Originate Report- December 2017

Cities to Watch: San Francisco

DECEMBER 2017

PACIFIC PRIVATE MONEY Northern CA Specialists

in Consumer, Owner-Occupied and Ground-Up Construction Financing See page 7 and visit PacificPrivateMoney.com for more information

THE OFFICIAL MAGAZINE OF GERACI

Inside December

Employees:

Your Best CYBERCRIME

Defense NETWORK

MORE

Should You Be

Managing Your

Own IT?

P2P Lending www.originate.report 1

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ANTHONY GERACI CEO/Editor

CONTRIBUTORS

Letter from the Editor

Max Berger • Anthony Geraci Michael Miller • Harry Singh Synoptek Staff

I can not ask you all to share your stories without sharing my own. In this edition, I

FOUNDING UNDERWRITERS

there are several articles regarding how to improve your marketing, technology as

RUBY KEYS Marketing/Editorial Director

JOHN PELACHE Account Executive

ALICIA CARTER Marketing Coordinator

DAVID BASEN • MAX BERGER Marketing Assistants

PAM HUBER Graphic Artist

write about my childhood, its impact on my life and the ability to be resilient. Also, well as the latest cutting edge lead generation techniques today.

I also want to personally invite you to Innovate 2018, which should be one of the

MARK HANF President, Pacific Private Money

largest conferences in the alternative non-bank lending market. We expect 175

attendees and it will be venued at the beautiful Balboa Bay resort where your peers

will be learning the latest lending trends in the marketplace, the best marketing techniques and the amazing networking of

your peers. I look forward to seeing you there.

I hope your 2017 has been as impactful as

DAVID OWEN

ours has been. I can’t wait to see what the next

CEO, A List Partners

year brings. Happy Holidays!

ORIGINATE ONLINE www.originate.report

GERACI ONLINE www.geracilawfirm.com Interested in advertising in Originate Report? Please reach out to John Pelache at John@Originate.Report or (949) 379-2600

Anthony

For Advertising Submissions, Article Submissions, and Inquiries contact Submissions@Originate.Report

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

GERACI CONFERENCES www.geracicon.com www.originate.report 3

contents DECEMBER 2017

Features

6 What Do Customers Look for in a Loan Originator?

By Originate Report Staff

9 The Financial Risks of Building and Managing IT Yourself

By Synoptek Staff

9

14 Networking: How it can Grow Your Loan Origination Company

By Michael Miller, 5 Arch

16 The First Line of Defense Against

Cybercrime: Employees

By Synoptek Staff

6

Special Features 6 Cities to Watch

San Francisco

By Max Berger, Geraci LLP

10 Personal Essay

A Portrait of Resilience

By Anthony Geraci, Geraci LLP

18 Industry Spotlight

16

10

Bob Eakin- CEO, JCAP Private Lending

22 Trend Report

rivate Lending & Technology: Are We P Ready for Peer-to-Peer Lending

By Harry Singh, Indigoblue Group

24 Upcoming Events 26 Loan Home 4 Originate Report | December 2017

18

www.originate.report 5

CITIES TO WATCH

Cities to Watch:

San Francisco

By Max Berger, Geraci LLP

Y

ou probably don’t need to be told that San Francisco is one of the greatest cities in the world- It’s nearly impossible to avoid exposure to this idea in some form.

Even if you’ve never been there, you’ve likely seen it appear countless times as the primary setting of books, movies and TV shows, as the subject of myriad songs, albums, articles, tourism guides, top ten lists, etc. Landmarks such as the Golden Gate Bridge and Alcatraz Island are permanent staples of pop cultural iconography, and are recognizable the world over. The city is a global industry leader in both technology and finance, not to mention its status as one of the world’s premiere tourist destinations. It also happens to be one of the most uniquely beautiful cities around, seamlessly blending classic Victorian and modern architecture to create a style all its own.

Economy:

• Major industries: tourism, technology, finance, medical research • Minimum wage: $13.00 per hour • Cost of Living: 39% above national average

Housing:

• Median Household Income: $53,353 • Median Home Price: $1,110,800 – 11% increase from last year • Median Rent Price: $4,400

Job Market:

• Forbes List-#22 Best Places for Businesses and Careers • Unemployment: 2.9% • Job Growth from 2016: 4.1%

6 Originate Report | December 2017

Must-visit locations:

Union Square – If you want to go shopping, there is absolutely no better place to visit than the Square in the heart of downtown. With a massive assortment of luxury department stores, shops, boutiques, theaters, galleries, and much more, you’ll never run out of things to do here. Plus, when you’re finished, you can take one of San Francisco’s famous cable cars from the Square all the way to Fisherman’s Wharf.

Fisherman’s Wharf – An immensely popular tourist area on the northern waterfront, the Wharf is home to great food, shopping, and breathtaking views of the bay and its most famous landmarks. Check out Pier 39 and Ghirardelli Square, and try a clam chowder bread bowl from one of the many excellent seafood spots while you’re at it!

Walt Disney Family Museum – For a good time with the kids, pay a visit to a one-of-a-kind museum about the Walt Disney company. With a detailed history of the man behind the legend, theater screenings of classic animations, and plenty of interactive exhibits and hands-on activities, there’s no shortage of fun for the whole family. And don’t miss their new exhibit exclusively for the holiday season!

Dinner – For one of the best recent additions to the city’s restaurant scene, hit up Mister Jiu’s in Chinatown.

Make a reservation at the Zuni Café for some of the best roast chicken around, or try Liholiho Yacht Club in the Tenderloin for delicious Hawaiian-inspired cuisine.

Lastly, Foreign Cinema comes highly recommended as a great outdoor theater/restaurant fusion.

Entertainment – Hopefully you have at least a passing interest in the arts, because the city has some of the best opera, ballet, and theater entertainment in the country.

