FEBRUARY 2020
THE OFFICIAL MAGAZINE OF GERACI
WISDOM FROM THE CEO:
Jadon Newman Noble Capital
INSIDE: CULTURE CORNER
Josh Youngblood
WHAT CAN ALFRED DO FOR YOU?
JCAP
CFPB ISSUES
HMDA Requirements
Wisdom From The CEO Millennials Reshaping the Rental Market WHERE MOST PRIVATE LENDERS GO WRONG www.originate.report 1
2 Originate Report February 2020
CONTENTS FEBRUARY 2020
Features 16 How Millennials are Reshaping the Rental Market - Some Plan to Rent Forever By Robert Greenberg, Patch of Land
24 Culture Corner: Jcap
6
Originate Report Staff
30 CFPB Issues Final Rule Loosening HMDA Requirements By Melissa C. Martorella, Esq., Geraci LLP
32 Where Most Private Lenders Go Wrong Scaling Their Business
16
By Abhi Golhar
Who To Know 6
Josh Youngblood - What Can Alfred Do For You? Originate Report Staff
21
12 Wisdom From The Ceo Jadon Newman, Founder & CEO – Noble Capital
21 Industry Spotlight Mark Hanf - Pacific Private Money
In Every Issue
30
26 Cities To Watch: New York, New York Originate Report Staff
36 Upcoming Events 38 Lender Directory
32 www.originate.report 3
Revenue diversification
Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial
TODAY’S MARKET OPPORTUNITY: •
•
•
100 billion dollar non owner-occupied investment space SFR ’s 1-4 Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial Diversify product offering and add new revenue opportunities you may be missing out on Legally compensate your most prized relationships (Realtors) for referrals
WHAT TO LOOK FOR IN A BROKER + CAPITAL PARTNER RELATIONSHIP: • • •
Concierge across product offering with underwriting, training, service and support Dedicated call center for loan origination support and fund control Marketing materials provided including product tear sheets, pitch decks and web banners
In today’s market, refinancings have limited availability and there’s not much new housing inventory to lend against. For mortgage Brokers, this means the obvious; there are a lack of transactions in the market to profit from. For shops that are only doing refinance or traditional mortgages, opportunities only come around every 5-7 years. You’ve got to have a big client base to have volume. With financial products across SFR ’s 1-4 Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial, the sales cycle is faster, there is significantly higher recurring business, and a few lenders have teams dedicated to helping you succeed.
BROKERS, PARTNER TODAY
4 Originate Report February 2020
Think of it as a new product offering which results in the diversification of your potential revenue. All of this is well within reach, and much easier than you may think. The NON-O/O investment space is a 100 billion dollar industry that has come full circle since the last market downturn. Over the last decade private lending has been growing, and the comeback of property investors is at an all-time high. Here’s what it takes to do these types of loans and a good private lender will handle these things for your Brokerage… • • • • • • •
Review and process loan applications Document collection Facilitate Appraisal Coordinate Title & Escrow Complete underwriting Facilitate Funding Pay you
Traditional Realtors and Mortgage Brokers have the misconception they need an NMLS license to be a lender in this product space. The main point in dealing with a private lender is while they primarily fund SFR’s, these loans are governed under commercial guidelines. Thus we are not governed under RESPA, TRID or TIlLA. These loans are funded only into business entities allowing 7-10 business day closings and can pay anyone under a Brokerage license a referral fee or commission on the HUD at closing. There are two avenues a Brokerage launching this type of product to Real Estate professionals can expect to see. You can be a Correspondent Partner (the lender would fund in your name)
http://triumph.capital/brokers
or an Origination Partner (the client would see the lender’s name on the HUD). Most deals are funded under a single set of product guidelines allowing training, underwriting and servicing to be easily understood. CORRESPONDENT PARTNER (CP): You look and feel like the lender, a complete white-label product. ORIGINATION PARTNER (OP): Traditional Broker + lender relationship, lender shows on HUD. A full concierge service for Broker partners handling everything from A-Z is an entirely new model for private lending and Mortgage Brokers / Real Estate professionals. Working with a direct lender enables Mortgage Brokers to keep the lion’s share of the profit and have the potential to earn from the yield spread as well, all while monetizing on much more frequent lending transactions, instead of the normal 5-7 year customer lifecycle. There many private lenders chasing this strategy and it’s safe to be wary of who to work with. While choosing a partner, look for someone who understands the business and has a strong reputation for closing transactions. You’ll also need support with marketing materials. Having the right documents and product tear sheets (one-pagers) for conversations, trade shows, etc. is helpful in positioning the opportunity with your existing book of referral business from Realtors.
For more information call
877-450-9741
ROB JENNINGS robert@triumph.capital
GEORGE O. FLINT goflint@triumph.capital
CEO Geraci LLP ANTHONY GERACI Anthony@Originate.Report
Letter
from the
Vice President Geraci Media RUBY KEYS Ruby@Originate.Report
Editor
Editorial Director MAX BERGER Max@Originate.Report
“Excitement must lead to immediate action or you will lose the power of momentum. More dreams die because we fail to seize the moment. Do it now!” -Tony Robbins
Art Director LYNDA HIGHT L.Hight@Geracillp.com CONTRIBUTORS Robert Greenberg • Abhi Golhar Jadon Newmanz • Josh Youngblood Mark Hanf • Melissa C. Martorella, Esq FOUNDING UNDERWRITERS
MARK HANF President, Pacific Private Money ORIGINATE WEBSITE www.originate.report GERACI LAW FIRM www.geracilawfirm.com MEDIA WEBSITE www.geracimediagroup.com CONFERENCE WEBSITE www.geracicon.com
Welcome to the February Edition of Originate Report! We’re continuing the momentum of the new year with another packed edition, full of both new and familiar faces. First we’d like to introduce you to Josh Youngblood from Alfred Tech, an innovative, end-to-end technology platform for the private lending business. You’ll also learn more about Mark Hanf, the founder of Pacific Private Money, and gain some entrepreneurial wisdom from the founder and CEO of Noble Capital, Jadon Newman. Lastly, you’ll go behind-the-scenes with JCAP Private lending to find out how their winning culture has been instrumental to their success in the space. What do these companies and individuals have in common? You’ll have the chance to meet most of them at the 4th annual Innovate Conference this month! At Innovate, you will receive first-hand knowledge from industry executives and professionals on how to stay ahead of the curve in the new year. This event will focus on education, the changes happening in the lending space, the new trends in business, and more. Join us in Newport Beach, CA on February 20-21 to keep your momentum going and take your business to the next level. Visit www.geracicon.com to learn more. To staying ahead of the curve,
Max Max Berger Originate Report Editorial Director www.originate.report 5
PROFILE
Josh Youngblood, the co-founder and CEO of Kumo Technology and Alfred Tech
Josh Youngblood WHAT CAN ALFRED DO FOR YOU?
W
By Originate Report Staff of
than ever before to conduct business.
specialized technology
No one knows the importance of
ith
the
role
cemented in the private
emerging, lender-based technologies
and Alfred Tech. Despite
his
Youngblood’s
company’s background
success, is
not
entirely conventional for a technology CEO – after receiving a degree in industrial engineering from USC, he
held
NBCUniversal
a
position where
he
at led
mission-critical operations driving $1 billion in distribution revenue. Youngblood’s most recent venture, Kumo Technology, was founded in
lending industry, new platforms are
better than Josh Youngblood, the co-
2012 and began as a custom software
giving private lenders more tools
founder and CEO of Kumo Technology
development firm – while in its
6 Originate Report February 2020
not only to help build tech-related
material, “Alfred came to prominence
infrastructure but also streamline
through King Alfred the Great of
departments within their operations.
