Originate Report - November (AAPL)

November 2023

THE OFFICIAL MAGAZINE OF GERACI

INSIDE: AAPL

The New Fraud in Town: Business Identity Theft

TITAN

Sarper Beyazyurek Churchill Real Estate

TRAILBLAZER

PIONEERING A BRIGHT FUTURE FOR BANKING

Andrea Propp Knorring IceCap Group

AND MORE...

SPECIAL EDITION

November 2023 Originate Report 1

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2

TABLE OF CONTENTS NOVEMBER 2023

COVER STORY 6

Western Alliance Bank – Pioneering a Bright Future for Banking

By Charles Peckman, Contributing Writer for Originate Report

6

FEATURE ARTICLES 24

Diversification and Strong Leadership Guide Constructive Capital to New Heights

By Nick Georgandis, Contributing Writer for Originate Report

38

Val-Chris Investments – Standing the Test of Time

By Charles Peckman, Contributing Writer for Originate Report

12

CONTRIBUTED ARTICLES 12

The New Fraud in Town: Business Identity Theft

By Kat Hungerford, Project Development Manager, AAPL

28

The Offense and Defense of Building an Organization

By William J. Tessar, CEO, CV3 Financial Services

34

The Crucial Role of Speed and Process Consistency in Real Estate Investing

By Alex Offutt, Managing Director, Constructive Capital

42

How to Keep Yourself Out of Court (and Away From Me)

By Steven Ernest, Esq., Director of Litigation & Bankruptcy, Geraci LLP

PRIVATE LENDING TITANS 18

Sarper Beyazyurek, Principal, Churchill Real Estate

18

24

PRIVATE LENDING TRAILBLAZERS 30

Andrea Propp Knorring, Chief Strategy Officer, Fund Management & Investor Relations, IceCap Group

30 November 2023 Originate Report 3

2 0 2 4

C O N F E R E N C E

VEA NEWPORT BEACH NEWPORT BEACH, CA Help shape the future of private lending. Join forces with private lending industry legends and newcomers at Innovate to discuss the multi-layered approach they are taking to address rapid societal shifts, supply chain disruptions, evolving product lines, and the ever-changing needs of both the borrower and lender alike.

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Contact Ruby Boulanger at r.boulanger@geracillp.com (949) 379-2611 | https://geracicon.com/ 4

Welcome to the AAPL Special Edition of Originate Report!

Partner & CEO Geraci LLP ANTHONY GERACI a.geraci@geracillp.com Senior Vice President, Marketing LESLEY BOYD l.boyd@geracillp.com Creative Director LYNDA HIGHT l.hight@geracillp.com Sr. Marketing Ops. Manager & Editor DANI L’HEUREUX d.lheureux@geracillp.com CONTRIBUTORS Kat Hungerford • William J. Tessar Alex Offutt • Steven Ernest, Esq. Charles Peckman • Nick Georgandis

“The secret of change is to focus all of your energy not on fighting the old, but on building the new.” - Socrates Turbulence and chaos marred the banking world as the new year rang in for 2023. Regional bank failures headlined the news throughout Q1 and brought confusion and some panic to seasoned professionals and the public alike. In a climate such as this, only banks that can strategically plan ahead, adapt, and change are able to survive.

For this month’s cover story, Pioneering a Bright Future for Banking, Originate Report had the distinct privilege of sitting down with two Senior Vice Presidents of the Note Finance Group within Western Alliance Bank, Lisa Alberti and Mark Roberts. Foresight and the ability to make informed decisions, combined with a commitment to transparency and strong communication, are invaluable assets to allow for adaptability in an ever-changing financial environment.

These innate strategies have allowed for Western Alliance Bank to thrive despite the turmoil in the industry. In fact, Bank Director and American Banker recently ranked Western Alliance Bank as a top U.S. bank for 2023. Check out this month’s cover story to learn more about the steps that Western Alliance Bank has taken to

FOUNDING UNDERWRITERS

achieve this distinction.

While this is the final issue of the year, we’ve already got our eyes

MARK HANF President, Pacific Private Money ORIGINATE REPORT www.geracilawfirm.com/originate-report GERACI LAW FIRM www.geracilawfirm.com LIGHTNING DOCS www.lightningdocs.com CONFERENCE LINE www.geracicon.com

on the horizon for next year. Registration is now open for our Spring Conference, Innovate, taking place at our new venue, Vea in Newport Beach. Join us by registering here: https://geracicon.com/.

You don’t want to miss this opportunity for networking, education, and fun!

It’s time to #shareyourstory with us. Contact us to find out how: submissions@originate.report.

All 2024 editions are now available.

Until next time,

Lesley November 2023 Originate Report 5

COVER STORY

By Charles Peckman, Contributing Writer for Originate Report

T

he

first

quarter

of

2023

was

marked by turbulence and chaos in the banking world. The sector

navigated a stormy sea, underlined by bank failures and confusion among seasoned professionals and the public alike.

This was not the story for Western Alliance Bank, though, which has not only weathered the storm but emerged more robust.

To Western Alliance, which has

over

$65

billion

in assets and serves customers across the country, the start of this year served as a springboard to redefine the banking landscape in the years to come. In fact, Bank Director and American Banker recently ranked Western Alliance Bank as a top U.S. bank for 2023.

One of the cornerstones of Western Alliance Bank’s strength lies in its leadership team’s unwavering commitment to a clear strategy.

6

From the onset of this year, the

downturns and market corrections

executives and senior management

Western Alliance team recognized

assisted in the response to the

are ready to meet with clients and

the need for adaptability in an

turmoil of early 2023.

listen to their concerns. It is rare for a customer to be able to meet with

ever-evolving financial landscape.

Their foresight and ability to make

"The speed and certainty of execution

the CEO of a bank, but that sort of

informed decisions, combined with

of our offerings is a critical element

open-door policy has allowed us to

a commitment to transparency and

to our continued success," she said.

keep the lines of communication

strong communication, have proven

"Our private lenders are moving

open with our customers."

to be invaluable assets, ensuring

very

that the institution remains at

environment, and they need to feel

At the end of the day, Lisa said, the

the forefront of innovation and

assured that they have access to

results speak for themselves. In

financial stability.

capital. The entrepreneurial nature

quarter two of 2023, Western Alliance

of Western Alliance also allows

has

Originate Report sat down with

us to tap into different niches and

1,000 new accounts with $3.5 billion

two Senior Vice Presidents of the

become

in deposit growth (as of June 30,

Note Finance group within Western

which in turn allows us to offer the

Alliance Bank, Lisa Alberti and Mark

best possible rates and experience

Roberts. The two banking veterans

for our customers."

"What we have experienced in quar-

prioritize resilience, innovation, and

In a sector sometimes criticized

the strength and stability of the bank

a longstanding client-focused ethos

for prioritizing profit over people,

throughout this period and beyond.

Western Alliance Bank's commitment

quickly

in

subject

this

matter

fast-paced

experts,

to its clients has been a breath of fresh "If we go back to mid-2022, the ex-

air amid banking sector concerns.

ecutive management team saw that

Their client-centric approach coupled

there may be challenges on the hori-

with personalized solutions and a

zon in terms of the macroeconomy,"

deep understanding of the unique

Mark said. “This allowed us to be

needs of each client has solidified

well-prepared for the unique chal-

Western Alliance's reputation as a

lenges we saw this year. Western

trusted financial partner.

Alliance prioritizes a very strong risk management environment, an

To Mark, maintaining a competitive

environment that carries us through

edge is impossible without estab-

all seasons. Our diversified banking

lishing a track record of excellence

model also allows us to prioritize

and trust. and

transparency

The importance of this diversified

are more than buzzwords to us," he

model was reiterated by Lisa, who

said. "When there are downturns

added

Alliance's

in the market or specific tension

experience throughout economic

points with one of our products, our

Western

approximately

2023 vs. December 31, 2022.)

going forward," Lisa said. "We're looking to continue those conversations to deepen our relationships with customers and selectively look at new customer relationships."

Lisa expressed that it can be easy to get lost in the numbers on a balance sheet. What is not expressed in quarterly earnings reports and mere numbers, however, is the underlying mindset that leads to sustainable growth. This point was echoed by Mark, who said Western Alliance has built a strong customer base and rapport with players from

areas of growth."

that

seen

ter two and beyond just reaffirms

stressed how the group continues to

"Accountability

already

across the field.