Certainly pay a visit to the San Francisco Opera if you have a chance (and for the holiday season, don’t miss their stunning performance of The Nutcracker), or see a concert at the world-famous Fillmore.

Nightlife – If you’re still searching for things to do after dark, there are nearly unlimited options for bars and clubs! Stop by DNA Lounge or the Monarch if you’re trying to get your dance on, or pay a visit to Bourbon & Branch or the Alembic for something a little ritzier.

Max Berger is a Marketing Assistant at Geraci LLP.

CONTACT: (949) 379-2600 | m.berger@geracillp.com

www.originate.report 7

FEATURE

What Do Customers Look for in a Loan Originator?

By Originate Report Staff

M

ortgage originators are always looking

Ensure you are always communicating.

nancial situation. A firm understanding of the products

more business. However, with so much

most want the same thing from their loan originator:

reassure them they made the right decision.

for the best marketing techniques to earn

competition in the marketplace, it is no longer enough to have slick advertising materials or a strong social media presence. Originators must understand what today’s borrowers expect from a loan officer.

Here are seven actions that help you earn the respect of homebuyers, home sellers, and the average borrower.

Walk your borrowers through the entire mortgage process.

Most borrowers understand the broader points of obtaining a mortgage, such as how their credit, income,

and assets are the key underwriting criteria used to

qualify them for a loan. However, many are confused by loan-to-value calculations, debt-to-income ratios, amor-

tization schedules, and other mortgage terms. A good loan officer understands how to prepare a borrower for

a mortgage application by walking them through the requirements.

Ask questions and welcome feedback.

From the time you entered the mortgage business, you

probably heard the best way to sell a loan was to ask the borrower what they want in a mortgage. This sim-

ple approach still works. Most borrowers, even if they have bought or sold real estate before, value a loan offi-

cer who understands their expectations. Likewise, loan

While some borrowers need more attention than others, responsiveness. Returning messages promptly and keep-

ing them informed of the process is the best way to

build trust and gain referrals. When a loan originator is not responsive to a customer’s concerns, however trivial, they risk alienating them, or worse, slowing the loan process to the point of cancellation.

Provide exceptional organizational skills.

You have likely run across some disorganized borrow-

ers. However, they still demand organization from their organized in your approach to disclosures, locking rates, and the closing. By letting borrowers see your organi-

zational skills and their benefits, their confidence in you will build and help seal the deal.

Always be honest and direct with your clients.

Always be upfront and forthright in any communication with your clients. Questions should be answered truth-

fully and without hesitation. Honesty is one of the most important qualities to offer, because your client will re-

spect your suggestions and feel confident in the integrity you bring to the transaction.

Be educated and well-informed about the

concerns will help you develop a firm grasp of your

Many borrowers are confused and unsure of what loan

borrower’s expectations.

8 Originate Report | December 2017

From the time you entered the mortgage business, you probably heard the best way to sell a loan was to ask the borrower what they want in a mortgage. This simple approach still works.

Refrain from placing too much pressure on seeking a loan originator. To be successful, you must be your clients. loan officer, and that is probably the reason they are

officers should take heed of the feedback they receive.

Asking a few simple questions and listening to their

you sell builds their confidence in your ability and will

products you offer.

product may be best or even appropriate for their fi-

Many borrowers feel highly stressed when consider-

ing important financial decisions. Don’t add to their consternation by placing more pressure on their deci-

sion-making process. You will always need to address time-sensitive matters, but when offering a loan solu-

tion, demanding the borrower make a decision may

leave them second guessing if they made the right choice in their selection of a loan officer.

Of course, there are other factors that play into a bor-

rower’s decision-making process, but focusing on these

seven essential actions will better prepare you as a loan professional and help you focus on what matters most to your borrowers.

CONTACT: www.Originate.Report

FEATURE

The Financial Risks of Building and Managing IT Yourself

By Synoptek Staff

I

t’s natural to weigh your costs and options before you purchase any major IT equipment or service.

If you expect to extract value from the product or service later, you must understand what circumstances will impact that value, including time, wear, and the indomitable march of progress. Savvy chief financial officers are changing the way they invest in IT, moving away from the traditional capital expenditure (CapEx) model and toward operational expenditures (OpEx).

So, what is the difference between CapEx vs. OpEx? According to ShorTel, “Traditionally for technology investments, CFOs most often preferred capital expenditures over operating expenses because they could take advantage of amortization and depreciation of those investments over an extended period of time. There’s a growing argument, however, that operating expenses (OpEx) have distinct advantages over capital expenditures (CapEx) that have made it a favored investment approach by finance departments.”

The CapEx plan includes:

• Large amounts of cash.

• Error-prone guesswork to estimate future capacity needs for static hardware/software.

• Lengthy and arduous processes to estimate the budget and get it approved.

• Permanent equipment with little or no flexibility in upgrading as technology or business needs change.

With OpEx, you can:

• Pay only for the capacity you need at the moment and scale as requirements change.

• Ease and speed up the budgeting process because short-term spending requirements are less.

• Make multiple investments across the business since capital isn’t tied up in large upfront expenditures.

• Fund expenses faster through operations rather than borrow or divert money from other projects.

• Smooth out cash flows over time instead of requiring lumpy outlays.

As an example of this type of spending, consider a new car. Only in very rare cases do they ever increase in value, regardless of whether you actually drive it. You can cut its retail value by 15 to 25% the moment you drive your new car off the dealer’s lot.

Another example? Consider technology purchases: servers, desktops, networking gear, storage, and more.

Unless it’s plugged in and operating at full capacity the moment you order it, its relative value to your company starts decreasing immediately and will be outdated in less than six months. After a year, the equipment will have cost more in resources through the upkeep and overall maintenance than the equipment is worth; anything beyond another two years and you’ll pay someone to haul it away. Then, you’ll purchase new, expensive equipment.

However, you still need to invest in the right IT resources to operate your business, even if it takes a serious bite out of your profitability. Or do you?