Wessex, in the 9th century. Alfred was as much scholar as warrior,
One lender Youngblood said Kumo
an
has worked with since the company’s
whom the notion of ‘counsel’ was
inception has seen its portfolio grow
a perfect fit. The name persisted
from $300 million in annual funded
through centuries, and ‘Alfred’ found
loans to $1.2 billion while also
itself beside famous surnames like
reducing headcount – to Youngblood,
Tennyson, Nobel, and Hitchcock.
the expansion of technology has been
And then, yes, Alfred was a butler –
instrumental in the streamlining
perhaps a Superhero’s most famous
process.
one. And certainly, that anticipatory
early
renaissance
man
for
service is one aspect of what we do. “I think at the core of what we do, we
But ‘Alfred’ has taken on a cultural
listen to users,” he said. “We knew
significance all its own, an identity
going into this venture that in order to have good design, software, and usability, we have to be close to the people who are clicking the buttons and doing the work every day; we’ve taken that feedback to heart while we design and modify our software. As a development company, we own the technology we are creating, so about four years ago we decided to take to market a strong, scalable infancy, he said the new venture worked with private lenders in the Los Angeles area, a pattern that continues to this day.
particular space because, in order to build software, we really became in
[private
has become the Alfred platform we’re selling today.”
lenders’]
operations and became acquainted
images
of
a
loyal,
observant,
and responsive (not to mention impeccably dressed) butler from a certain comic book franchise come to mind – Youngblood said this is by design, as the Alfred platform he
with a couple of large lenders in the
helped develop serves as the lender’s
L.A. area,” he said.
butler, an end-to-end technology platform for the private lending
While working with these lenders,
business. According
At the core of Alfred are three deceivingly simple goals: building relationships, closing deals faster, and growing business at a consistent rate. Youngblood said he knows all too well the complexities of the private lending sphere, including the
headaches
associated
with
the underwriting, loan document generation, and investor distribution pitfalls faced by blossoming and seasoned
professionals
alike,
Youngblood said at the end of the day, a company will not miss out on potential deals with Alfred in its toolkit. The platform’s tailored approach to loan and investor management situates the platform in a unique position, Youngblood said, but its functionality is ever-changing. As
Youngblood said he acted as ‘a consulting CTO and trusted advisor;’
even if they can’t express it.”
processes. Despite these potential
When thinking of the name Alfred,
“We built a very strong niche in that
embedded
platform for lenders. That mindset
that most everyone understands,
to
Alfred’s
branding
Josh Youngblood: Continues on pg. 8
www.originate.report 7
Josh Youngblood: Continued from pg. 7
lenders old and new begin to use technology on a more consistent basis, apprehension about what those platforms offer can be common. Although that may be the case, Youngblood said Alfred’s mindset towards user qualms is unique as
we will continue to do, because when
piece that integrate in a seamless
someone thinks an aspect of Alfred
fashion. This concept, also known
would be better a different way
as API (application programming
it’s the people who are clicking the
interface) is an often overlooked –
buttons and doing the work every
yet incredibly important – function
day who are using [our platform] to
in lending-related software.
make their jobs easier.” “In our early days we recognized This user-first mentality extends
the power of a true API, so we
outside the confines of company
spent extra effort and investment in
partnerships, however. Youngblood
developing a robust API at the core
said many existing platforms are
of our system,” he said. “We built
designed as one “monolithic”,” piece
everything around that – there is
pillars to our company and the fourth
of software which discounts the
competition within the space, but a
pillar in that series is partnership –
ways in which different functions
question we often ask ourselves is
that stems from a humble approach
can work with each other (and
‘are they building platforms that can
that we take with every customer,”
even
programs
integrate and deliver true business
Josh said. “That is exactly what we
entirely.) Instead, Alfred focused
automation?’ We took this approach
have done from the beginning, and
on
from the beginning because with the
well. “I think you have to take any apprehension in stride, but then listen and adjust. We have four
with building
different functions
piece
by
Left: Safa Roohi, VP of Customer Success Right: Josh Youngblood, the co-founder and CEO of Kumo Technology and Alfred Tech
8 Originate Report February 2020
way cloud computing is moving, the API served as the foundation of the platform. Now, we’re in a position to easily add integrations to expand what it offers.” In addition to internal integration with
new
features,
Youngblood
also said an API has upstream and downstream external applications. “Alfred has the ability to integrate with
anything
QuickBooks
to
from
CRMs
other
to
systems
that push or pull data,” he said. “I think that’s going to be a huge competitive advantage in the future. As we onboard more customers and people request different types of integrations, automation – both data and data entry – will be driving more of that functionality.” A prevalent desire amongst lenders is for automation in borrower flow “as
much
as
possible.”
Dealing
with loan applications can often be
a
cumbersome
process,
Safa Roohi, VP of Customer Success
and
Youngblood said one of Alfred’s goals
is
to
make
be daunting sometimes.”
process
“As we add new features, we always
structured, intuitive, and automated.
find it important to keep in mind
This, he added, will not only save
that there is a mix of technology
potential
the
expertise amongst our customer
initial intake, but will also assist in
base. Some professionals know what
collecting bank statements, personal
an API is, but a lot of people don’t,”
financial statements, and the other
he said. They may have heard about
components of the loan process.
it, but they don’t necessarily know
headaches
that
during
the power of it. What we’re coming These features will be tentatively
up with is samples and demos for
released in March 2020. Youngblood
many integrations so that customers
said Alfred is looking forward to
can see how APIs work. One of the
implementing these attributes with
best things we can do is focus on our
new and existing clients alike.
use of technical language, which can
When tasked with designing an engaging, yet simple to use interface, Youngblood said his engineering education has played a large role in a user-first mentality. “At its core, my engineering degree talked about human interaction with technology. That core made a large impression on me, especially the ergonomic design of technology,” he Josh Youngblood: Continues on pg. 10
www.originate.report 9
Josh Youngblood: Continued from pg. 9
said. “That gave me a lot of tools, I think, in the beginning, to set up my mind in the right way – at the end of the day, though, I’ve always been technically inclined and interested in helping people in their jobs.” Similar to how factory equipment was once designed from the top down – that is, without the factory employees in mind – Youngblood said early software platforms were designed in a similar light. In the absence of APIs and other integration tools, he added that a lack of user input has left gaps in lender-related technology. When designing Alfred, Youngblood implemented what he calls a ‘FisherPrice mindset.’ Although much of the platform’s internal functionality is incredibly complex, a deceivingly simple user interface leads to more straightforward usability, he added. “When it comes down to living up to and delivering on the promises we’ve made, it means that we have
Josh Youngblood, the co-founder and CEO of Kumo Technology and Alfred Tech
to stay close to our customers and maintain the trusted advisor role,”
customers.”