"We have a reputation for delivering consistently for our clients," he Western Alliance Bank: Continues on pg. 8

November 2023 Originate Report 7

Western Alliance Bank: Continued from pg. 7

said. "We receive a steady stream of

referrals

from

our

existing

customers which only strengthens our credibility in the marketplace.

An extremely important ingredient for our success, though, is the team that stands behind Western Alliance every day. Whether a customer needs to get a wire out at the last minute or needs assistance with something as routine as pulling a bank statement, we often joke that our customers come for the loans but stay for the customer experience."

When

thinking

about

today's

competitive marketplace, Lisa said she is often surprised at how many new customers who come to Western Alliance have already met with others in the space.

Lisa Alberti and Mark Roberts

"Clients will often approach us having already been to five or six other groups. They feel like no one speaks the same language as them,"

diligence and follow-through. While

she said. "We understand the inner

What is continuously expressed to

some lenders only focus on the

clients is the mantra that Western

speed of deal flow, Western Alliance

Alliance stands behind its word.

workings

of

these

complicated

deals, and our external partnerships with groups like Geraci allow us to tap into an extensive professional network at an enterprise level. We

prioritizes efficiency and attention to detail.

"It's not just about making promises; it's about keeping them," Lisa

"We are always looking at the

said. "This commitment is shown

factors

deal

in our diversified banking portfo-

flow," Mark said. "This includes

lio where we serve a wide range of

asset class, geography, and market

clients with unique financial needs.

concentration. When we meet with

Our ability to see a process to com-

our customers, we want to impress

pletion is evidence of not only our

An important element of this ever-

on them that we are viewing the

outstanding staff but the underlying

evolving customer/bank relationship,

landscape from a bird's eye and

principle of dependability in place

Mark said, is the importance of due

boots-on-the-ground perspective.”

at Western Alliance."

feel comfortable with our clients because we know what they do. And we take the time to get to know them and learn what they desire from the customer/bank relationship."

8

that

can

influence

Western Alliance Bank Note Finance Team

In addition to this emphasis on

lending loans that measure how

matters, Lisa added. At Western

transparency,

Alliance's

much borrowers can advance. When

Alliance, technology is not just a

dedication to clients is shown through

we look through a historical lens,

tool – it is a means to enhance the

an investment in technology. With

tasks that used to take a full day can

human touch. This is shown through

words such as 'AI' and 'automation'

now be accomplished in a half hour.

the bank's strategic use of tools to

buzzing

banking

What we want to be keenly aware

industry, Mark said it is imperative

of, though, is how we are utilizing

to focus on the products that foster

technology without over-relying on

an environment of forward thinking

algorithms. That mindset can lead

and consistency.

to a false sense of positivity about a

Western

around

the

deal – and not consider the human "At Western Alliance, we have been

element of a transaction."

investing in technology that makes more

While technology does play a pivotal

efficient and beneficial," Mark said.

role in modern banking, it is the

"This

way tools are harnessed that truly

our

customers' includes

processes our

asset-based

streamline operations and create meaningful connections with clients while

preserving

the

essential

element of personal interaction.

"Technology is very important for speed and efficiency," she said.

"Because of the nature of our business, though, there are very few products that can be purchased Western Alliance Bank: Continues on pg. 10

November 2023 Originate Report 9

Western Alliance Bank: Continued from pg. 9

off the shelf. We have to start from scratch and build proprietary tools that improve our workflow and client

relationships.

We're

also

always thinking ahead to the next step, and how we can improve tools to make them smoother – both internally and externally."

Just as technology platforms ebb and flow out of popularity, Mark added that some entrants to the space lack the expertise and awareness to gain traction. Western Alliance's commitment to innovation not only shows their grasp of customer needs but

Western Alliance Bank’s foresight and ability to make informed decisions, combined with a commitment to transparency and strong communication, have proven to be invaluable assets, ensuring that the institution

that the bank is here for the long run.

remains at the forefront of

"What we see in the space, often, is

innovation and financial stability.

groups jumping in and out of lending.

This is not our approach," Mark said. "We have the staying power and ability to take on whatever the market throws our way. Our team of dedicated professionals on the lending side of the equation wakes up every day and focuses on nothing but private lending. That is a key reason we are successful."

the pulse of what is happening on a

"Our journey through the turbulence

larger scale. We often meet with cli-

of the first quarter was a testament

ents two or three times a week, and

to the power of experience and tech-

because of this high-touch, hands-on

nology working in harmony," he

mindset, we can share that informa-

said. "Our track record provided a

tion with clients in real time. This

bedrock of stability, while our com-

Consistency and commitment are the

doesn't only allow us to maintain

hallmarks of Western Alliance Bank's

transparency, it also lets clients feel

approach to lending. In a market sometimes marked by fluctuations and uncertainties, their steadfast focus on private lending – and utilization of market-wide data – sets them apart from the competition.

as though they are an active stakeholder in the bank's success."

Where there are periods of success, however, there also are times of doubt. This is not a justification

mitment to embracing new methods allowed us to adapt and thrive in these challenging times. It's not about choosing one over the other; it's about finding the balance that enables us to deliver exceptional value to our clients. It's an age of rapid change, and we have found synergy between learning from the past and

"We have access to data from across

for ‘hiding behind the phone,’ Mark

our products and the industry as

stressed, adding that communication

a whole," Lisa said. "In addition to

becomes paramount when navigating

Despite

our portfolio, we have a finger on

market concerns.

with navigating less-than-optimal

10

keeping our eye on the horizon." the

difficulty

associated

Mark Roberts

Lisa Alberti

conditions, Lisa said there is much

and experienced staff – will continue

one of the country's top-performing

to learn from what many would

to support lasting relationships.

banking companies.

"We continue to stress to our

Its

consider a negative situation.

"Periods of strain on the banking sector offer invaluable lessons. They remind us of the importance of adaptability, the need for commitment to our clients, and the power of innovation in times of strain," she said.

"These challenges become growth opportunities, and they show the en-

customers that our commitment is unwavering and constant," Mark said. "We are not just a bank; we are your financial partner, standing in your corner through ups and downs.

Your goals are our goals, and your success is our success. We're here, ready to listen, adapt, and provide

during strength that comes from a

solutions

dedication to excellence, trust, and

because when it comes to financial

the pursuit of lasting partnerships."

journeys, we're with you every step

that

empower

you,

primary

subsidiary,

Western

Alliance Bank, Member FDIC, offers an array of solutions and services delivered by banking and mortgage experts who put customers first.

If you would like to learn more about Western Alliance Bank or its Note Financing group, visit: westernalliancebank.com/ commercial-corporate/note-finance

of the way."

Looking forward, Mark said that Western Alliance's ability to adapt –

With more than $65 billion in assets,

partnered with a robust balance sheet

Western Alliance Bancorporation is

For more information, please visit: westernalliancebank.com

November 2023 Originate Report 11

CONTRIBUTED ARTICLE

The New Fraud in Town BUSINESS IDENTITY THEFT

By Kat Hungerford, Project Development Manager, American Association of Private Lenders

T

his article was originally

(and should) train your staff against

For private lenders, business identity

pub­ lished in the American

them, educate your borrowers, hire

theft generally looks like this:

Association of Private Lenders’

or outsource cybersecurity experts,

Fall 2023 issue of Private Lender

It’s You, But Not Quite You. You’re

and purchase insurance.

ABC Lender LLC. The scammer has

Magazine.

When

a

fraudster

hijacks

your

Where there is money to be made,

business’s identity – your website,

there is the potential for fraud.

your name, your reputation–it won’t

Always.

be because an employee unwittingly

In today’s digital lending world, the

multitude

of

opportunities

for bad actors to, well, act badly, is ever increasing and ever more sophisticated. You may be familiar with (and have personally seen a time or two hundred) “common” fraud-like borrowers faking income statements, email phishing attempts, ransomware, and elaborate wire transfer schemes.

Most of these require some element of interaction with your business, a knowledge of how things work, and where your weak points are. You can

12

clicked a malicious link or didn’t

cloned your website, ABClenderllc. com, but to a domain (XYZlenderllc. com) that doesn’t remotely resemble your business. They’ve also changed key details within the content of their new cloned site, like your company

properly verify loan documentation.

name (now XYZ Lender LLC), logo,

There is no training or awareness

location, and, of course, contact

campaign that can prevent it because

information and inbound lead forms.

it’s not predicated on any exposure or attack point. It’s entirely external.