For most mid-sized businesses that rely on technology, IT expenses can become a burden for the CFO trying to write them off against their operating income. Building and managing IT becomes a major cost center that doesn’t look as good as depreciating assets on the balance sheet. For example, you take 36 months to gain the full tax benefits of a high-performance server blade, but it’s obsolete in 12 to 18 months and needs to be upgraded or replaced. Plus, there’s another 18 months worth of value that you’re not realizing. Not surprisingly, owners and investors are moving away from this model.

What are the challenges with the build inhouse model? They are:

• Skilled labor costs (salary, benefits, training, replacement costs) • Capital outlay (hardware/software/management tools, facilities) • Integration costs (consulting) • Reoccurring refresh cycles (hardware, software, people, facility infrastructure)

What are the benefits of a subscription/ shared services-based cost model?

• No upfront capital • You pay only for what is consumed • Scale on demand (skilled labor, capital, software, facilities) • Resource utilization is maximized • Rapid time to market • Rapid return on investment (business value is realized at the same financial period as cost) • Predictable spending

Enter the Subscription-Based IT Model

Consider instead the OpEx model. Rather than investing in the resources and hardware that must be maintained and upgraded, housed, powered, cooled, and staffed, you could subscribe to a managed IT services model to access the latest technology and technologists.

Even better is to alleviate such responsibilities entirely and move to a hosted model such as a public cloud offering infrastructure, platform, and software as a service. In each of these modes, all physical assets are managed by the provider and you pay only for what you need.

Organizations that rely on innovation can more freely adopt critical upgrades to enhance IT performance, expand their capabilities with new technology, and adhere to new regulations much quicker. Organizations can do this without complex capacity planning and expense forecasting.

ABOUT SYNOPTEK:

When you engage Synoptek, you engage an IT partner that provides high caliber, endto-end technology management exuding confidence and trust to help grow your business. Our technology solutions promise forward thinking and innovation that leverages the strengths of your people, processes, and technologies to attain your business objectives.

CONTACT: tsuss@synoptek.com | synoptek.com

www.originate.report 9

ESSAY

A Portrait of Resilience

By Anthony Geraci, Geraci LLP

W

What I have written on these pages I haven’t told anyone completely, and while I write them for you, I also write this for me. What I’ve figured out at age 38 is I wouldn’t trade any of my life experiences for anything, nor am I looking for any sympathy, because experience has made me who I am and given me the grit, perseverance and knowledge that I can handle ANY situation.

I am so incredibly grateful to have gone through it all. However, if there are one or two lessons you can pick up from my life story, I would love to hear what you learned about yourself while reading this. If it is italicized, I have annotated my life with my current thoughts.

The Early Years

“I told your father that if he was late on his rent again, you were to get out, so get out!” He slurred, sweating, with bits of spittle dropping from his mouth. He shut off the gas, but I knew how to turn it back on. I was 13 years old, and I vowed then never to be in that position when I grew up. The gas was the easy part. Electricity was a whole different matter. But I learned quickly that a 6-volt battery hooked up to a lantern bulb via wire provided enough light to read by. And that was good enough by me.

I can’t tell you much else about my childhood, because I don’t remember it. My first steady memories are around age 11. I remember that we moved around often. My father was allergic to work. Maybe that’s an

10 Originate Report | December 2017

unfair statement. He could get a job; he just wasn’t any good at keeping one. His temper flared up whenever someone at work pissed him off, and he would “flip his top” whenever that happened. (He was known as FlipTop Guinea in his bartending days.)

I found out years later that his Dad died when he was 3 months old and his Mom is still very much a mystery today. My search continues to find out what happened after my Grandfather’s passing. At least my parents were still alive.

We didn’t starve, but in true poor childhood fashion, we had WIC and food stamps. Around this time, my parents divorced, and I decided to move in with my father. One thing was clear: my father wasn’t going to support us, because for him, holding onto a job was like trying to hold water in his bare hands.

Me, being 15, and my father, still on a pedestal to me, moved yet again to a place I didn’t know, and gave up what little security I had in a job. During this time, my love for books flourished. When I dropped out of school, I couldn’t exactly walk around town due to truancy laws. But I lived in the library, and checked out tons of books and paperback novels. I worked the night shift, came home, slept, and spent the early evenings at the library or reading at home.

Moving Out, Retail, GED

When I was 16, my sister visited me from Florida. She had a completely different experience after our parents

Middle School Dropout

At age 14, with three months left in the 8th grade, I dropped out of school to get a job. It was still tough to find a job, but there were always places that didn’t ask too many questions, even in 1995 Indiana. So I was paid $5 an hour on a contract basis to tag dry cleaning.

It wasn’t glamorous, but when I received my first paycheck of $400, it was more money than I had seen in my life. I split the bills with my father, and we even had enough money to pay for rent and food. Life was good for a while, but Flip-Top was getting restless. He found himself a girlfriend and wanted to move to Alabama.

Anthony and his sister, Theresa Murphy, at Oxford in England

divorced, but that story is hers to tell. She asked me what I was going to do with my life. I don’t remember what I told her, but her question said enough: I needed to go back to school. I couldn’t take the GED until 17 in Alabama.

In the meantime, Flip-Top decided he had enough of Alabama and it was time to move to Tennessee. I hugged him and told him this is where I get off the nomadic, crazy life. I moved out, worked and prepared for the GED. If I give you the impression I’m angry with my father, you would’ve been right 10 years ago.

Today I’ve come to accept that he did the best he could with the faculties he possessed.

Around this time, I realized a few things about myself: I was reasonably intelligent, and, more importantly, I had an insatiable work ethic motivated by my current predicament. Wallace Community College in Dothan, Ala. offered night classes to study for the GED. I worked during the day and attended class at night.