Alfred’s (the Batman character) loyal
he said. “We’ve done so well up until
and ever-present characteristics to
now, and we will continue to scale
Alfred was officially launched in
heart, Josh said he is even looking
the company and grow the platform
August 2019, but has already worked
to incorporate clips from the Dark
making sure that our people are
with lenders such as the Lone Oak
Knight
supporting our customers. The team
Fund, Archway Fund, and Freedom
material.
we have has an in-depth knowledge
Private Money. Moving forward,
of how this industry works and
Youngblood said he hopes to expand
“Part of our story is that we hired a
how lenders work; they spend time
the platform’s portfolio while also
branding firm to specifically work
learning the specific nuances of our
cementing
on our company name, website, and
10 Originate Report February 2020
its
branding.
Taking
movies
into
promotional
design.”
“At the core of Alfred are three deceivingly
on a website to blindly procure new business – he said they are qualities
This branding, he said, does not
that team members bring to the
only help with a cohesive physical
office every day.
appearance
simple goals: building
will
relationships, closing
easily
but
moving
inform
forward
prospective
“Our customers need someone who
clients about Alfred’s competitive
really listens, someone who cares
advantages.
and takes the time,” Youngblood said. “We have found that people are very
deals faster, and
“As I’ve said, I value the relationships
willing to talk about what they do,
with people and companies I have
how they do it, and what aspects of
growing business at a
managed to build with Kumo and
a product or service they don’t like.”
consistent rate.”
and ,we want to share that knowledge
When all is said and done, Youngblood
with others,” he said.
stated that Alfred sets its clients
Alfred. We know our services best
free to handle the aspects of private other attributes. We went through
Even though Youngblood said it is a
lending that a computer can never do.
exercises
company
cliché to extol the virtues of a well-
After all, isn’t that what automation
culture and how we wanted to
rounded, passionate team, it is true
is supposed to accomplish? For more
embody the tonality of the brand,”
nonetheless. Alfred’s four pillars,
he said. “They did an excellent job,
information on the Alfred platform,
trust,
and I can’t reiterate enough the
visit alfred.tech
partnership, are not simply words
to
form
the
innovation,
service,
importance of good branding and
and
CONTACT: https://www.alfred.tech/
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• Everyone
Learn About Industry Events
Use our platform as a resource to grow your business.
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Private Lender Link, Inc. | 200 Main Street, Suite 200D, Redwood City, CA 94063 | 650-226-4277 | CA DRE Lic. #02057741
www.originate.report 11
WISDOM FROM THE CEO
Jadon Newman Founder & CEO – Noble Capital
12 Originate Report February 2020
your business. They need autonomy and authority to do their jobs, but one of my failures early on was not maintaining a level of transparency and accountability from those people. You need to hand off the baton while maintaining visibility. It’s a delicate balance.
J
Jadon Newman, Founder & CEO – Noble Capital
adon is the founder and CEO of Noble Capital, a financial firm focused on private lending and private equity investments based in Austin, Texas. With more than 18 years of experience in the financial services industry, Jadon specializes in private investment, wealth management and real estate. Looking back to when you started your first business – how did you know when you had the right idea? I knew I was on to something good when I could see that the business venture was creating the opportunity for my partners, employees and clients to be successful also. The measure of a successful business isn’t only defined by how much money you make, but for how much opportunity for growth you’re able to create. I’ve learned that if I can help others achieve their goals, we’ll all be successful. What was the best (and worst)
piece of advice you ever received? The best piece of advice I’ve received is that “pigs get fat and hogs get slaughtered”. You can’t be too greedy in business because it can be detrimental to your business, your clients and your colleagues in the long run. The worst piece of advice I’ve received is that “more is more”. Throughout my career, I’ve come to believe that less is more. While we all want to grow and be the best in our industry, you should avoid spreading yourself too thin. Focus on mastering your business, not being a jack of all trades. Double down on your expertise if you want to be the best. What was one of your greatest failures, and what did it teach you? Part of leading a growing enterprise is that you have to pass the baton and delegate responsibility to those whom you trust and who are capable of achieving the goals you’ve set for
What habits and/or mindsets have helped you succeed as a business owner? It’s crucial to maintain the mindset that we’re on a mission, and that we have a common goal. It’s the leader’s responsibility to define the mission, and the tactical objectives should get passed down to the leadership to execute their part of that mission. If you can define the mission for your organization, an ordinary group can accomplish and extraordinary goal. You need to be able to articulate that mission and sell it to the group. What advice would you offer someone who is starting their first business? When you start a business, you have a rare opportunity to approach the venture from the starting line. Your mentality should be “work to live, instead of living to work”. You are the architect, and you should build your business around your goals and your dreams, so you can maintain that passion for what you are doing. Don’t create a monster that will consume you down the road. You’ll only have the chance to start at the beginning once. Life is short. We don’t get too many shots at this, so think about what is important to you at the outset. Jadon Newman Founder & CEO Noble Capital www.noblecapital.com
www.originate.report 13
EXECUTIONDESIGNEFFICIENCY Geraci media is a national marketing and design agency specializing in brand development and growth strategy for private lenders and real estate professionals, nationwide. COMPANY FLYER PR PRESS MATERIAL
LOGO DESIGN PITCH DECK
WEBSITE DESIGN WEBSITE DEVELOPMENT
CONNECT WITH US! HTTPS://GERACIMEDIAGROUP.COM/
Ruby Keys | r.keys@geracillp.com | 949.379.2600 Geraci Media is part of the Geraci LLP family of companies encompassing legal, media and consulting. For more information, see https://geracillp.com/
14 Originate Report February 2020
PRESS RELEASE
ABS appoints Carlos Nodarse Chief Executive Officer and names Jerry Delgado Executive Chairman, Effective January 1, 2020 LONG BEACH, Calif., December 20, 2019 - Applied Business Software (“ABS”) today announced that Carlos Nodarse has been appointed Chief Executive Officer. Jerry Delgado, currently Chief Executive Officer, has been appointed Executive Chairman. These changes are effective January 1, 2020. Carlos is currently Chief Operating Officer of ABS, and as a member of the senior management team for over 30 years, has played an integral role in the company’s business and growth strategy. “Carlos is a proven leader with hard-core software development skills, product vision and the ability to bring people together. There is no better person to lead ABS into the next chapter of product innovation and growth,” said Jerry Delgado, ABS’ co-founder and current CEO. “It is an honor to succeed Jerry, who has had an extraordinary tenure with ABS,” Carlos said. “I am proud and delighted to serve as ABS’ next CEO. The opportunities ahead for ABS are vast and varied, but to seize them we must have clear focus, and continue to bring innovative products to our customers.” ABS also announced that Jerry Delgado, ABS’ co-founder and current CEO, will assume a new role as Executive Chairman, and will devote his time to supporting Nodarse in his new role, and helping with product design and direction. About Applied Business Software Applied Business Software is a market leader and global provider of software systems and solutions to the lending industry. ABS offers a complete suite of software products designed from the ground up to specifically address the needs of those who originate and service loans. All our products are consistently rated superior in design, system interface, expandability, and ease of use. ABS is based in Long Beach, California. For additional information about ABS’s products and services, visit www.themortgageoffice.com or call (800) 833-3343. Elizabeth Morales, Director of Business Development www.themortgageoffice.com | (800) 833-3343 | elizabeth@absnetwork.com www.originate.report 15
FEATURE
How Millennials are Reshaping the Rental Market Some Plan to Rent Forever By Robert Greenberg, Patch of Land
T
he
community
too. Professionals representing all
financial crisis and the subsequent
has much to learn about
aspects of the housing economy
run-up
Millennials
their
will have plenty of opportunities
the economic recovery. With that
versus
to invest in this generation in 2020
experience as a sobering backdrop,
and well beyond.