What Is Business Identity Theft?

“Imagine you’re at home one night and receive a phone call from a borrower. He asks if you’ll be funding his loan, reminds you of the fee he

The brand colors will still be yours, as is all the content that differentiates you and makes ABC Lender, well, ABC Lender. Your face will probably still be up as the CEO, but instead of John Somebody you’ll be James Someday. And these are scammers, so some of the other pertinent

paid, and wonders why you stopped

details will fall through the cracks

communicating. The problem? You’ve

in their effort to separate ABC from

never heard of him before.”

XYZ: social links still go to you, your

– Jeff Smallowitz, Private Lending Direct

linked to your YouTube), and many

embedded videos are still up (and

of the internal pages will still have ABC-identifying information.

The fraudster will have spun up a host of fake social media accounts for brokers and real estate agents, planted them in popular online groups and forums, and have them make referrals and friendly recom-

As our industry grows and gains credibility among borrowers and investors, private lenders must proactively guard against a concerning new digital risk.

mendations to drive borrowers to the cloned site. The cloned site looks legitimate, because it was, up until it was stolen.

It’s All You. These scammers aren’t just stealing your hard work to make themselves look and sound legitimate (with breadcrumbs that lead alert borrowers back to you).

dollars into application fees, down

Enter AAPL

payments, underwriting fees, pre-

In all but one case (the private

closing fees, this-fee-I-just-made-up fees, they also (finally) get desperate enough to start digging.

Their goal is to defraud people using your business, your name, and

In the cases we know of, borrowers

your reputation. You’re ABC Lender

landed in front of the “real” private

LLC; they’re ABC Lender LLC. Your

lender by:

site is at ABClenderllc.com; theirs is ABClenderllc.net. You’re John Somebody; they’re John Somebody. Your site looks exactly like their site (except location, contact information, and inbound lead forms).

It’s So You, It’s Actually You. One lender, Jeff Smallowitz, didn’t have a website to clone. But he has a longstanding reputation in the business, is well-known in local investment groups for face-to-face lending, and has a California Finance Lender License (which is likely how the fraudsters found him). Scammers built a website with their phone number,

1. Clicking through the cloned site

lender who didn’t have a website), by the time the borrowers found the “real” lender, that lender already had a heads up on the situation. This is because, in every case, the lender was a member of the American Association of Private Lenders and prominently displayed the member emblem on their site.

to find out where to blast them on

Either because fraudsters don’t real-

Google Reviews or social media.

ize what AAPL is or are hoping to use

2. Google searching the business name to land on the real site to send angry emails and phone calls.

3. Skip-tracing a home phone number using information on the cloned and/or real lender site.

4. Process serving a lawsuit.

Universally, these borrowers had not yet realized the lender was also a

but his name, his company… and his

victim of fraud and that the scammer

home address.

and lender were not the same. Many of them hadn’t yet realized they’d

And Then the Shoe Drops

fallen victim to a scam at all, still

When a borrower gets desperate

believing the situation could be fixed

enough after sinking thousands of

and their money returned.

our credentialing to earn the trust of unwary borrowers, when these bad actors clone a site, they leave our emblem in place. And savvier borrowers will reach out to verify membership and potential red flags. We in turn check against known contact information, help borrowers understand the indicators that demonstrate they are not actually working with ABC Lending LLC or John Somebody, and then direct them to fraud victim recovery resources.

Then we send a very bad news email to our member, along with next steps to get the fraudster site shut AAPL: Continues on pg.14

November 2023 Originate Report 13

AAPL: Continued from pg. 13

down (See DIY Fraudbuster Guide).

But that takes time, sometimes months (if we’re successful at all).

In the interim, lenders must deal with a 1-2-3-4 punch to their time, reputation, budget, and sometimes personal lives.

On finding fraudulent activity, they

the faster we can react, the more

have Fastlane processes to rapidly:

time, effort, and money fraudsters are forced to put into the scheme.

Eventually they give up and move on to an easier target.

Long term, preventing and reacting is a powerful weight in our favor

When we point out that every business identity theft victim we know of was also displaying our member emblem, we’re aware this is the definition of confirmation bias.

How many fraudsters removed the emblem from a cloned site? How many borrowers never reached out to verify membership? How many members are not displaying the voluntary)

credentials?

How many more private lender victims aren’t AAPL members?

• Inject decoy data into scammer phishing forms, hiding victims’ “real” data in a bunch of looks-

quickly to crack down on fraud

It’s Not Enough

(entirely

monitor for potential threats and

against new regulation or licensing requirements. Scammers don’t care if they are defrauding businesses or consumers. When an industry becomes a haven for fraud, the government has historically proven that they view the easiest method to “protect the public” is to require a license to practice.

real-but-actually-fake information.

• Have web browsers place “go back!” alerts on fraud sites.

• Take down fake social media profiles that directly refer borrowers to the fraud site.

• Take down the fraud site via the site registrar and/or host­ing provider.

This multipronged monitoring and mitigation brand

approach

protection

means

that

specialists

can

You Don’t Need to DIY

usually find and remove fraudulent

(and Probably Shouldn’t)

activity within days, if not hours, and

Where there is fraud, there are people

often before anyone falls victim to

who make it their business to fight it

the scam. These services range from

(literally). Online Brand Protection The larger picture issue here is

software-as-a-service

is a growing sector of cybersecurity,

that technology makes this scam

encompassing

touch/monitoring required from the

easy to perpetuate. It’s easy to buy

domains, social media, mobile apps,

domains, clone websites, and replace

and the web.

monitoring

for

information. Many bad actors have backup copies ready to spin up

In our industry, it looks like coun-

when a cloned site is shut down.

terfeit monitoring, but for content

Most of these scammers operate

and brands rather than knock-off

internationally in countries known

products. Companies specializing in

for ignoring this kind of activity, so

these services use machine-learning

there’s little permanent recourse.

technology to:

Simply

put,

mitigating

business

identity theft is like playing a game of whack-a-mole.

• Create domain watchlists so brands don’t have to purchase every iteration of their name.

with

high-

user to all-inclusive packages with human-reviewed alerts.

Enter AAPL (Again) As the oldest and largest association for the private lending profession, we have a responsibility to be aware of everywhere our name is used and where our logo and member emblem appear. We must be proactive in safeguarding the industry by shutting down fraudsters pretending AAPL membership to gain borrower trust and by stepping up monitoring so

The solution is to make things less

• Monitor for site cloning and

easy, more uncomfortable, and even

social media impersonation.

we can alert members to potential

outright inhospitable for scammers—

• Monitor for usage of protected

business identity theft and other scam

both for individual fraud events and

images (like trademarked logos

activity. We cannot rely on victims to

as an industry. The more we can

and emblems).

be our canary in a coal mine.

14

To that end, we researched, interviewed, and vetted more than 20 of the top online brand protection providers. Several work with financial services clients and hit the right blend of technology and account management. Ultimately, there is only one we feel confident can meet most of our members’ needs across service offerings and price point.

Gather Intel There are several providers for these tools. Below are recommendations that tend to have more complete information.

1. Find the registrar of the scam site by searching the domain at lookup.icann.org/en.

• The search result may include an abuse contact email or phone number.

• Otherwise, search the registrar's website for abuse notification process.

2. Find the IP address of the scam site domain using “Website to IP Lookup” at NSLookup.io.

Allure Security (alluresecurity.com)

• Search the resultant IP address at search.arin.net.

will monitor not only AAPL brand

• On the ARIN results, find the abuse team contact information for the site’s hosting provider.

assets but also member site content.

Allure Security also understands the importance of reacting quickly to protect lenders and borrowers when business identity theft occurs. As part of its partnership with AAPL, Allure

Security

will

take

down

members’ first cloned site.

proactively take advantage of a 30% AAPL Member Discount on Allure Security services that include advanced domain and cloned site monitoring, blocklisting from search engines, data decoy injection into phishing forms, and social media AAPL

receives

no

compensation or affiliate fee.