On November 13, 1997, I took and passed the GED with flying colors and immediately enrolled in Wallace Community College. I also learned another thing about myself: I’d do anything for a scholarship. No, really, anything. I wore an ugly red blazer and showed potential students around the campus. It really wasn’t a bad gig for a scholarship.

Rack Room Shoes, Office Depot, and Management

I took whatever jobs I could get while focusing on getting through community college. At 18, I graduated with an Associate’s degree and moved to Montgomery, Alabama to attend Auburn University. I became a frontend supervisor for Kirkland’s, a store that sold mirrors, candelabras and other items to beautify the home. After the manager and assistant manager were jointly fired, I became the de facto manager. I was promised the job of assistant manager. But after two months of working 16-hour days, the regional manager brought in both a new manager and an assistant, leaving me in the same position I was before.

I went four doors down in the mall to a place called Rack Room Shoes. I applied for the assistant manager job and the manager, Stan, told me, “Well, the job pays $6 an hour.”

I replied, “For an assistant manager?”

He looked at me and said, “Oh, well that’s a different story.”

I got the job on the spot and worked there for about a year. I was then recruited by another shoe company, Shoe Carnival, and both my manager and Regional Manager, Allan, said if I stayed I would have my own store within six months. At 19 years old, I became store manager of Rack Room Shoes.

Anthony with his family, nieces, and nephews at the Getty Museum in Los Angeles

Managing both the store and my college career took some juggling. I lined up my college classes on two different days from 7 a.m. to 7 p.m., and then I worked the other five days a week. After a year of this, Allan came into my store and said, “You have to work Mondays, not your assistant manager. If you don’t work Mondays, I’m going to fire you.”

To me, it wasn’t even a choice: college vs. Rack Room Shoes. I left Rack Room three months later and took a step down to become technology associate at Office Depot. I took a whopping pay cut of $1,000 a year.

Within six months, I was offered the role of customer service manager. Again, I went back into management, this time on the night shift. Trustworthiness goes a long way; i.e., don’t be a dick.

Many people work their asses off and are still no closer to their own goals than they were 10 years ago. What are you doing to innovate? What obstacles in your life have you not overcome?

How can you overcome them?

I graduated from Auburn with a degree in history in 2001, packed up my life in a U-Haul and drove 2,000 miles to the beaches and lights of California. After graduating from law school in California, I worked in a small firm doing alternative non-bank lending and left that firm to start my own. I thought this could be either the best or worst decision in my life. So far it’s proved to be one of the best.

Rules for Success I’ve Learned

I’ve had a crazy life so far, and I’m enjoying it so much today. Along the way, I’ve learned certain principles of my life. I take no credit for any of these rules, as I’m sure I’ve stolen them from somewhere, but they have proven true for me and occupy my life.

1. Don’t believe your own bullshit…You may

have closed that last deal and are making a shitload of money. Are you sure it’s because of your own efforts?

Doubtful. We’ve all been helped somewhere, including me. Just because I had a challenging childhood doesn’t mean I didn’t have help along the way. I have stumbled many times in my adult life, and someone has always held out his or her hand to pick me up. So have you.

2. ...and most of it is bullshit. See #1 above. Honestly, how much of your life has been intentional? Did you intend to do something? I’ve prepared myself for many eventualities, but a lot of it is still luck.

3. Innovation trumps hard work every day of the week. Don’t have electricity? Wire up a 6-volt bat-

tery to a lantern so you have light to read. Don’t have books? Get a library card. Can’t watch TV? Do you really need to anyway? Many people work their asses off and are still no closer to their own goals than they were 10 years ago. What are you doing to innovate? What obstacles in your life have you not overcome? How can you overcome them?

4. Don’t ask and ye shall receive; ask and it shall be denied. Are you stuck just being a loan originator?

Do you want more? Are you showing your broker you want and deserve more? You are? Are you sure? If so, maybe you’re not in the right place and need to find another job that recognizes your talents. If you ask for that promotion, though, chances are you won’t get it.

Ask not for the promotion but what you can do to get it.

5. Stay Hungry, Stay Humble. This really should be

higher on the list as it is so relevant, and I see this so often. You are making a lot of money and you think it’ll last forever, but it doesn’t and you lose it all. Whatever you’re doing and innovating, whether you see it or not, someone is on your heels. Keep growing, keep going, keep striving and be humble. None of us knows everything. Keep learning. continued on page 12 www.originate.report 11

A Portrait of Resilience continued from page 11

6. Make Sure You Suck Every Day. I know; this is why I never asked her out. Crazy, right? All I had to do where I lost you. But if you don’t do something that ab-

was ask her out and we would’ve dated, but because I

you will NOT grow. If you haven’t looked back on your

that chance. The only chances you’ll ever miss are the

solutely scares or embarrasses you or makes you cringe, past and cringed, you missed out. Start causing yourself embarrassment NOW.

7. Take that Chance; Do it NOW. Tomorrow is

too late. I was really attracted to a woman when I

was younger. We used to have a lot of fun together as friends, even eating dinner and driving around. I wanted to ask her out but was so embarrassed and insecure that I never did. After Flip-Top moved me to Alabama, she

wrote me a letter which remains etched on my soul. She included a 3-dollar bill and among other things asked

was insecure about myself, I didn’t and missed out on ones you didn’t take. Don’t ever let that girl, that job, that option slip through your fingers.

My life has been a series of ups and downs, but I wouldn’t

trade it for anything. I think a large part of who I am is

made up of the things I learned as a child. Remember,

you too can shine light anywhere in the world with two strips of wire, a 6-volt battery and a lantern light.

Here’s to your success.

ABOUT THE AUTHOR: Named a Super Lawyers® Rising Stars in the legal

field, which is given to just 2.5% of attorneys nationwide, Anthony Geraci is the managing shareholder of Geraci in charge of firm strategy and development of Geraci’s team and culture. He is skilled in mortgage lending and securities law and has authored numerous articles on real estate finance and security subjects. Mr. Geraci is a leader in creating national mortgage pools and mortgage funds as well as sophisticated net branching arrangements among several mortgage companies.