this massive generation has forged
approach
lending
to
and
renting
homeownership — and whether their current preferences will change
home
prices
during
its own path when it comes to
as they age. Even though I am the
The oldest Millennials, who will
father of two Millennials myself, I
turn 40 this year, came into prime
admit that I still have much to learn
homebuying age amid the nation’s
16 Originate Report February 2020
of
renting versus homeownership. Certainly,
an
entire
generation
to
the
National
Association
of
home purchase, if the buyer is using
Realtors (NAR). While the amount
a mortgage, should be considered as
of student loan debt has risen, the
well, especially if the buyer doesn’t
homeownership rate has fallen, and
plan to stay in the house for more
it has fallen more steeply among
than a couple years.
younger generations. • The single-family rental (SFR) • Millennials will continue to move
market gained significant traction
into homeownership, but at a more
during
modest
generations
real estate investors bought up
before them due to affordability
distressed housing to renovate and
constraints. The time it takes to
use as rental properties. SFR in a
save for a down payment will keep a
short timespan has become a new,
significant portion of millennials on
burgeoning asset class where both
the homeownership sidelines even
institutional investors and regular,
as this generation accounts for the
small
largest percentage of homebuyers
continue to be active participants.
pace
than
(38%), according to NAR. It’s going to remain challenging for firsttime homebuyers to qualify for a mortgage when you have loads of student loan debt. • As the stigma surrounding renting fades, more people are choosing renting as a lifestyle choice due to doesn’t move in lock step, but there are some really interesting trends emerging:
its positive attributes such as the flexibility of making a short-term commitment and the freedom from maintenance and repair costs. Real
• In a November 2019 national
estate investors have responded
survey by Apartment List, 12.3%
to this lifestyle choice with a wide
of Millennial renters said they plan
variety of options in rental products
to “always rent,” up from 10.7%
from single-family homes in the
just one year ago.
suburbs to luxury high rises in urban centers.
• High student-loan debt remains a
major
to
the
factor
• Fast-rising home prices make it
young-adult
cheaper to rent than buy in some
contributing
decline
in
a
metropolitan areas. Rent can be
2019 Federal Reserve study. The
less costly once the actual cost of
U.S. currently has a student debt
homeownership is factored in such
load of $1.4 trillion, which accounts
as the down payment, upkeep and
for 10% of all outstanding debt and
property taxes. The thousands of
35% of non-housing debt, according
dollars in fees associated with a
homeownership,
according
to
•
The
the
to
housing
crisis
mid-sized
multifamily
as
investors
market
has
been on fire for several years, and developers will remain active in 2020 although new construction starts and permits are expected to fall, according to CBRE Research. Apartment demand is projected at 240,000 units in 2020, roughly 20% less than 2019’s estimated 300,000 units, according to CBRE. Here are a few things to watch for in 2020: • Rent control initiatives: Several states and cities (New York City, Oregon and California) instituted rent controls in 2019 in an effort to address the housing affordability crisis. Real estate investors and lenders will want to keep close tabs on city and state regulatory initiatives and how it they will impact investments and real estate lending activity going forward. Millennials Rental Market: Cont. on pg. 18
www.originate.report 17
Millennials Rental Market: Cont. from pg. 17
• Suburban strength: For multifamily investors and lenders, the suburbs will be the place to be in 2020, according to CBRE Research, which predicts the suburbs will outperform urban locations with lower vacancy and stronger rent growth. •
Opportunities
metros:
Cities
in with
midsized less
than
exceptional multifamily investment opportunities, especially in cities where local government entities have committed to upgrading their urban cores and investing in quality of life initiatives, according to CBRE Research, but investors and lenders will need to remain cognizant that liquidity and overbuilding risks are higher in smaller metros.
Housing models like “co-living” are taking cues from the co-working trend that has exploded over the past decade. Real estate investors and developers are eyeing shared housing as an option to address affordability. Co-living is a form of shared housing in which communal an
shared
alternative
to
and
provides
conventional
apartments. • Accessory dwelling units (ADUs) are also growing in popularity as a way to address the nation’s housing affordability In
California,
and the
supply
news for the housing market.
of
affordable
housing.
Investors (and lenders) should stay informed about the latest legislation
Conclusions
involving unconventional housing
Young people have always made up
plays as new opportunities for
a significant portion of the nation’s
investment and financing present
residential rental market and will
themselves.
continue to put their mark on the rental industry in 2020 and beyond.
salaries, but living and working
Lenders in the private money and
in high-cost housing markets, are
alternative
putting their money to work by
want to stay up to date on the latest
investing in residential real estate
trends surrounding the residential
in more affordable cities around the
rental market in order to reach
country. Turnkey online real estate
millennials who rent, buy or are
platforms which include assistance
otherwise investing in the housing
with
economy.
property
management,
supply
crisis.
state
passed
several new laws in 2019 to reduce restrictions on building ADUs with
18 Originate Report February 2020
financing
space
will
have made residential real estate investing relatively easy, even for
Patch of Land
those with no experience. These real
Patch
estate platforms enable investors to diversify their financial portfolios with the opportunity to get cash-
• Unconventional housing plays:
are
that should result in generally good
• Young professionals making high
2 million people could provide
areas
the goal of encouraging a greater
flow with an appreciating asset. •
The
economy:
Lenders
and
estate is sensitive to the labor market. As 2019 drew to a close, employment and hiring were steady, sentiment
Land
is
an
industry-
leading alternative lender providing professional real estate developers and entrepreneurs with fast and reliable access to capital for single-
investors already know that real
consumer
of
remained
family, multifamily and commercial projects. The company also operates an online real estate crowdfunding portal providing accredited investors the opportunity to diversify their portfolios with fractional ownership
strong and the Federal Reserve hit
of high-yield, short-term investments
the pause button on further interest
across
rate
information about Patch of Land, visit
cuts.
The
experts
expect
moderate GDP growth this year and
the
country.
For
more
www.PatchofLand.com
ABOUT THE AUTHOR: Robert is the Chief Marketing Officer at Patch of Land overseeing the company’s sales and market efforts; including loan originations, branding, lead generation, as well as the company’s sales and marketing automation. He has more than three decades of consumer and B2B experience working with leading companies in retail, technology, finance, and real estate. Prior to Patch of Land, he led the marketing efforts for the B2R Finance where he helped originate over $1B of real estate investor loans that led to the industry’s first-ever multi-borrower single-family rental securitization. Contact: rgreenberg@patchofland.com
PRESS RELEASE
Jcap Private Lending Announces New President, Jason Harris Jason Harris Joined the Jcap Team in January and is Focused on Growing the Business Jason Harris has joined Jcap Private Lending after a 20-year career in real estate finance, development and brokerage. He most recently served as a member of the leadership team for five years at Peerstreet, a leading Fintech company. During his tenure at PeerStreet he built and led multiple teams that were instrumental in recruiting and onboarding over 250 lender partners that generated over $3 billion of volume. He feels it was a privilege to have been involved in the astronomical growth at PeerStreet and is excited to build and grow Jcap Private Lending. The opportunity to join Bob Eakin, CEO of Jcap Private Lending, and his team was an opportunity that he could not pass up. Bob has had an impressive 30-year career in the mortgage industry creating an impeccable reputation within the industry. He has built a tremendous brand that is supported by a team of exceptional professionals. He is thankful to Bob and the Jcap team for the opportunity to join them and continue to build on what they have started. A driving force behind his decision to join Jcap is the high level of ethical standards and customer service that Jcap maintains and provides to its partners and investors on a daily basis. Jason’s immediate goals at Jcap are to recruit top industry talent to join the origination team, nurture them and provide these individuals with the resources they need to realize their full potential. He finds the opportunity before him and the potential for growth in all facets of the business very exciting. Jcap is a National Direct Private Lender based in Newport Beach, California. They offer Bridge Loans (including Construction Loans for Fix & Flip, Spec Residential, and Multi-Family), Commercial Loans and Stated Income 2nd’s. Their loans range from $100K to $5MM+. Jcap Private Lending is committed to solving short-term needs through Real Estate financing. Laurie Medina, Marketing Manager | www.jcap.net | (888) 321-7334 | laurie@jcap.net www.originate.report 19
SPOTLIGHT SPOTLIGHT
INDUSTRY SPOTLIGHT Mark Hanf
Pacific Private Money
20 Originate Report February 2020
loans, and I was hooked. When that Mark Hanf Pacific Private Money
company went out of business in 2008, I launched my own private lending practice.
