After hosting a our audience has invested time in registering and lises want to convert a lead into a cusWhile it’s cerwebinar you’ll have metrics to measure how well it tening to the information you plan to share. They’re tainly important to provide useful information and performed. These metrics include the number of at expecting valuable takeaways from the webinar, tips to your audience, it’s equally important to share tendees, number of those registered, and total views. even something they can put into place at their own how your brand or business can help them achieve The webinar can and should be recorded for you, the company. This positions you and your brand as an this. How can your product be a solution to their audience, and affiliates to share with others, grow industry leader, or expert. problems? Your webinar should show the audience ing the results even more. Each time a person com the value of your brand. Garnering interest in the pletes your webinar’s registration form they should Webinars can give your audience the chance to ask product and its potential impact is the first step in be considered a new potential lead, whether it be for questions and provide feedback. This is valuable becompleting a sale. a sale or a potential partnership. Webinars adds a cause you can address concerns, reservations, or any personal interaction that videos and commercials lingering questions they may have about your trainThere are numerous benefits to hosting a webinar. don’t. Webinars put a face and name with your prod ing or product in real-time.

Though this article only touches on a handful of uct making you approachable, human, and someone them, it should be clear that webinars are an effecthey can trust. Educating them on how your product You can customize your presentation to your auditive tool for engagement and growth. As you take can benefit their company is the first step in opening ence based on their questions and feedback to keep these benefits into account, you should begin to the door to future discussions and partnerships. It them engaged. Ask them to take an action, such as think how you can use a webinar for lead generation is essential to show both new and established leads completing a task or answering a question. This will and to increase traffic, which will yield great results how your product or service can improve or enhance increase audience participation and interest. for your business. Webinars have grown in populartheir workplace.Depending on the prospect, the ity in recent years and have become an important sales formation and tips to your audience, it’s equalInclude guest speakers, such as industry leaders or marketing tool. These live web-based seminars can ly important to share how your brand or business affiliates, to speak during your webinar. These inconnect you with leads from all over the world. They can help them achieve this. How can your product be dividuals should be familiar with your industry and encourage interaction by allowing the audience to a solution to their problems? Your webinar should value of your product. They will be able to educate ask questions or provide feedback in real-time. show the audience the value of your brand. Garnerthe audience on the benefits or impact, validating inJust how beneficial can a webinar be to your busiing interest in the product and its potential impact is formation you have or will be sharing. ness? Here are 7 reasons why webinars are a fantasthe first step in completing a sale.There are numertic marketing strategy. ous benefits to hosting a webinar. Though this article By inviting a guest speaker, you can also increase the only touches on a handful of them, •it Upcoming should be clear Business Development • Fintech/Newest Loan Programs • Automation in Today’s Evolving Society webinar’s attendance by including your guest’s auWebinars are a cost-effective way to extend your that webinars are an effective tool for engagement dience and & following.

This can grow the number of reach globally.

Rather than pay for ights and hotels Trends Changes • Marketing & Outreach • Essential Tools & flTechnologies •and New Legal Issues and Regulations growth.

As you take these benefi ts into account, leads you may gain substantially. to meet with individual leads, you can engage with a you should begin to think how you can use a webilarger group over their computer screens. nar for lead generation and to increase traffic, which 5. Results: will yield great results for your business. WebiResults can be seen quickly from webinars. After People from all over the world can attend, providnars have grown in popularity in recent years and hosting a webinar you’ll have metrics to measure ing your brand or product with the potential to see huge have become an important marketing tool. These

CONTENT L E T U S H E L P YO U !

CURRENTLY ACCEPTING ARTICLES

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www.originate.report 41

Redwood Mortgage Corp. www.redwoodmortgage.com RMC@redwoodmartgage.com (800) 659-6593 San Mateo, CA 94402

Direct Lender

Zinc Financial Inc. www.zincdinancial.com office@zinc.net Tom Valentino

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*CA

AZ, CA, CO, IN, MI, NM, OH, TN, TX, WA

LET LENDERS KNOW YOU FOUND THEM IN ORIGINATE REPORT! 42 Originate Report May 2020

REV. 06.25.19 2019

Direct Lender

* = STATES LENDING IN

Fidelity Mortgage Lenders, Inc. www.fidelityca.com psteigleder@fidelityca.com Peter Steigleder (818) 422-8879

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TYPES OF PROPERTIES

90/2

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15M

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TYPES OF LOANS

MI NI MU M LO MA AN XIM $ UM Co LO mm AN er $ Co ns cial um Br e r idg Co e rp o A c rat i o qu ns i /T No sitio ru s ns te s a n ts/ L Pu eg dD rc h a ev e l o l Ent Re ased itie pm ha s en b ts Bla / Re mo nk S e e t Lo d e l e co d/ nd ans Re Jo no int Mor va tg V te d a en Fo ge t re i g n u re s s Ot h e N at i r on als MA XL OA NCh TO ur -VA ch LU es La E( /T nd % em (B )/M Au ar p les AX to m e / /S TE Co o RM Re mm yn t ag t a i i ve (YR e og l( rc i S) S En ue al/ te r h o p s L s o t ai t) Ga nm / Str sS ip en Ma Le t at i o t lls isu ns ) re Ho (G sp olf i Co Mi t alit ur y( xe se d H R e - u s e o te s / M ls) sid ar Pr ina In e o n p Ra d ) n c t i a l I e r t i e u st r he nv s ial sa Se es tm lfnd s en Fa R e to ra tP ge rms st a ro pe rti O f u ra n fic es t s e

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