Mr. Geraci is also an active member and a member of the board of directors of EO (Entrepreneurs Organization). CONTACT: (949) 379-2600 | a.geraci@geracillp.com www.geracilawfirm.com

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You have knowledge. You have ideas.

Let us showcase your voice.

Currently we’re looking for articles showcasing: Business Development • Fintech/Newest Loan Programs • Automation in Today’s Evolving Society • Upcoming Trends & Changes • Marketing & Outreach Essential Tools & Technologies • New Legal Issues and Regulations.

Another idea? We’d love to hear that, too.

Write for us. Email submissions@Originate.Report for more information.

www.originate.report 13

FEATURE

Networking:

How It Can Grow Your Loan Origination Company

By Michael Miller, 5 Arch 14 Originate Report | December 2017

C

lients themselves are not enough to build your portfolio. As a loan orig-

inator, you also need to build your

professional network.

“Even successful real estate investors can grow com-

placent,” says Shawn Miller, CEO of 5 Arch, a private mortgage company for residential real estate investors.

“But you are only as good as your most recent deal.

Networking is a great way to ensure future opportu-

nities and continued success for your loan origination company.”

Here are two ways networking can help boost future profits:

1. Forge new relationships. Networking groups

bring together like-minded people. You might meet potential investors strike up a friendship with like-minded

professionals. Either way, getting out there and talking

with business colleagues gives you a much-needed break from crunching numbers.

2. Establish your reputation. It is hard to grow

your business when nobody outside of your immedi-

ate circle knows what you do. Before you blow your budget on a billboard by the highway, here is a simpler

solution: “Bring along a stack of business cards and a firm handshake to your next networking event and start

introducing yourself and your accomplishments to others,” says Miller.

You are only as good as your most recent deal. Networking is a great way to ensure future opportunities and continued success for your loan origination company Now that you can see the potential impact of network-

ing to your bottom line, here is where to mix and mingle with folks in the field:

Auctions — There is usually only one reason to go to

a house auction, and everyone is there for the same reason. Go often enough, however, and you will start to see

Community groups — Your local Chamber of

Commerce or economic development corporation is a great place to make professional connections. Community organizations such as these host mixers and other networking events, usually at a discount to members.

Attend a few and start chatting, suggests Miller. “You may be surprised how many people are looking to buy or sell a home, or they know someone who does.”

Trade shows and conferences — Before social media, these were really the only ways that profession-

als from all over the world could meet in person, how-

ever briefly, in the same time zone. Today, they remain an excellent way for you to spread the word about

your loan origination company. “Even in the digital age, conferences and trade shows are still excellent opportunities to connect, learn, and grow as an investor,” says Miller.

Social media — Of course, platforms like Twitter

Real estate investment clubs — These local orga-

and Facebook have all but eliminated constraints when

investors in a dynamic learning environment. Become

day. Take advantage of being “on” 24/7: Join a Face-

nizations join both beginner and experienced real estate a mortgage mentor to a newbie investor, or simply

connect with others to see how they are taking their portfolios to the next level — and how you can help. If

you are looking to grow your business outside of your

immediate community, Bigger Pockets is an excellent online resource that will help you connect with real

estate investors and loan originators all over the United States, Canada and Australia, says Miller.

it comes to communication. Now, we can post and

tweet from wherever we are, no matter the time of book group dedicated to real estate investing, or search relevant hashtags on Twitter to find out who is tweet-

ing about #RealEstateInvesting on the #WestCoast, for example.

Whether you connect with others online or in person,

it is important to keep building your professional net-

work to increase your opportunities — and ultimate success — in the loan origination business.

ABOUT THE AUTHOR: Michael Miller serves as the Chief Marketing Officer of 5 Arch and its parent company, 5 Arches, LLC. Prior to this, Michael was the CMO of Epsilon Agency Services and Managing Director of Catapult Marketing. He also

the same people, so you will likely get an idea of who is

co-founded Hyper Marketing, which was later acquired by Epsilon. Mr. Miller lead

business and who needs someone on the inside of loan

marketing platforms across brands, including JPMorgan Chase, Union Bank, Wells

serious about growing his or her real estate investment acquisitions.

global strategic initiatives and marketing for MRM Worldwide and advised McCann Worldgroup, as well as other prominent advertising agencies. He has developed global Fargo, Google, Intel, GM, The Home Depot, Lennar, and Tishman Speyer.

CONTACT: mmiller@5archgroup.com

www.originate.report 15

FEATURE

The First Line of Defense Against Cybercrime:

Employees O

By Synoptek Staff

rganizations lose approximately $445 billion per year to cybercrime and more than 70 percent of those companies are small and medium-sized businesses (SMBs).

Many SMB leaders don’t realize that having employees trained on the latest cybersecurity threats can help prevent, detect, or deter cybercrimes.

The Importance of Training Your Employees

Every employee in your organization with access to corporate data and devices needs cybersecurity training. Insider fraud accounts for as much as 47 percent of all cybercrime losses. Every device needs addressing, too, especially if workers use personal devices for company business. Each device is a potential target for malicious actors.

Employees who know how to identify those threat traits are more likely to eliminate them before problems arise.

Both initial training and ongoing instruction are critical to ensuring employees know the basics — and learn about new emerging threats.

The most common SMB cyber threats are social engineering, phishing emails, malware, unpatched devices, and unmanaged mobile devices. Employees who know

16 Originate Report | December 2017

how to identify those threat traits are more likely to eliminate them before problems arise. Both initial training and ongoing instruction are critical to ensuring employees know the basics — and learn about new emerging threats.

Four Fundamental Guides

Here are four simple procedures for training employees: 1. Establish program prevention rules.