So, I’ve been
involved in the real estate industry my entire life. Q: How have you seen Pacific Private Money grow and expand over the years? We’ve
grown
by
double-digits
every year since inception. We’ve gone from a home office to a small office to our own “bank” building in downtown Novato, California. We’ve grown from just my wife and I writing loans and selling trust deeds to having a team of 20 and counting.
We went from
making primarily fix & flip loans to
expanding
include
our
offering
consumer-purpose
to and
owner-occ bridge loans. Now we’ve added ground-up construction and are opening a Non-QM lending division. We’re currently working toward opening a branch office in Los Angeles.
We’ve also seen
the demand explode for buying
M
alternative, higher interest rate ark’s real estate career
Q: How did you first get involved
spans
in real estate?
over
35
years,
including 25 years in
commercial
development
My dad was a builder, and I grew
and
up working alongside his crew
property management and 12 years
every summer. When I graduated
in private lending. He founded
from college in 1982, he had by
Pacific Private Money in 2008,
then a sizable company, and I went
and he and his team have grown
to work for him doing accounting,
the company to over $150 million
capital raising, applying for credit,
in annual volume, 350 investor
and basically helping to execute his
clients and three mortgage funds. A
vision. Like many small developers,
recognized authority in the private
the business didn’t survive the turn
lending space, he is an author and
of the market in 2007.
radio
thereafter I ended up working for
personality,
and
frequent
guest speaker at industry events.
Shortly
someone who made hard money
real estate loans, and we’re now selling loans to several institutional investors. This has allowed us to grow even faster, without having to raise more equity or debt. Q: How has your company vision evolved from Day 1 to Today? Success
in
any
endeavor
is
oftentimes a combination of hard work, luck and timing. When I started doing this in 2008, it was just a way for me to make money during a rough time using my Mark Hanf: Continues on pg. 22
www.originate.report 21
Mark Hanf: Continued from pg. 21
experience and skills. A lot changed along the way.
We had no idea
that Dodd-Frank would come along and
essentially
money
through
legitimize
hard
regulation.
The
bad actors left, and companies like ours emerged to fill the growing need for non-bank financing. Then came
legalized
crowdfunding
in 2013 which created greater opportunities for raising capital. Today the alternative finance space is the fastest growing segment of mortgage lending. As our company has grown along the way, we’ve expanded our goals and broadened our outlook. A few years ago, if someone had suggested that we should have a goal to reach $1 billion in annual fundings, I would have said they’re crazy. Now that’s part of our 5-year vision. Q: What are some of your goals for 2020? In addition to launching a Non-QM division and opening more branch offices, we’re seeking to grow our team with strong regional talent. We want to have local coverage throughout California. Next, we’re seeking to increase operational excellence through new software
company?
fact, our three promises are “fast,
We have a tremendous amount of
friendly and reliable”. While some
fun on a daily basis. We’ve hired
of our borrowers might only care
some real characters through the
about getting their money fast, we
years, and we like to let off steam
know that our referral partners
with jokes and by poking fun at
and vendors definitely care, and
each other.
they like working with us.
It’s all good-natured
and we’re careful about boundaries. Culture fit is our first priority
Q: What is a recent trend in the
when hiring. We spend more time
private
together than we do with our own
excites you?
families, and if it’s not enjoyable,
I’m
what’s the point?
companies finally paying attention
lending
excited
to
industry see
more
that tech
to the private money lending space. Q: What does success look like for
For years there were only a few
you?
technology options developed for
At our company, we encourage
this industry. Now there are many,
our team members to be students
and they are competing for our
of personal development. We’ve
business. The growing number of
invested a lot in team coaching.
technology vendors showing up
Along the way we have learned
at the AAPL conference these last
that
couple of years is a great sign for
should
any be
successful in
the
company
business
of
our industry.
improving people’s futures. This goes for improving the futures of
Q: What do you see in the future
our investors, our borrowers, our
for private lending?
referral partners, and absolutely
I’m bullish on the prospects for
of our team members. Success for us is doing good work, having fun and providing opportunities for everyone to thrive.
our industry in the years ahead. Notwithstanding
the
upcoming
recession (whenever that might be), I expect demand for capital
Q: What mistakes have you seen others make in this industry?
will continue to remain strong. If banks and conventional lenders pull back in the next cycle, where will
and other efficiencies. There are
When I was first in this business,
finally a strong number of quality
I couldn’t help but notice a certain
LOS and CRM options built for our
degree of arrogance among some
industry, and we’re pretty excited
originators. It was like they were
about that.
saying to their clients, “We don’t
conservative right now? You bet.
need you; you need us!”
We
But are we shying away from good
Q: What is something that most
decided that friendliness was going
opportunities to grow and lend?
people don’t know about your
to be a hallmark of our delivery. In
Not a chance.
borrowers go if not to alternative lenders? In anticipation of the next cycle, are we being a bit more
CONTACT: mark@pacificprivatemoney.com | 415-883-2150 | PacificPrivateMoney.com
22 Originate Report February 2020
Private Money Loan Servicing Software Powerful, Flexible and Easy to Use! Multi-Lender Loans
Online Investor Access
Mortgage Pools
RESPA Compliant Escrow Analysis
Enhanced Reporting and Forecasting
Rehab, Commercial, Construction, HELOC, ARM
Integration Borrower and Investor Text Alerts
Online and Over The Phone Payments
The ® Your Ultimate Lending Platform
(800) 833-3343
www.TheMortgageOffice.com
Applied Business Software, Inc. 2847 Gundry Avenue, Long Beach, CA 90755 sales@absnetwork.com
www.originate.report 23
CULTURE CORNER
Exuding the Newport Beach Lifestyle JCAP PRIVATE LENDING
C
BY LAURIE MEDINA ompany
is
are produced because he knows
to doing good, and that “we are
the
the loans are a sound investment,
all citizens of the world”. Among
company and is defined
and he wants to be included in
some of his philanthropic efforts
by its leadership. That couldn’t
them. He embodies the Newport
he has participated in a project
be more true at Jcap Private
lifestyle and translates that to
to bring sight to the blind in
Lending! The Jcap team possess a
the office where he enforces a
Vietnam, a medical mission in
strong sense of self, do what is
very casual dress code (you’ll
Peru, local urban youth programs,
right, embody a Newport Beach
find that he’s always in shorts
and he volunteers at his local
vibe, and truly enjoy who they
and a polo shirt). He encourages
church every Sunday.