Locking down your brand assets will protect your reputation and prevent diverting untold resources to respond to

threats

gained

a

after

they’ve

foothold.

already

Importantly,

doing so will also contribute to a broader effort to make our industry a safe, trusted place for borrowers, investors,

service

• Links to referring social media profiles • Links to social media forums and/or groups • If via internet search, what search engine and term(s) Build Your File 1. Keep track of affected borrowers • Name and contact details

We also encourage members to

monitoring.

3. Ask borrowers how they found the fraudster site.

providers,

and

lenders to conduct business. Reach us at contact@aaplonline.com for more information and to get started today.

• Amount they were each defrauded • How they found the fraud site • Where they have submitted complaints • If their complaints name you/your business 2. Document the fraud site.

You may consider an all-in-one site archiving software like Stillio (stillio.com), Pagefreezer (pagefreezer.com), or TrueScreen (truescreen.com) • Site screenshots that include the domain • Video recordings of a screenshare as you navigate the fraud site 3. Track where you’ve reported (see below) Report, Report, Report Your goal here is to make law enforcement aware of (and proactively protect yourself from possible recourse), stop referral traffic, and take down the fraudulent site.

1. Government agencies and law enforcement • Attorney General—Your state and fraudster’s “business location”: https://www.naag.org/find-my-ag/) • Federal Trade Commission: https: reportfraud.ftc.gov AAPL: Continues on pg.16

November 2023 Originate Report 15

AAPL: Continued from pg. 15

• US Cybersecurity and Infrastructure Security Agency: email phishing-report@us-cert.gov • Federal Bureau of Investigation Internet Crime Complaint Center: https://www.ic3.gov/Home/FileComplaint 2. Report abuse to domain registrar and website hosting service.

Each provider will have their own reporting methods.

Common methods:

We do not receive compensation or any affiliate fee for members who enlist their services. Reach us at contact@aaplonline.com for more information and to get started today.

Allure Security Both members and non-members may sign up for a free trial at https://alluresecurity.com/aapl.

1. Domain and Web Impersonation Monitoring (We recommend this for most members.)

• Similar domain detection

• Abuse phone number, form, or email from ARIN search results

• Web beacon deployment (advanced cloned site alert)

• DMCA takedown notice

• Data decoy injections into phishing forms

• Additional international resourc­es via the World Intellectual Property Organization (https://www.wipo.int/members/en) 3. Report referring social media profiles.

• To the platform Most providers will have some kind of abuse/report button for posts and profiles.

• To the group/forum Message the group/forum moder­ators to block the profiles and request they alert their members.

• Blocklisting from web browsers, email services, etc.

• Fraud site take down 2. Social Media Impersonation and Monitoring (brand and/or company executives) We recommend this for larger lenders or lenders who have previously experienced impersonation attacks.

• Monitoring on Facebook, LinkedIn, Instagram, Twitter • Profile take down Kat Hungerford is executive editor of Private Lender

4. Report for blocklisting in web browsers and email services:

magazine and dig­ital project manager at the American

• Google (used by Chrome, Firefox, Safari): https://safebrowsing.google.com/safebrowsing/ report_phish/?hl=en

tions, project management, and market­ing. Hungerford

• Microsoft (used by Edge and IE): https://www.microsoft.com/en-us/wdsi/support/ report-unsafe-site-guest Alert Others 1. Create a quick-reference sheet based on this Guide but with specifics of what to report and where to go.

• Fraud site information

Association of Private Lenders. She specializes in operaalso acts as secretary for the association’s Government Relations Committee, which serves as AAPL’s advocacy arm in Congress and state legislatures. AAPL is the oldest and largest national organiza­tion repre­senting the private lending profession. The association supports the industry's dedication to best practices by providing edu­ cational resources, instilling oversight processes, and fighting regulatory encroachment.

• Specific pages where phishing occurs • Registrar, hosting, and social media reporting links 2. Send your quick reference to affected parties.

• Anyone whose logo or name also appears on the cloned site • Defrauded borrowers • American Association of Private Lenders We will pass your sheet on to borrowers who reach out to us directly.

Engage Expert Help AAPL Members receive a 30% discount off all Allure Security services. We have engaged Allure Security for AAPL brand and limited member site monitoring.

16

Kat Hungerford Project Development Manager American Association of Private Lenders https://aaplonline.com/

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November 2023 Originate Report 17

PRIVATE LENDING TITANS

PRIVATE LENDING

TITANS

Sarper Beyazyurek Principal, Churchill Real Estate

18

Q: What excites you about your role today?

I am excited to keep identifying and building opportunities for Churchill’s long-term growth. Churchill originated a total of $5.4 billion in 2022 and emerged as the only non-bank real estate finance company with the ability to originate, finance, and manage residential and multifamily real estate assets nationwide across strategies and products. I am proud of our ability to serve as a leading provider of flexible capital solutions to our borrowers across the U.S. residential real estate sector.

Q: Can you explain a time where you faced adversity or had

Sarper Beyazyurek Principal Churchill Real Estate

Q: Why did you choose Private

been fragmented and under-insti-

Lending?

tutionalized. Given banks are not as

I have been in the lending and

active in private lending due in part

financial services sector for most of

to complexities surrounding construc-

my career. Prior to joining Churchill in 2019, I spent ten years at Wachovia (now Wells Fargo) focusing on the highly regulated and competitive consumer mortgage space.

The opportunities in the private lending space are enormous, and Churchill is a leader in providing flexible capital to the U.S. residential

struggles early on in your career?

Where did it all begin? How did these experiences mold and shape you into the leader you are today?

I started my career in the mortgage business right before the Global Financial Crisis. I observed the entire mortgage industry meltdown, the collapse of businesses that no one would have ever expected could fail,

tion, loan management, and other is-

and, most importantly, witnessed

sues, we see an attractive opportunity

what it was like for so many people

in private lending today to create new

to lose their jobs. Managing the start

investment classes within residential

of my career through a tumultuous

real estate and deploy institutional

cycle taught me how to manage risk

capital into a space that has not yet

above all else.

reached full maturity.

Q: Is there anything that you wish Q: What is your current role and

real estate sector. As a private non-

what do you do day-to-day?

bank lender, Churchill is in a unique

I am a Principal at Churchill responsible

position to drive innovation within

for business development, risk manage-

an asset class that has historically

ment, and portfolio management.

you could go back and tell yourself at the beginning of your career?

Luckily, looking back on my career so far, I have no major regrets. I Sarper Beyazyurek: Continues on pg.20

November 2023 Originate Report 19

Sarper Beyazyurek: Continued from pg. 19

have been fortunate enough to be surrounded by great people and mentors throughout my career who have made a significant difference in

my

career

development

Churchill's edge within the highly competitive market in which we

and

trajectory. While I definitely have made some mistakes and learned important lessons from them, they collectively made me the person and

operate is its wealth of proprietary data and comprehensive technology platform,

professional that I am today, and I

which underpins the entire business and

wouldn’t wish to change that.

Q: Who is someone that has had a significant effect on your career and why?

There are multiple people across

drives scale. The firm’s multiple lines of business also differentiate us from most

different phases of my career who have made a substantial positive impact on me. A good friend of mine, Fred Barros, gave me the opportunity

to

work

at

KPMG

banks and lenders in that they allow us to finance both small balance and large

consulting right out of grad school.

That role exposed me to many types of businesses and taught me how to work with different kinds of people across a large organization.

Later, Serkan Erikci brought me to Wachovia, which eventually became

balance residential housing programs, providing opportunities for investors that other managers cannot provide.

the Wells Fargo Mortgage Finance team. Serkan taught me how to maintain the fine balance between

leadership, and experience-driven

business, which allows me to be far

approach to calculated risk-taking

more creative in finding flexible

inspired me to join them at Churchill.

capital solutions for our borrowers.

Q: What has been your favorite

Q: What would you consider to be

Travis Masters, who respectively

aspect of being in private lending

the highlight of your career thus

taught me how to best structure a

over the years?

far?

deal from a business perspective

My favorite aspect of working in

The highlight of my career so far has

and how to leverage analytics to be a

private lending is that the sector is

undoubtedly been the opportunity

strong programmer. Their guidance,

not as heavily regulated as consumer

to help drive the successful growth

risk and return and how to manage the competing needs of our internal risk management team and our borrower clients. There, I met my current partners, Derrick Land and

20

of Churchill over the last few years.

to finance both small balance and

portfolio to maintain integrity for

Looking forward, the firm is well-po-

large balance residential housing

our borrowers, investors, employees,

sitioned to pioneer new investment

programs, providing opportunities

and counterparties.

opportunities and provide access to in-

for investors that other managers

vestment classes for its investors that

cannot provide.