A clear set of standards about what workers can and can’t install on their work machines can help reduce some risks. Hackers use unfamiliar programs to download viruses, bugs, and malware, so employees should delete anything that looks suspicious in Tweets, online

ads or any other transmissions. High spam standards can also help defend against inadvertent intrusions.

2. Set sound password standards.

To limit the extent of a breach, each employee should assign a new and different password to each of her or his accounts. Each password should include a variation of upper- and lowercase letters, numerals, and special characters. In addition, employees should write down and store passwords in safe places away from their devices.

3. Have a back-up plan.

A regular habit of backing data up can also save the company in the long run in the event of an intrusion or corruption. Either set a corporatewide backup strategy or establish a schedule for each employee to back up her or his work and store the backup files safely in an unconnected server.

4. Encourage communication.

Sometimes, the best deterrence is talking about cybersecurity issues around the office. When every employee is invited to share his or her concerns about suspicious activities, all employees understand that company leaders are serious about eliminating cybercrime threats.

The most important aspects of employee training and education are consistency and repetition. Ensuring all employees receive the same directives, training and reinforcement on a regular basis helps business leaders maintain a savvy, well-educated and safe workforce.

ABOUT SYNOPTEK: When you engage Synoptek, you engage an IT partner that provides high caliber, end-to-end technology management exuding confidence and trust to help grow your business. Our technology solutions promise forward thinking and innovation that leverages the strengths of your people, processes, and technologies to attain your business objectives.

CONTACT: tsuss@synoptek.com | synoptek.com

www.originate.report 17

SPOTLIGHT

Industry Spotlight: Bob Eakin CEO, JCAP Private Lending

18 Originate Report | December 2017

B

ob is a seasoned Senior Executive, C-Suite Officer, and Consultant with 30 years of success in finance and lending. Leveraging extensive experience in strategic planning and operational management, he is a valuable asset for startup to mid-size companies looking for acumen in a rate sensitive environment, contraction/expansion in mortgage origination, growth scaling and navigation, marketing, and staffing. His broad areas of expertise include residential mortgage lending, loan origination, investment portfolio management, insurance, compliance, underwriting, team building and development.

In his executive career, Bob has held leadership positions as CEO at Jayco Premium Finance of California (dba JCAP Financial Group); CEO at Jayco Capital Group; and V.P. Loan Origination at Karma Mortgage (dba Mark 1 Mortgage of Orange County). He is rated in the U.S. top 50 of mortgage lenders in both origination volume and number of loans closed, funding over $1B in home loans. Currently, he specializes in investor funded bridge financing for residential and commercial Real Estate. He originates loans for listed properties, foreign borrowers, corporations, stated income, low FICO, and construction.

Bob obtained a Bachelor’s Degree in Economics and Political Science at UC Irvine. He has served on local boards and advisory councils, including Seven Day Hero and Star Rock Ministries.

Originate Report: What makes you stand out from other private lenders in the area?

Bob Eakin: Years of experience. I have lived in Orange County since 1982 with a long resume of success. Not only am I the operator of our business, I also invest my own money into our loans.

OR: How did you get into this business?

BE: I did a summer internship my junior year of college with an alumni in my fraternity, Kappa Sigma. I loved the mortgage business immediately. Helping people with their biggest personal financial component, solving for the best financial solution, and serving people was the perfect combination.

OR: How has JCAP Private Lending been able to stay in business for this long?

BE: We are conservative. We work hard at caring for everyone involved including the borrower, the investor, our team at the company and our community.

OR: How have you seen this industry change since you started out?

BE: When I first started at a bank in 1990, all they talked about was that we were about to be paperless.

I watched bank applications go from about three pages to what felt like a novel and loan docs went from a small stack to what looked liked several reams of

Bob Eakin

paper. Now, after three decades, we are actually close to paperless. It’s been neat to watch technology truly advance and simplify our business.

OR: What advice would you give to someone just starting out in this business?

OR: What is the most popular loan you write?

BE: The short-term residential loan. Our average client has an unintended consequence that requires access to some of their equity. Once they correct their situation, we get paid off by a traditional bank loan or they sell the property.

lessly to care for people. My advice would be to work

OR: What skills do you think have helped you become successful?

BE: I have big ears (laughing). I’m a good listener and problem solver. If you have equity, we can usually help you solve your problem.

BE: The most successful people in our space work tirehard letting people know that you are here and don’t just look at the money. If you are working hard for the borrower, the money will follow.

OR: What is the future of private lending? How is the market changing?

BE: The tightening at banks has improved the market for private lending, which is now a $68 billion industry. My best guess is that as banks loosen (and as hell freezes over), our sector will soften. However, there continued on page 20

www.originate.report 19

Industry Spotlight: Bob Eakin continued from page 19

has always been a need for short-term financing when it

of our world and if you are going to be a citizen, why

BE: There is a tendency in lending to try to be the

and small business owners. We can help these people

and selfishly, my heart is full when I am giving. As the

We focus on being professional problem solvers; spend-

comes to foreign nationals, builders, heirs to properties, when the banks can’t.

OR: What are the biggest challenges with private lending?

BE: There is a lot of liquidity in this country. The rich really did get richer through this last cycle. Lots of money in a space loosens underwriting guidelines causing

A business is really a living organism, just like a person. We have the same responsibility to be citizens of our world and if you are going to be a citizen, why not be a good one? companies to make riskier loans and we do not like loan defaults. We are best at being lenders, not property owners.

OR: Why do you think it’s so important for businesses to serve the community and those less fortunate?

BE: A business is really a living organism, just like a person. We have the same responsibility to be citizens

not be a good one? It is better to give than to receive leader of our organization, I am privileged to be our

commander of giving, allowing me and our team to all experience that gift.

OR: If this industry didn’t exist, what career path

would you have taken?