work with.
new ideas, inspires his staff to
the
culture
personality
of
Bob Eakin, CEO of Jcap Private
strive for their personal best,
Jcap’s most recent project was
and mentors junior sales execs.
funding the construction of a
Lending: he founded the company
new school in India with the
in 2014 in Newport Beach after
Philanthropy:
being named one of the Top
Bob
50 Loan Originators in the US.
partnering
As the chief underwriter, Bob
organizations
underwrites like an investor –
lives of people around the world
and now provides free education
because he is an investor. Bob has
for 25+ years. He believes that
to
a position in most of the loans that
there are no walls when it comes
the community. They are also
26 Originate Report February 2020
has
organization Harvest India for
been
committed
with to
to
children who don’t have access
non-profit
to education. This project was
improve
the
completed young
in
September
boys
and
2019
girls
in
involved in helping out the local
that will include a full-on theme
community. This past summer
and prizes for the best talents!
the Jcap team did a beach cleanup for one of their local beaches! They had a great time bonding as a team and giving back to the
They also have free snacks and an espresso bar in the office available to all employees.
community. They
are
currently
evaluating
their local community service options and can’t wait to start
(NOT PICTURED) “When I came to Jcap Private lending, I knew that I would be joining a highly effective team, but I had no idea that I would be welcomed into a family. I look forward to coming in to work every day and being surrounded by hardworking people who also know how to make work enjoyable!” -Rachel, Marketing Intern
giving back in 2020! Jason Harris President of Jcap
Perks: The Jcap team organizes monthly catered
lunches
to
celebrate
holidays and/or birthdays! The office is decorated with holiday or
birthday
decorations
each
month. Every couple of months Jcap throws a small team building event. Their favorite event from 2019
was
a
Murder
Mystery
party where each team member
New Addition to the Team: Jcap would like to introduce Jason Harris as their new President. He brings with him over 20 years of experience in real estate finance, development,
brokerage
and
private lending. He is arriving from
PeerStreet, fintech
an
industry
was given a script and assigned
leading
marketplace
as different characters. They got
where he was instrumental in
dressed up and followed clues
the company surpassing $3B in
to find the “murderer” amongst
volume during his tenure. The
the group!
Their next event is
team is excited about the energy
at the end of February where
and industry insight that Jason
they’re having a Jcap Talent Show
brings.
“It’s not easy to find a company where you feel like all of your work experience comes into play and you learn something new every day. On top of that, it’s even harder to find a company where you truly enjoy everyone you work with and look forward to coming to work every day. I’ve found that at Jcap.” -Laurie, Marketing Manager
“Jcap is a company that allows me to wear many different hats and explore all the different facets of the private lending world. I love Jcap because I work with a tight knit team that supports and motivates each other!” -Ellen, Executive Assistant We’d rather be at work than at home.” -Operations Team
CITIES TO WATCH
CITIES TO WATCH:
NEW YORK CITY, NEW YORK
“I
By Charles Peckman, Originate Report
want to wake up in a city
which has captivated the world’s
To your left is the Financial District,
that
sleeps.”
mind for over a hundred years, has
which has been the epicenter for
Although the lyrics to New
certainly lived up to its monikers
some of corporate America’s biggest
many times over.
triumphs and blunders. To your right
never
York, New York are most often sung by heavily-inebriated happy hour
is the Empire State Building, which
patrons, Frank Sinatra’s love letter
In a city where the bright lights of
serves as a symbol of industrial
to the Big Apple rings true to this day
Broadway mingle with the ever-
strength and the urban boom of
– after all, what is there to say about
changing ticker tape of Wall Street,
the early 20th century. Even while
New York City that hasn’t already
it would be foolish to say that there
traveling from one site to another, a
been said? The storied metropolis,
is nothing to see in the Big Apple.
ride on the ever-vibrant Subway will
26 Originate Report February 2020
NEW YORK, NY Economy: • Major industries: Publishing, media, information technology, finance, and real estate • Minimum wage: $15.00/hour • Cost of living: 87 percent higher than the national average
(expected -1.3 percent one-year forecast) • Home price change: -0.7 percent one-year change • Homeownership: 32.4 percent • Median rent price: $3,675 (two bedroom apartment)
Job Market: • Forbes List: #115
Housing:
• Unemployment: 4.1 percent
• Median household income: $50,711
• Job growth: 1.4 percent
(according to 2010-2012 estimates)
• Loan originator average salary:
• Median home price: $647,115
$71,280
produce more characters than most
Must-see Locations
searching for their passions, or
novels (and who knows, you may run
Although this city has the word new
looking to fall in love with the
into Jerry Seinfeld.) There are also
in its name, the Big Apple’s roots are
American Dream, monuments like
reverential points throughout New
in one of mankind’s oldest pursuits
York, including several monuments
– the pursuit of a better life. For
dedicated to 9/11, one of the darkest
decades – and still to this day – the
days in U.S. history. No matter
city has served as a beacon of hope
where you originally hail from, it is
for millions of immigrants from
hard to deny the urban splendor of
countries far and wide. Whether
New York City.
these people were fleeing tyranny,
The Statue of Liberty serve as an embodiment of this search and a reminder that America is a place for all. As an ancestor of German immigrants, it was one thing to see historical footage of Ellis Island Cities to Watch: Continues on pg. 28
www.originate.report 27
Cities to Watch: Continued from pg. 27
in history class growing up; but standing in the Great Hall – perhaps in the same spot as those who came before me – was nothing short of amazing. Even if you are a casual (at the most) observer of art, New York’s selection of all mediums – from the refined brushstrokes of the Old Masters to the consumerist iconography of Andy Warhol – makes for a well-rounded and in-depth tour of art throughout the last few centuries. Well-known the world around, institutions like the Museum of Modern Art and Whitney Museum of American Art feature thousands of works by the likes of Van Gogh, Kandinsky, and Lichtenstein. Nightlife In the late 19th century, New York City was split up into five boroughs to form the city we know today. Over time, each area has formed its own “vibe” so to speak – the measured
was illegal, speakeasies, or secret
delicious pastrami) and its many
bars, popped up around the city. This
Michelin-rated hot spots, one thing
spirit of illicitness lives on today
is for certain – your taste buds will
(even though alcohol is no longer
not be unsatisfied for long. Chef
illegal) in several 1920s-inspired
Danny
speakeasies. Located in the Financial
tavern Gramercy may not be the
District (but not sanctimonious in
most inexpensive place to dine,
any way,) The Dead Rabbit Grocery and
Grog
offers
meticulously
researched vintage-inspired drinks (including, of course, cocktails made with Absinthe.) The Back Room, the Lower East Side’s take on a Prohibition-era gangster hangout, serves its immaculate cocktails in teacups and small-batch beers in paper bags.