Q: What advice would you give to

other asset managers simply cannot

someone who has just started out Q: What tools do you use to

in private lending?

aid you in your role to be most

Always be transparent and tell the

Q: What do you enjoy most about

efficient, organized, and focused?

story as it is rather than offering a

your job? Least?

Technology is integrated into the

spun-up sales pitch. Maintaining a

What I enjoy the most about my job

physical spaces of Churchill’s offices,

high level of integrity for investors,

at Churchill is the freedom it grants

enabling real-time reporting, real-

employees, counterparties, and cli-

me to think outside of the box and

time performance monitoring, and

ents by providing honest feedback,

implement creative solutions for our

real-time risk management. Each

especially in challenging situations,

clients in a collaborative environment.

vertical across the firm shares key

goes a long way toward building trust,

information

which is paramount in this industry.

provide, which is an exciting prospect.

and

data,

enabling

Q: Is time or money more valuable

Churchill managers to be better-

and why?

armed investors, fiduciaries, and asset

Q: How will private lending change

It’s hard to say whether one is more

managers. We leverage proprietary

to adapt to the current market

valuable than the other, but my

data platforms to synthesize data and

trends?

approach to maximizing both is to

report performance in real time for

Change is all about risk versus re-

take the long-term view. Some of

all parties which gives us proactive

turn. Investors deploying billions

my

current

which

and institutional risk management

into the space want to be able to hit

can’t

be

many

capabilities. Our programs allow

their hurdles, so the assets will need

years to cultivate. Similarly, in this

for

making

to generate attractive returns. To do

business, you have to make financial

throughout all aspects of a loan

so, private lenders have made adjust-

investments without expecting an

lifecycle by facilitating relationships,

ments for not only underlying note

immediate

having

reducing complexity, and accelerating

rates, which have increased from 6%

confidence it will pay off in the end.

approval times while incorporating

to 11% over the past year, but also

real-time risk management.

to tighten up the credit box, focus

relationships,

purchased,

return,

took

while

streamlined

decision

Q: How do you make sure your

on more experienced borrowers, and

company stays ahead in this

Q: Has your role changed

decrease their leverage. We are also

industry?

significantly to address the

seeing rating agencies showing in-

Churchill's edge within the highly

current environment?

terest in rating short-term residen-

competitive market in which we

While market conditions are always

tial transitional loans (RTL), which

operate is its wealth of proprietary

changing in real estate, one of the

will be a big milestone for the asset

data and comprehensive technology

core skills of my role will always

class and help attract more investors

platform,

the

remain the same: the ability to

into the space.

entire business and drives scale. The

analyze data to understand the

firm’s multiple lines of business also

current state of the market, make

differentiate us from most banks

an educated guess as to where it’s

and lenders in that they allow us

heading, and proactively manage the

which

underpins

For more information, please visit: https://churchill-realestate.com/

November 2023 Originate Report 21

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22

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November 2023 Originate Report 23

FEATURE ARTICLE

Diversification and Strong Leadership Guide Constructive Capital to New Heights

By Nick Georgandis, Contributing Writer for Originate Report

“T

he beauty of empowering others is that your own power is not

diminished in the process.”

— Andrew Carnegie If major players in private lending have learned anything in the past few volatile years, it’s that the only thing you can count on is change.

2022 was known as the year of the skyrocketing interest rate, and this year has presented its own challenges. The companies who are not only surviving but thriving in this environment all exhibit similar characteristics: a product array that addresses the needs of the industry and a leadership mindset that can help their teams stay the course.

“Our market remains challenging because of the fact that important factions

Ben Fertig President, Constructive Capital

24

of

liquidity

are

going

to, for the most part, stay on the sidelines,” said Ben Fertig, President

at Constructive Capital. “What you

“It started with diversifying our cap-

An Environment of Empowerment

are seeing is a lot of the fixed income

ital sources for debt service coverage

Being one of the largest players

or bond-related liquidity not coming

ratio (DSCR) loans. That allowed us to

with a great product offering might

back to a healthy level. That’s not

lock in our cost of capital for extended

seem

time periods.”

to

exactly a new story, but a story that has been seemingly refreshed throughout the year. Everyone had thought the rate environment was going to taper, but that’s not what

•

Rental loans in the form of long-term financing for singlefamily and multi-family rental

•

Short-term financing (Fix and rehabilitation of single-family

– one being Constructive Capital.

Originate Report recently had the opportunity to speak to Ben Fertig, President at Constructive Capital, to talk about his firm’s true source of differentiation.

Industry-Leading Moves Since coming on as president of Constructive Capital in September 2017, Fertig has learned that the only consistent thing in the industry is the lack of consistency. Their answer to that challenge has been to make sure they are never caught holding just one position. Almost adverse to “status quo,” Constructive is continuously pushing boundaries to see what it can accomplish.

during

an equally important reason lies in

several prominent companies in

opportunities to diversify and grow

success

products:

Flip loans) for the purchase and

are many players who have found

Constructive’s

advantage

the company and the market suggests

the dissolution or consolidation of

taken its toll on the industry, there

built-in

Today, Constructive offers three main

properties and portfolios,

the space. While the market has

a

uncertain times, but a closer look at

we’ve been looking at.”

These recent events have led to

like

and multi-family properties, and •

Lines of credit for clients who are interested in frequently fixing and flipping homes.

loans.

After

the

company funds the loan, it may sell it on the secondary market to investors who package it with other mortgages to sell as mortgage-backed securities or to a life insurance portfolio. This essentially turns Constructive into a financial intermediary, which greatly assists in making money available in the market for new mortgages and increases

liquidity.

Constructive

also services the loans through collecting mortgage payments and maintaining escrow accounts. This ecosystem creates a nice synergy with

Constructive’s

third-party,

white-label funding business.

Constructive’s

levels throughout the firm.

Leadership can take many forms in the dynamic business world.

For Constructive, their industryleading status was developed from the inside out. Because Fertig and his management team confidently lead their staff on a daily basis, there is a foundation to lead their

Constructive offers wholesale and correspondent

the leadership mindset found at all

diversification

clients through the private lending process. Managing Director Alex Offutt, Senior Vice President Tess Siwa, and Vice President Darryl Shelton are all critical members of the management team that inspires and leads Constructive daily.

“My belief is that leadership and management are two distinct systems of action. It's very difficult to guide a team through a tough market through just management. You need to be a leader,” Fertig says. “From a leadership standpoint, we focus on ensuring the right talent is in the right seats and empowering them.”

Constructive,

ef-

forts have propelled the company “In 2021, we diversified our sources

forward in recent years, solidifying

of capital and liquidity,” Fertig says.

it as a market leader.

with

its

115

staff

members, averages 700+ loans per month. Fertig emphasizes that hiring employees capable of this level of Constructive Capital: Continues on pg. 26

November 2023 Originate Report 25

Constructive Capital: Continued from pg. 25

efficiency in a niche market like private lending is no easy task.

“We built our company to outperform when the market is really difficult,” Fertig says. “Our team utilizes innate critical thinking skills to adapt and succeed in the most difficult times.”

Continuous improvement and in­ novation coupled with the desire to build strong, lasting relationships with their clients allows Constructive to deliver an exceptional experience from beginning to end.

Ben Fertig

Leadership Through Tech A diverse offering is not only where Constructive

leads

the

charge.

The company offers an all-in-one client-facing portal tailored to each client’s individual needs and the feedback they provide. This docu­ ment management system is fully integrated with Constructive’s loan origination system and is powered

“There is always going to be an

continues to push the envelope in

analog element to loans in our

both the quantity and quality of

business,” says Fertig.

loans in the private lending sector, with no plans of slowing down.

“We focus on technology to support our clients and our products, but

“Constructive has grown and picked

we’re never going to be a fintech

up market share as the conditions

company that fails to prioritize

have gotten more difficult,” Fertig

Encompass software, an end-to-

earnings and relationships. That just

says. “I think that our relative per-

end digital mortgage solution. This

hasn’t worked in our space.”

formance has a positive correlation

by

ICE

Mortgage

Technology’s

to how difficult the market is. It’s

plat­ form helps ease new clients into the headspace of working with

What’s in a Name?

a private lender.