BE: I am sure that I would be in business. I feel called to lead, to give, and to serve. The day-to-day product just happens to be lending.

OR: What advice do you have for loan officers trying to close loans with you?

BE: If the borrower has equity over one or more properties, there is probably a deal there. Think creatively...

how do I solve the borrower’s problem? We are here to team up with brokers to solve borrowers’ short-term

financing needs. We love to fund loans quickly and are easy to work with.

OR: How is your company reacting to changes in

the marketplace?

cheapest...this is a losing battle for you and the industry.

ing little time on price...our compelling story is experi-

ence and speed. Price wars kill everyone’s profits and eventually kill the industry.

OR: What CRM systems do you use to email your target market?

BE: Mail Chimp.... they are all good.

OR: Have you had to learn any lessons the hard way?

BE: Don’t work with anyone and everyone. Be selective.

Work with like-minded people that you enjoy working with. When I was building our A-paper mortgage bank (so glad to be out of that space), I thought that the more people we worked with, the better. Sure, it looked great on paper but I was totally wrong. It turns out that even if you try to always be honest and keep your word, it doesn’t mean that everyone else does. Some people really are selfish and self-serving. My new mantra is trust and verify!

CONTACT: Bob Eakin | (949) 622.6199 | bob@jcap.net | www.jcap.net

Quit Guessing.

Start Knowing.

Be confident knowing that your IT systems are managed by the best, so you can focus on growing your business.

20 Originate Report | December 2017

SYNOPTEK.COM 888-SYNOPTEK

You’re going places.

Don’t stop until that place is the top.

If you’re a loan originator looking to build your business and gain insight from the nation’s top mortgage brokers, bankers, lenders, and lawyers, Originate Report is for you. Distributed to 35,000 professionals in the private lending industry every month, this is where you come to see and be seen.

To discuss submitting original articles, or for general Originate Report questions, email us at submissions@originate.report.

behind you all the way. find us online at www.originate.report

www.originate.report 21

TREND REPORT

Private Lending T & Technology:

he private lending market has been around for as long as there have been unforeseeable circum-

stances in our lives. It is natural for every bor-

rower to expect the lowest possible rate and fees when it comes to borrowing money. Traditional banks generally

are the cheapest sources of funds for borrowers, thanks to

Are We Ready for Peer-to-Peer Lending?

By Harry Singh, Indigoblue Group 22 Originate Report | December 2017

the rock-bottom yields they provide their investors. The

concept is simple: raise capital from depositors like you

and me, pay minimal return on the deposits with minimal risk, lend the funds at higher rates to borrowers, pool the mortgages into portfolios and then sell them to investors

via third parties to replenish the capital. Financial insti-

tutions that are not as well capitalized run the risk of restrictions on the securitization process or viability.

Canadian government, using its watchdog — the Office

efficiency in the end will prevail. Predictably, it is not

— has restricted the availability of mortgage credit

chasing fintech investments and acquisitions, as they,

of the Superintendent of Financial Institutions (OSFI)

through a progressively tighter set of guidelines. This action has shifted a significant share of the business

from banks and alternative institutions to mortgage investment corporations (MICs) and private lenders.

Private lenders and MICs have previously funded a relatively insignificant portion of the overall mortgage

credit in the Canadian market, but during the last nine years, private lenders and MICs have experienced a dramatic increase in their portfolios. Coincidentally,

the increase has aligned with credit tightening regulations imposed by OSFI. Indeed, the number of pri-

vate lenders and MICs has also noticeably increased in Canada. While there is plenty of business for private lenders and MICs in the market, it continues to be inefficient.

Private lenders that are focused on dealing with the ultimate borrowers find this market challenging, because

the cost of marketing to ultimate borrowers is expensive, and the borrowers may not fit a private lender’s

requirements. For this reason, many private lenders and MICs in Canada choose to deal with mortgage

brokers. A mortgage broker will vet the borrowers and match them with a suitable private lender. Of course, the assumption is that brokers will be knowledgeable

about private mortgages, as they are not as simple as a cookie cutter prime mortgage. Moreover, the num-

ber of private lenders in any marketplace is an elusive

number. Most mortgage brokers will use one to three private lenders, which precludes the borrowers from A government looking to slow down the supply of

truly benefiting from lender competition.

mortgage fund availability (an indirect measure to slow

As we approach 2018, technology undoubtedly will

or limit the securitization activity by imposing addi-

vate lending will undergo tremendous change. Con-

down the amount of borrowing) may look to restrict tional guidelines or a maximum ceiling. The measure would slow down the supply of credit and reduce com-

petition, which would put upward pressure on the cost of borrowing for borrowers.

The Canadian governments have, over the last nine years or so, grappled with a unique situation where the interest rates need to be kept low while maintain-

ing the consumer debt-to-income ratios and boisterous

real estate markets in certain parts of the country. The

shape the landscape and an age-old business like pri-

sumers, with the availability of information on the Internet, are much better informed regarding trends

and opportunities. The notion of peer-to-peer (P2P)

lending is around the corner, and sites are popping up that facilitate this. This cuts out the middlemen and makes the process cheaper for the borrower and more

lucrative for the lender. The predictable and ongoing obstacle will be regulations in the name of protecting the public. However, the regulatory framework around Uber and Bitcoin are classic examples of how market

an accident that every major bank in North America is too, see the writing on the wall.

As we approach 2018, technology undoubtedly will shape the landscape and an age-old business like private lending will undergo tremendous change.

Some of the more practical challenges of P2P lending, specifically in the private lending world, tend to focus

on the ability of an average person to understand the risks versus rewards of private lending. However, with bottom-of-the-barrel returns on savings, retirement

funds and the volatility of mutual funds, investors are

hungry for stable yield. At least in Canada, more quality business is shifting from traditional lenders to private

lenders, so investors can have higher yield while taking on risk. Additional credit/lending education and per-

haps the use of cheaper but knowledgeable underwrit-

ing hubs could be a solution. Underwriting hubs are effective web marketplaces that amalgamate business

from across the country so that investors/lenders can peruse available opportunities. This could reduce costs for borrowers while enhancing the yield for investors.