Meyer’s
Flatiron
District
but its ambiance, food, and service are known across the globe. The Modern, with its French/American new fare, has views that overlook the gardens of the Museum of Modern Art. To fully grasp the dining options throughout New York, be sure to read The New Yorker’s “Table for Two” column, where a cycling group of journalists describe their favorite
If the Prohibition-era scene is not for you, never fear – New York City is home to some of the country’s most well-known nightclubs. The Pyramid Club, for example, opened its ever-radiant doors in 1979 and helped define the drag and gay scenes throughout the 1980s. The Copacabana, which is located in the heart of Times Square, claims it is the “most legendary and cosmopolitan
chaos of Manhattan rubs shoulders
nightclub in New York.” With three
with the cultural influences of the
floors and thousands of square feet,
Bronx. The easternmost borough,
not to mention live Latin music, it is
Queens, brings a big-city feel without
easy to see how this claim came to
the (arguable) pretentiousness of
be – regardless of what you like to
areas within Manhattan such as the
do after the sun goes down, a short
ever-affluent Upper East Side. With
walk down the streets of the city
all of that said, the five boroughs
that never sleeps will yield a litany
create distinct differences within the
of late-night hotspots.
places to satisfy an empty stomach. Attractions Whether you enjoy an unhurried walk through the sprawling Central Park
or
an
exhilarating
night
in a Broadway Theater, there is something to do for every occasion. You could peruse the floors of the New York Public Library, where the smell of old books and freshlybrewed coffee is met with the sight of aspiring (and seasoned) authors, playwrights,
and
literary
critics
pounding away on their keyboards. Although New York’s many towering skyscrapers house some of the best in art and theater – not to mention the headquarters for many corporations – the buildings themselves are rife with history. Even if you think you
nightlife of the Big Apple. Dining
know everything about the Empire
But this night scene was not always
With cultural ingredients (see what
State Building and other landmarks,
such a hotbed for artisan cocktails
I did there?) as wide as the country
the New York City architecture
and an ever-growing list of craft
itself, New York surely has a “few”
tour will surely unearth factoids
beers – during the Prohibition, a time
restaurants to choose from. Known
not
when the sale and import of alcohol
for
Wikipedia page.
28 Originate Report February 2020
its
delicatessens
(and
their
found
on
your
standard
www.originate.report 29
FEATURE
CFPB Issues Final Rule Loosening HMDA Requirements By Melissa C. Martorella, Esq., Geraci LLP
L
Consumer
500 open-end lines of credit. “For
provided
Financial Protection Bureau
data collection years 2020 and 2021,
addressing certain issues relating
(CFPB) issued a proposed
financial institutions that originated
to the partial exemptions that the
included
fewer than 500 open-end lines of
August 2018 rule did not address,”
temporary thresholds for collecting
credit in either of the two preceding
the Bureau stated in the press
and reporting data on open-end lines
calendar years will not need to
release.
of credit under HMDA.
collect and report data with respect
rule
ast
May,
package
the
that
to open-end lines of credit.” The
rule
also
clarified
partial The rule is advantageous for smaller
HMDA
lenders,
that
were
eliminating
many
from
added by Congress into the Economic
reporting
Growth,
HMDA. The rule also covers reverse-
Regulatory
Relief,
and
requirements
under
Consumer Protection Act (EGRRCPA),
mortgage
which was signed into to law in May
lenders. The implementation of the
2018.
rule will lessen burdens on smaller
lenders
and
the
EGRRCPA
by
The final rule comes at a time
exemptions for lenders from some requirements
by
private
when the U.S. Supreme Court is set to hear a case challenging the constitutionality
of
the
organizational
structure.
CFPB’s The
decision could determine the fate of the agency that was formed under the Obama administration as
lenders and reduce compliance costs
part of the Wall Street Reform and
across the board.
Consumer Protection Act of 2010.
exemptions will last for another
“This final rule further effectuates
If the SCOTUS decides that the
two years, holding the threshold at
the burden relief for smaller lenders
Bureau is unconstitutional, it could
In
a
press
release
announcing
the final rule, the CFPB said the
30 Originate Report February 2020
have ramifications throughout the
five days before the original public
According to the Bureau, this two-
industry by potentially unraveling
commenting
year
all of the CFPB’s decisions over the
October 15.
period
deadline
of
extension
will
allow
time
to consider fully the appropriate
past nine years.
level for the permanent open-end The final rule incorporates into
The pending SCOTUS review may
coverage threshold for data collected
Regulation C the two-year extension
have played a role in why the CFPB
and implements further EGRRCPA
beginning January 1, 2022, after
decided to finalize its proposal. The
partial exemptions.
relating
rule proposal was made last May, and according to CFPB Director
The final rule extends to January
Kathleen L. Kraninger, is being
1, 2022, the current temporary
finalized because it adds definitive
threshold of 500 open-end lines of
clarity and is in the best interest
credit for open-end institutional
of smaller financial organizations doing
business
in
communities
across America. In
the
May
announcement,
Kraninger said the proposed changes would provide much needed relief to smaller community banks and credit unions while “still providing regulators and stakeholders with the information we need under the Home Mortgage Disclosure Act.” In more proof that the rule issuance was fast tracked, it’s release comes
and
transactional
reviewing
coverage.
The
rule stated that the Bureau also intends to address in a separate final
additional to
that
comments
aspect
of
the
proposal. If you have questions about HMDA compliance or reporting, Geraci Law Firm is here to help. Our transactional team is filled with experts that can assist with determining whether
rule the changes it proposed to the
HMDA reporting requirements apply
permanent coverage thresholds for
to you. Please reach out to Melissa
open-end lines of credit and closed-
Martorella at 949-379-2265 for a
end mortgage loans.
consultation.
ABOUT THE AUTHOR: Melissa Martorella joined Geraci Law Firm as an Associate Attorney in the Banking and Finance section in August 2015. Ms. Martorella’s experience includes representing lenders and brokers, preparing commercial, residential, and construction loan documents, as well as drafting assignments, extensions, modifications, and subordination agreements. Ms. Martorella also has experience assisting with negotiating the terms of transactions, drafting custom language, and closing loans. Contact: m.martorella@geracillp.com
www.originate.report 31
Where Most Private Lenders Go Wrong Scaling Their Business By Abhi Golhar
F
ollowing the Great Recession
continues to evolve, private lenders,
surprise outcomes are likely to be
that hit the United States
both big and small, must become
negative for you.”
in 2007, the private money
more agile and continuously adapt to
- Nassim Nicholas Taleb
lending industry has significantly
overcome increased competition.
evolved. Prior to 2008, private mortgage lending was dominated by
So, what do private lenders really
a handful of very large companies
need right now? Strategies on the
— Landmark Capital & Investment
best ways to scale your business so
Company, Mortgages Limited, and
you’re set up to support growth in
IMH Capital, to name a few. Along
your organization. And guess what?
with these major players, a few
All it really requires is a little bit
smaller ones poured in and managed
of planning coupled with the right
to compete on a small scale.
technology, processes, and partners. Before we can identify how to scale
Lagging Behind The Competition Consider the enormous size of real estate lending today. The Fed’s recent report shows mortgage debt topping $9 trillion. When accounting for lending to businesses, it tops $15 trillion. And, over 10 million commercial properties and homes sell each year in the US.