Constructive Capital chose its name for several reasons, chief among

While leveraging technology to

them being its connection to the Lat­

min­imize errors and expedite the

in word “constructus,” which means

application-to-approval

is

organizing parts in a particular place

a crucial aspect of Constructive's

and order. This perfectly reflects the

business model, Fertig believes

challenges faced in the ever-chang-

that automa­ tion will never fully

ing world of private lending. Under

replace the value that people bring

the guidance of Fertig and an impres-

to the process.

sive leadership team, Constructive

26

cycle

not easy for anyone, but we are still going strong.”

Spoken like a true leader in the industry.

For more information, please visit: https://www.constructiveloans.com/

Stable, reliable capital with unmatched execution

85% of our 1Q fundings closed within 20 days of application

833-208-1442

Rental and fix & flip loan products in a variety of term lengths

Competitive rates and a 21day rate lock

ConstructiveLoans.com

November 2023 Originate Report 27

CONTRIBUTED ARTICLE

I

By William J. Tessar, CEO, CV3 Financial Services

had the privilege of coaching

a camaraderie through hard work,

team’s success, advocate for their

boys’ football for 14 years and

teamwork, celebrating successes, and

wellbeing, and create a platform

have come to learn just how

overcoming failures.

for their voices to be heard, you

closely the strategies for football parallel the strategies for building and running a business. Whether you are a sports fanatic or not, putting an offensive and defensive strategy into play will help you establish the

foundation

that

sets

your

organization up for success—and the common denominator for both strategies is putting people first.

came

different

levels

me invaluable lessons on being proactive and protective. These lessons, which apply today and have produced incredible results over my 40 years in lending, collectively amount to the dos and don’ts of organizational leadership.

The top five offensive and defensive

With each new season of my coaching tenure

will create a mutually reciprocated The experience of coaching taught

of

talent and experience to the team.

While the varying skillsets may have impacted our scores, one thing was always consistent year after year: an unwavering purpose for why we

strategies I have learned, on and off the field, for building a company from the ground up are:

OFFENSE • Exercise a people-first mentality.

The power of your business lies

respect and commitment that no job description can define.

• Surround yourself with positive influences. If you are the only one in your organization to have a people-first mentality, you bear the responsibility of spreading that mindset. Be selective and pick the right people who will foster that mentality, because when executives commit to it, managers commit to it, and direct reports commit to it.

The trickle-down philosophy is no longer a mentality; rather it becomes a movement. The commitment to

within the people that make up

consistent connection and involve­

your organization. As a leader, it

ment is a long game, but with the

and advanced players all united

is imperative that you genuinely

right people leading the way, it

under the shared philosophy that ‘We

operate with your people as a

eventually becomes an unspoken

are in this together’, and they built

priority. When you champion your

love language of the organization.

were there. Beginner, intermediate,

28

• Collectively create core values.

ears and one mouth for good reason…

your business, so listen, but don’t be

Your company’s core values should

use them proportionately.

distracted. Remain unflappable to the thousands of different views in

be ones that each member believes in and will live by, both in and out of the office. Create your core values to be more than a façade; create them to exemplify a way of life and a guiding compass unique to your business and team. Make this a collaborative process, welcome ideas, and socialize your selected values so they become engrained in your team’s everyday life.

• Have a “customer for life” approach. The embodiment of a relational busi­ness is when you view your clients, as well as your team members, as a long-term investment by investing in them as people.

True customer service begins at ‘hello’ and ends never, and, with a servant approach, the relationship will evolve as a partnership and not a deal. If you lead with a relational mindset and translate that into running a business, you will have a winning long-term strategy that evolves into business prosperity.

• Take extreme ownership. No matter what mistakes are made within the organization, as the leader, the buck stops with you. Own it.

DEFENSE • Embrace constructive criticism.

The open-mindedness to receive constructive criticism is instrumental to true growth. Do not close off your senses to the invaluable feedback

• Don’t fall in love with your own

the marketplace and stay loyal to the

ideas. While great ideas and strong

one that matters most… your team’s.

viewpoints are par for the course, be careful to not become so set in your ways that you miss out on opportunities. For example, COVID brought a huge paradigm shift in the way I viewed it as necessary for everyone to work in the office.

I squirmed when people began to work from home, but their gratitude for feeling safe and being present for loved ones resulted in unspeakable gratitude and increased productivity.

The people’s actions spoke, and my work-in-office position evolved to work-from-anywhere.

• Know when to stop. Don’t succumb to the coziness of your comfort zone. If a person, place, thing, idea, or con­cept isn’t working… STOP it. Having the discipline to stop something despite habits, history, or convenience is a defensive play that is easier said than done, but assuredly a move that

• Inspect what you expect. It’s my belief that constantly evaluating the results of your strategic plan is key.

This means constantly revisiting, pivoting

where

necessary,

and

doubling down when appropriate.

The proper execution of this strategy requires the collective culmination of all four defensive strategies above.

When you can assess your actions and direction with honesty and have the humility to course correct, your organization will have the strongest defense possible.

Offensively or defensively, the foundation of your business is centered around your people. They need to feel like they have a purpose, feel exceptional being a part of your team, and define their ‘why.’

By putting

people first in all aspects of their lives, you will collectively build the bedrock of a solid organization.

will always expand your organiza­ tion to new and improved horizons.

For more information, please visit www.CV3financial.com or reach

• Stay true to your vision. Distrac­

out to the CV3 Financial team at

tions are all around but remember to

info@CV3financial.com.

turn down the noise when it comes to outside influences that weigh you down or deviate you from your vision. Specifically, this means not allowing factors such as other peo­ ple’s business plans, other “expert”

you receive internally from your

opinions about the marketplace, or

organization or externally from your

even antagonistic personalities to

customers. As I used to say when I

impact your shared strategic initia­

was coaching, we were given two

tives. Your vision is what drives

William J. Tessar CEO CV3 Financial Services https://cv3financial.com/

November 2023 Originate Report 29

TRAILBLAZERS

PRIVATE LENDING

TRAILBLAZERS Andrea Propp Knorring

Chief Strategy Officer, Fund Management & Investor Relations, IceCap Group

30

addition to their recently acquired insurance business. I am proud of what we’ve built and to have worked with the team at Geraci to structure these funds.

Q: Where did you get your start?

I started my career at Goldman Sachs in 2010 on the commodities trading floor in Calgary, Canada.

I made my way to New York with GS in 2012, then worked for two

Andrea Propp Knorring

Chief Strategy Officer, Fund Management & Investor Relations IceCap Group

large wall street hedge funds and eventually converted my focus from one hard asset (commodities) to another (Real Estate).

Q: How many years have you been

but in a way that didn’t involve all

in Private Lending and why did

the middlemen. This is how I met

you enter this field?

the Oved Family and their private

I’ve been in private lending for 4

lending business, IceCap Group. I

of the 14 years I’ve been in finance.

joined Joseph Oved and Ezra Dweck

I entered this field after seeing

in 2019 with a vision to launch fund

the opportunity through the lens

vehicles that would provide investors

of a larger asset manager I was

with direct and diversified exposure.

working with. They were buying

Working synergistically with their

residential transition loans (RTLs)

quickly growing business originating

from other private loan originators

mainly short-term, first lien RTLs in

and generating an excellent risk

the Northeast, we launched our first

adjusted return. I liked the short-

fund in August 2020. We followed

term nature (12 to 24 months) and

that with our second fund, a private

the fact that this niche part of the

REIT, in September of 2021, and just

real estate market was serving a very

recently launched our third fund,

important role in addressing the US

IceCap Real Estate Debt Fund III.

housing crisis. I could also see that

We target 13 to 18% net cash-on-

these loans were often originated,

cash returns, which our first fund

sold, and then packaged up in

has delivered on consistently over

various securitizations that found

the last three years. Fund III is an

their way in the portfolios of large

open-ended

institutional pensions, endowments,

with a quarterly investment and

and foundations, but by the time they

redemption period that we plan to

made it to them, there were many

grow to over $100m in AUM in the

layers of spread removed. I quickly

next year, which fits in nicely with

realized that I personally wanted

the family’s existing balance sheet

exposure to these types of loans,

dedicated to longer term lending in

evergreen

structure

Q: What is your current role and how does that affect your company at large?