The next year will be an exciting one from an inno-

vation perspective. With record-breaking bank profits

and margins while investors starve for yield, the macro environment is very conducive for P2P lending models.

The private lending world naturally lends itself to such

a model, as does unsecured lending, which tends to be

a much smaller ticket item in terms of dollar amount.

Web marketplaces that facilitate peer-to-peer lending models will be pursued — particularly those that build

risk mitigation through property valuations and other ancillary services that further enable an investor to lend.

ABOUT THE AUTHOR:

Harry Singh is President and CEO of Indigoblue Group of Companies and Co-Editor of Private Matters Today.

CONTACT:

harry@indigoblue.ca

www.originate.report 23

UPCOMING EVENTS

All event dates subject to change.

Please visit conference websites for agendas and details.

Upcoming Events

Don’t be left out! Showcase your upcoming event here!

Contact Ruby@originate.report for more information.

DECEMBER 2018 JANUARY FEBRUARY

Innovate 2018 Conference February 7-9, 2018, Newport Beach, CA www.geracicon.com

MARCH APRIL MAY JUNE

Activate 2018 Conference May 6-8, 2018, Los Angeles, CA www.geracicon.com

JULY AUGUST SEPTEMBER

Captivate 2018 West September 9-11, 2018, Las Vegas, NV www.geracicon.com

OCTOBER

Captivate 2018 East NOVEMBER 24 Originate Report | December 2017

October 10-12, 2018, Boston, MA www.geracicon.com

GERACI PRESENTS

2018 CONFERENCE Attend Innovate 2018 to learn about the latest trends and insights in the private money lending space that we’re seeing. We will show you how to raise and deploy capital more effectively, while also bringing you together with the people that you need to know in this industry! See you in Newport Beach.

FOR MORE INFORMATION ABOUT ATTENDING, SPONSORING, OR SPEAKING, CONTACT RUBY AT RUBY@GERACICON.COM

FEBRUARY 7-9, 2018

BALBOA BAY RESORT | NEWPORT BEACH, CA

www.geracicon.com/innovate www.originate.report 25

LOAN HOME

Help Make Dreams Come True.

Are you a lender? Advertise with Originate Report’s Loan Home and be seen by 35,000 industry professionals each month.

Contact our Loan Home director at alicia@originate.report or (949)383-4788.

www.helveticagroup.com loans@helveticagroup.com (310) 575-3301

100K 10M √

√

√

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Direct Lender

√

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JCAP Financial Group www.jcap.net info@jcap.net (949) 622-6199

√

er

um

idg

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EB-5

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150K 5M

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70/5

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* TX

Direct lender against Texas Real Estate—EB-5 loans and projects in most states.

√

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70/2

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√

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√

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California Properties, 1st & 2nd TD’s

√

√

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* CA

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70/30

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www.pacificprivatemoney.com loans@pacificprivatemoney.com (415) 883-2150

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Direct Lender

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Br

√

100K 50M √

250K 5M

√

e Co rpo ra Ac t ion s/ T qu is ru No ition sts/ L tes s a nd ega De l En Pu ve t rch lop ities as me e Re d nts ha b Bla / Re nk mo de et Se Loa led/ co ns Re nd no M va Jo ted int ort g Ve ag Fo ntu es rei r gn es Na Ot t io he na r ls MA XL o Ch an-to urc -Va he lue s/ (% La Te nd ) m ple / MA (B X s/ Au are tom / Co Syn Term ag m (yr o me o Re tive s rci gues ) tai a l (S l/ L h En ot) ter ops/ tai St rip Ga nm Ma s S en lls tat t ) ion Le s isu re Ho (Go sp ita lf Co Mi lity ( urse xe d- Hote s/ M ari ls) Re use sid Pro Indu na) en s p Ra tial er t ie trial In nc s he vest me Se s a n lf-s nd tor Fa t Pro pe r ag Re m rtie s sta e s ura Of nts f ic e

LO MU AN $ Co M mm LO A e r N Co c $ ns ial

MA XI

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Direct Lender

A List Partners Management, LLC

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UM NI M MI

www.weapproveloans.com robert@accmortgage.com (877) 349-0501

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Direct Lender

* CA

Look for this Lender’s Ad in this issue of Originate Report

26 Originate Report | December 2017

* = states lending in

ACC Mortgage

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2017

LENDER

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PRIVATE MONEY LOAN HOME

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Helvetica Group

MA

MI

NI

LENDER

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COMMERCIAL LOAN HOME Do you want to find your loan a home?

That home can be found here, in these lenders.

TYPES OF PROPERTIES WE LEND TO

um e Br idg r e Co rpo ra Ac t ion s/ T qu is ru No ition sts/ L tes s a nd ega De l En Pu ve t rch lop ities as me e Re d nts ha b Bla / Re nk mo de et Se Loa led/ co ns Re nd no M va Jo ted int ort g Ve ag Fo ntu es rei r gn es Na Ot t io he na r ls MA XL o Ch an-to urc -Va he lue s/ (% La Te nd ) m ple / MA (B X s/ Au are tom / Co Syn Term ag m (yr o me o Re tive s rci gues ) tai a l (S l/ L h En ot) ter ops/ tai St rip Ga nm Ma s S en lls tat t ) ion Le s isu re Ho (Go sp ita lf Co Mi lity ( urse xe d- Hote s/ M ari ls) Re use sid Pro Indu na) en s p Ra tial er t ie trial In nc s he vest me Se s a n lf-s nd tor Fa t Pro pe r ag Re m rtie s sta e s ura Of nts f ic e

TYPES OF LOANS

www.originate.report 27

28 Originate Report | December 2017