I am the Chief Strategy Officer, Fund Management and IR, supporting our firm’s ability to originate more than $500M a year, predominantly in short term bridge loans used for more affordable residential and multifamily rehab projects. I manage our funds and investor relationships while also working on interesting opportunistic private deals, either personally or in concert with the Oveds.

Q: How have you seen your company grow in spite of or because of current market conditions?

The last few years have presented many challenges in the form of Covid, rapidly rising interest rates, and general market volatility by way of regional bank instability. Because of our strong balance sheet and family office backing, we’ve been able to continue originating loans Andrea Propp Knorring: Continues on pg. 32

November 2023 Originate Report 31

Andrea Propp Knorring: Continued from pg. 31

and acquire talent through all market conditions while some others in the space have unfortunately atrophied.

Q: What are some of your goals for 2023 and beyond?

To see our business exceed originations of $1B/year and our Funds hit $250M AUM while partnering with the highest quality borrowers and

"Success is all about the double bottom line. There are many ways to make money in this world, but strong monetary performance must also be coupled with doing something to improve humanity and/or the planet in some way, otherwise, I’m not interested."

investors alike.

Q: What does success look like for

— Andrea Propp Knorring

you?

Success is all about the double bottom line. There are many ways

a full development team. This is

finance / investing / entrepreneurship

to make money in this world, but

what has allowed us to punch out-

that I am so grateful to support and be

strong monetary performance must

side our weight class and continue

supported by!

also be coupled with doing some-

to grow our business at a time when

thing to improve humanity and/or

markets have presented their fair

the planet in some way. Otherwise,

share of challenges. This has also

I’m not interested.

helped us keep our portfolios healthy and current with very little by way

Q: What is something most people

of delinquencies.

don’t know about you or your

Q: Tell us about a person or organization you admire. How have they made an important impact on you, the industry, or the world?

Since moving to Austin, TX a couple years ago, I now agree with those who say Matthew McConaughey is

company? What steps are you or

Q: What piece of advice did you

your company taking today to

personally receive early in your

make an impact on the industry?

His philanthropic work is admirable

career that has helped shape

We are relationship lenders. Our team

(Just Keep Livin’ Foundation), and

decisions you’ve made?

actively works with our borrowers

his book Greenlights is filled with

Careers are a jungle gym, not a ladder.

inspiration I think about often. There

There is no linear path to success.

is one quote I often reflect on:

Q: Are you involved in any

“Life is our resume. It is our story

to

avoid

foreclosures

and

keep

their careers on path. We’ve even been known to help our borrowers in situations where they have a foreclosure with another lender. This is a big reason why over 65% of our loans are with repeat borrowers. They like doing business with us because we put them first.

associations, networking groups, or the like that have influenced your career path?

The GS Alumni Network, The Univer­ sity of Calgary Alumni Network, Summit, The Spru Crew, Vibrant Ventures,

We’ve also invested heavily in our

The Microdosing Collective, and my

own proprietary technology and

own personally curated network of

underwriting by backing them with

badass women across various roles in

32

a state (if not national) treasure!

to tell, and we write the chapters.

Can we live in a way where we look forward to looking back?”

Thank you for the opportunity to share a little bit about mine! Many more chapters still to come…

For more information, please visit: https://icecapgroup.com

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90 Discovery, Irvine, CA 92618 | info@lightningdocs.com | (949) 379-2600 | www.lightningdocs.com November 2023 Originate Report 33

CONTRIBUTED ARTICLE

THE CRUCIAL ROLE OF SPEED PROCESS CONSISTENCY IN REAL ESTATE INVESTING

By Alex Offutt, Managing Director, Constructive Capital

“I

feel the need. The need for speed!”

Maverick and Goose said it best in Top Gun all those

years ago. But what they meant wasn’t as reckless as it may sound. Fighter planes have been dogfighting each other in battle (or practice) for almost 100 years, and it is taken as gospel that the greatest advantage a fighter plane can have in a dogfight is speed.

While Constructive Capital isn’t dogfighting MIGS over the open ocean in a Hollywood movie, what we are doing is winning the war on operational excellence for our clients. Lenders and brokers report that loan file velocity is the most important component of a client/investor relationship for them. Speed at every step combined with transparency and communication can offer investors a tremendous competitive advantage and increase the likelihood of a successful outcome.

34

At Constructive, thanks to our best-in-industry Operations team, we have been continuously work­ ing to refine our process of provid­ ing industry-leading turn times for DSCR rental loans.

However, it must be noted that, in this current environment, there are no shortcuts to this level of performance. Just like in the real world, if a fighter plane doesn’t pass all of its pre-flight checks, they won’t clear for takeoff.

Much like a loan moving through our process, we must also make sure that the quality of our loans

“Regardless of whether rates go up or down, and irrespective of what is going happen in 3 or 6 months, our goal has been, and will always be, to provide best-in-class speed and stability to our clients and their borrowers. "

is airworthy. Currently, we are

— Alex Offutt

seeing 57% of our files close in 13 days or less. On top of that, for some of our more experienced, high-volume clients, we have been able to get their loans into closing in five days or less!

The only thing that matters

con­sequences for businesses in this space, underscoring the ne­ cessity of working with trusted partners.

more than speed and execution

This is where the combination

is knowing that your capital

of stability, speed, and certainty

provider will be there when you

of execution matters most. We

need them. We’ve heard from our

routinely hear from our clients,

clients themselves that nothing is

in one way or another, that these

worse than not knowing if your

factors matter a great deal to

capital provider will be there for

real estate investors; knowing

them at closing. As everyone in our

how quickly they can get to the

industry is aware, we currently

closing table overcomes most

find

other considerations.

ourselves

in

uncharted

in-class speed and stability to our clients and their borrowers.

Constructive is dedicated to providing lenders and brokers with bestin-class products that allow them to grow their client base. And while speed wins above all else, we are still maintaining the high standards that have enabled us to achieve this unparalleled combination.

economic waters. We don’t know what rates are going to do. We

Regardless of whether rates go

don’t know what the future

up or down, and irrespective of

holds for credit policy in this

what is going happen in 3 or 6

product class. These unknowns

months, our goal has been, and

can

will always be, to provide best-

potentially

have

drastic

Alex Offutt Managing Director Constructive Capital https://www.constructiveloans.com/

November 2023 Originate Report 35

EN S E R P P

LL I C NOW! A T U R O E G RN FOU

TS

SEASO

A Podcast Brought to You by the Nation’s Largest Private Lending Law Firm Listen on

https://geracilawfirm.com/lender-lounge-podcast 36

February 2023 Originate Report 36

November August 2023 Originate Report 37

FEATURE ARTICLE

Val-Chris Investments

Jeff LaMotte Vice President, Val-Chris Investments

Standing the Test of Time

By Charles Peckman, Contributing Writer for Originate Report

I

n the fast-paced world of non-

regulatory environment and stays

“I think there is a lot to be said for

conventional lending, Val-Chris

on top of trends in the marketplace,

a family-run business atmosphere,”

Investments stands out as a

Originate Report sat down with Vice

LaMotte said. “What I have found

beacon of excellence and innovation.

President Jeff LaMotte, who has been

is that working closely with a core

With over 45 years of experience

with the company since 2009.

group of people allows for a level

in the real estate lending industry, Val-Chris has consistently adapted to

A key element that contributes to

market shifts, employed innovative

Val-Chris Investments’ success, Jeff

approaches, and prioritized a client-

said, is the close-knit dynamic in

centric ethos to create lasting value

place at the firm. Jeff added that the

for borrowers.

mentoring he received – and contin-

of trust that is unparalleled in the industry. We are constantly dealing with complicated situations, and I think a hands-on, collaborative approach leads to the best outcomes for borrowers and the industry.”

ues to draw upon – from President

Part and parcel to this collaborative

To better understand how Val-Chris

Chris Boulter has been instrumental

approach, Jeff added, is the impor-

Investments navigates a complex

in his career.

tance of keeping a keen eye on the

38

regulatory environment of lending.

downturns or a pandemic. Despite

that to stand in the way of acquiring

Laws at the local and state levels of-

these potential negative situations,

and keeping new talent.”

ten change without fanfare and can

Jeff said there are lessons to be

have a lasting impact on investors.

“Understanding who our investors are – and how regulatory changes can impact them – is at the core of what we do. Because we do not run a fund, and our customers are individual investors, we strive to leverage our knowledge and create deals on a personalized basis. There is no such thing to us as a ‘cookiecutter deal.’ Our relationships with groups including Geraci allow us to maintain a holistic view of the lending landscape,” he said.

learned when ‘elements of the market

The mindset of embracing the chang-

are scrambling.’

ing nature of business and workflow speaks to the intertwined nature of

“We learned a number of lessons from COVID-19,” LaMotte said. “Our volume drastically increased because we

doubled

down

and

became

intimate with our investors’ needs.

We found deals with higher yields and lower loan to values, all of which accelerated our growth. In addition to focusing on creating more lasting value for our customers, we also embraced the idea of remote work, which has yet to be seen across the

But maintaining a holistic view of

lending field. If someone makes the

the market, he admitted, can be

decision to move somewhere new

difficult when faced with market

with their family, we do not want

championing the staff and investors, Jeff said. This attention to detail – and care – is a core component of the Val-Chris ethos.

“No matter what business you are in, customer service is a key component for growth and success, period.

Because so many private lenders are smaller shops, this attention to customer service must be amplified.

What I stress to newer people in the field, though, is that you never want to run a business so lean that your customers feel as though you are too busy for them. Especially in lending, where there is trust associated with

“What I have found is that working

capital changing hands, you want to showcase that you are a good

closely with a core group of people

custodian of those funds. We have

allows for a level of trust that is

Chris since the beginning,” he said.

unparalleled in the industry. We are

In a post-COVID world, Jeff said the

constantly dealing with complicated

– while not overlooking the human

situations, and I think a hands-on, collaborative approach leads to the best outcomes for borrowers and the industry.”

— Jeff LaMotte

been embodying that mindset at Val-

continued leveraging of technology element of lending – will yield substantial growth for Val-Chris.

“One of the many lessons we have learned in the past few years is the value of maintaining an agile staff,” he said. “This includes embracing reVal-Chris Investments: Continues on pg. 40

November 2023 Originate Report 39

Val-Chris Investments: Continued from pg. 39

mote work and using the tools at our disposal, like Lightning Docs from Geraci, to integrate our boots-onthe-ground operation with remote employees and stakeholders across the country. Being cloud-based allows us to pull documents and important elements no matter where we are.”

With this ability, though, may come a sense of trepidation. The first quarter of 2023 was marked by uncertainty in the lending space,

Jeff LaMotte with Chris Boulter, President, Val-Chris Investments

but Jeff reiterated that the field – and Val-Chris’ resolve – has never been stronger.

“Our extensive experience in the lending field allows us to draw on decades of experience, including what has worked and what hasn’t,” he said. “Every time we begin the loan process, we are harnessing our

collective

relationship

experience

with

the

and

investor.

Outside of this, we also keep in close contact with what many would

Val-Chris Investments Team

consider our competition. This may sound like a cliché, but being on the same page as others lets us move forward collectively.”

Moving forward, Jeff is excited to be part of Val-Chris’ continued growth.

As the conversation surrounding

“What we are seeing now is in-

To learn more about the services

creased interest in non-conven-

offered by Val-Chris Investments, visit

tional products like using self-di-

https://www.val-chris.com/.

rected IRAs to purchase trust deeds with us,” he said. “These trends, and the curious nature of our investors, allows us to create cre-

private money lending evolves, he

ative solutions and positive gains

said, the group’s track record speaks

across the board. It is an exciting

for itself.

time to be in lending.”

For more information, please visit: https://www.val-chris.com/

40

U P C O M I N G

E D I T I O N S

INNOVATE SPECIAL EDITION If you would like to be featured in any of our upcoming editions, reach out to us at: submissions@originate.report November 2023 Originate Report 41

CONTRIBUTED ARTICLE

HOW TO KEEP YOURSELF OUT OF COURT AND AWAY FROM ME

By Steven Ernest, Esq., Director of Litigation & Bankruptcy, Geraci LLP

M

y boss has told me a few

of Title Insurance (we recommend

waives your collection remedies (for

times

conferences,

125%) of the loan amount. Fraud is

a time) in hopes the loan will one day

“no one has figured out

a bigger topic and will be the subject

begin performing again. You want to

of a forthcoming article (teaser!).

ensure this doesn’t extend too long,

at

how to make money in litigation.”

or you may find yourself unable to

I’m assuming he meant no one other than me. Point taken. So, how can you

Presuming you find yourself with

collect at some point (owing to the

avoid litigation, or ‘lawsuit proof’

a defaulted loan, a way (not recom-

Statute of Limitations).

your loan files? Let’s have a look.

mended) is to just let it go. You can make a forbearance agreement with

You can also modify the loan terms.

The time to start is at underwriting.

your customer. That means you and

This variety of ‘work out’ generally

Fraud is WAY up since 2017, so

the borrower agree that you won’t

involves moving defaulted payments

ensure you know who your borrower

enforce your rights now, and that the

to the end of the loan, waiving fees/

is, that the collateral exists and is

borrower promises (pinky swears

costs/interest, changing the interest

owned by your borrower, and that

this time) that he’ll cure the default

rate, changing the monthly payment,

you’ve purchased the right amount

over a period of time. This essentially

or extending the duration of the loan.

42

(for you) if I had to sue and enforce

also ‘double track’ these cases with

this contract pal, because you’ll have

non-judicial foreclosures.

to pay my lawyer (and yours).” You see, all the fees and costs of litigation get added to the balance owed, so litigation becomes rather expensive for borrowers in default. This might intimidate them into consenting to one of the remedies listed above.

If litigation seems inevitable, have a

Once you get finished winning, there are cost effective remedies (and others not so much) which will find their way to uniting you with your money.

Record abstracts will immediately cause your deficiency balance to attach to all real estate your borrower/ guarantors own (and they cost less than $40). Bank levies can really ruin

careful look at your file. Do you have

your borrower’s day (and get them to

a signed contract? Is the guaranty

you notify all guarantors. They don’t

come negotiate payments with you).

signed? Is the Deed of Trust signed,

Same for wage garnishments.

have to agree, or like it, but they

and does it encumber the correct

must be notified (otherwise you’ll

property? Is your account payment

forever waive your right to collect

history sufficiently detailed that you

from them).

could explain it to a golden retriever?

If you do this, IT IS ESSENTIAL that

If so, make a final attempt at “saber Perhaps your borrower is in a

rattling”, and give the borrower one

substantially worse position and

last chance; or have your attorney do

can’t make any modification work.

it. A last-gasp effort might resolve

He just wants to walk away and toss the keys to you. This is a deed in lieu of foreclosure circumstance.

This will get you title to the property (your collateral) and will avoid the costs and time of conducting a foreclosure. It also waives your right to collect any deficiency against your customer (not so against your

this for you.

If you have to march down to the courthouse, consider at the outset your strategy; it may save you a tremendous amount. Bearing in mind the fees provision in your contract – which really means your borrower is paying for all this – combining remedies into one case will make

guarantor – but again, remember to

the procedure cheaper. If you sue for

notify him beforehand).

judicial foreclosure and add breach

Saving all that, you can use compli­ cated methods (the extraordinary relief – also the subject of a forthcoming article – teaser2). These involve receivership, judgment debtor exam­ inations, keepers (the till tapper), and other exotic remedies.

We are always available to you and excited to help strategize your plan.

Doing so is the only responsible way to manage your asset. If you don’t know where you are trying to go, any road will take you there. All the best.

Do you have questions about how to approach a delinquent borrower?

Geraci’s litigation team is here to help. Contact us today.

of guaranty causes of action in it, Failing any of those pre-litigation

by the end of the case you will have

remedies, there is the time-honored

title to the property, a deficiency

practice of “saber rattling.” Ensure

judgment against your borrower,

your contract has an attorney’s fee

and a deficiency judgment against all

provision. So long as it does, and

your guarantors. You’ll also insulate

so long as you are convinced your

yourself from many of the borrower

position is correct, this strategy can

claims against you and protect from

work. “It sure would be unfortunate

the anti-deficiency rules. You can

Steven Ernest, Esq. Director of Litigation & Bankruptcy Geraci LLP https://geracilawfirm.com/

November 2023 Originate Report 43

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44

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