Back in those days, private money
your lending business, let’s first look
lenders could easily charge higher
at some of the common problems
fees since there was very low supply
faced by private lenders today.
converging
to take an aggressive approach and
day, it’s no surprise everyone wants
Challenges Faced By Private Lenders Today
a piece of the market. As the industry
“If you are in banking and lending,
rates, making deals a lot riskier.
and a comparatively high demand for capital. Fast forward to present
32 Originate Report February 2020
As more capital enters the space to
lower
yields,
competition is forcing private lenders write loans at higher loan-to-value
is vulnerable to manual errors,
and create tailored tech solutions
there is no way to substantiate a
based on the latest innovations. Here
borrower’s claim of a payment if the
are a few examples:
lenders forget to make a note of the
•
Allow
making
borrowers
payments
transactions. Feel like losing some
for
and
sleep? Doing things manually is the
dashboards for investors directly
best way to get there.
from
mobile
creating
devices
using
e-wallets through apps; a musthave in today’s market
Going Through Lengthy Procedures •
Before The Deal Is Done
borrowers
make
wise,
Regardless of the size of the private
data-driven asset management
lending
decisions with the help of Robo
organization,
a
blazing
fast loan origination process is a competitive advantage. Most
lenders’
current
advisers •
Better
handle
authentication
in large-scale transactions and streamline
processes
and systems include tardy manual That can’t be good.
Help
steps. Given borrowers usually turn to private lenders when they have
Using Outdated Processes
limited time at hand and don’t wish
The amount of data that exists on
to go through the lengthy and tiring
borrowers can easily startle anyone.
processes most traditional banks have
While traditional institutions have
in place, quicker lender processes
completely automated their back-
yield quicker turnaround times for
end operations and workflows, most
borrowers yields more business for
private lenders are still too primitive
you and most importantly, happier
when it comes to accommodating
(and repeat) borrowers. Let’s now take a look at a few ways
using excel sheets leading to multiple
you can scale your lending business
errors that might be very difficult to
with the right practices.
correct. What does all this mean for private lenders? Accounting, legal
The RIGHT ways of undoing
and compliance nightmares.
everything that’s wrong!
Paper-based loan processing makes
Software Development = Overall
the task of maintaining records a
Development
monotonous one. This further makes
SaaS solutions have played a vital role
keeping track of a loan’s status and
in helping private lenders expedite
the process of retrieving critical
and organize their operations like
information time-consuming.
never before. And even then, lenders aren’t paying much attention to
Keeping track of a loan’s status could
developing custom software to suit
be pretty complicated when it’s
their needs.
recorded manually. Since the process
Your developer can help you design
through
blockchain technology •
Input data of general and limited partners
•
View and edit relevant data about partners and investment decisions
•
Create detailed reports about investments
•
Tally
management
fees
and
compute carried interests •
Increase productivity by helping administrative
tech and software advancements, resorting to manual accounting or
processes
personnel
in
creating scalable strategies and actions Custom software development can also leverage the latest data analytics to survey borrower data and create personalized solutions your clients expect, leading to increased loyalty. It can help with your company’s cybersecurity
risk
management
and
mitigation,
fraud
detection
and
prevention,
and
regulatory
compliance. Work Smarter Ft. Artificial Intelligence Abhi Golhar: Continues on pg. 34
www.originate.report 33
Abhi Golhar: Continued from pg. 33
Many
traditional
lenders
are
leveraging artificial intelligence (AI) to sift unconventional data to foretell creditworthiness
of
borrowers.
Doing so is especially important for markets where a growing middle class uses smartphones but dearths traditional credit.
digital
footprint
for
creditworthiness by having them download an application. With the app feeding data to a credit scoring platform, variables such as browsing, social media, geolocation, etc. are used to get a complete picture of the borrower. One organization called Lenddo has done this across Asia and Africa.
nagging. Private lenders can provide
documentation. All these solutions
a controlled, neutral environment
are highly customizable with respect
for customers to ‘discuss’ their
to your client’s experience too.
circumstances
Industry experts believe the growing
Chatbot
by
leveraging
technology
and
the
analyze
resolution opportunities baked into the bot itself.
data from online behavior and other sources to examine people’s location, search, and payment details to calculate creditworthiness in what’s called a “social credit” system. Some lenders who had laid the groundwork in North America are experimenting with search history
within which clients usually tend to lie, programming the chatbots for adequacy is quite possible. Gradually, the interactions carried out by these bots will serve as a template for training to make the process more effective – leading to lower costs and higher resolution rates.
data. Many car buyers, especially young people who haven’t taken out much credit before, don’t qualify for auto loans. Auto lenders are now getting comfortable extending loans despite “thin” credit scores when the search
characteristics
in
experience
a
mobile-optimized
will
lead
to
greater
A Few Closing Words In order to stay ahead of the game in today’s competitive climate, private lenders must consider implementing digital
solutions
like
custom
software and artificial intelligence or chatbots. Quick implementation, lower
costs,
and
near-universal
availability are some of the key
The Next Big Thing: Smartphones! Earlier, a mere 2% of mortgage devices. However, since the past 2-3 years, that number has leaped to 20%. This notable increase has occurred due to the increasingly busy lifestyles of individuals, and smartphones replacing laptops and desktops in the private browsing space. The
interest
demand for online lending services.
applications were filled on mobile
Technology companies can now pull
borrowers’
origination, processing to compliance
Given the limited radius of issues
With AI, you can easily analyze borrowers’
follow-ups without coming across as
benefits of these solutions. Adding them to your arsenal will not only help you eliminate tedious manual practices, but it will also allow you to modify processes swiftly as markets continually change. It’s super important that private lenders
begin
evaluating
incorporating innovative technology into their offerings. Just as the evergrowing pace of tech advancements
integration
of
smartphone
has enhanced countless facets of
solutions with the technology mix
our daily life, technology too is
will entirely transform the way
remodeling loan origination, enabling
in which lenders and borrowers
speedier funding decisions for your
interact.
borrowers
while
simultaneously
lowering processing costs, as well Current solutions in the market range from POS
as
improving
profitability
efficiency in the lending realm.
are favorable. Mainstream Intervention? Nope. A
technology
led
non-invasive
approach is the key to taking client
34 Originate Report February 2020
and
ABOUT THE AUTHOR: Abhi Golhar helps companies grow faster. Learn more at AbhiGolhar.com
and
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THE IMPORTANCE OF
results. This global reach creates networking opportunities for building relationships and partnerships. Your audi ence has invested time in registering and listening to the information you plan to share. They’re expecting valuable takeaways from the webinar, even some thing they can put into place at their own company. This positions you and your brand as an industry lead er, or expert. Webinars can give your audience the chance to ask questions and provide feedback. This how well it performed. These metrics include the is valuable because you can address concerns, reser number of attendees, number of those registered, vations, or any lingering questions they may have and total views. The webinar can and should be recorded about your training or product in real-time. You can Webinars have grown in popularity in recent years for you, the audience, and affiliates to share with customize your presentation to your audience based on and have become an important marketing tool. others, growing the results even more. Each time a their questions and feedback to keep them engaged. These live web-based seminars can connect you with person completes your webinar’s registration form Ask them to take an action, such as completing a task leads from all over the world. They encourage interacti they should be considered a new potential lead, or answering a question. This will increase audience by allowing the audience to ask questions orJust how whether it be for a sale or a potential partnership. participation and interest. Include guest speakers, beneficial can a webinar be to your business? Here Webinars adds a personal interaction that videos and such as industry leaders or affiliates, to speak during are 7 reasons why webinars are a fantastic marketing commercials don’t. Webinars put a face and name your webinar. These individuals should be familiar strategy. Webinars are a cost-effective way to extend with your product making you approachable, human, with your industry and value of your product. They your reach globally. Rather than pay for flights and and someone they can trust. Educating them on how will be able to educate the audience on the benefits hotels to meet with individual leads, you can engage your product can benefit their company is the first or impact, validating information you have or will with a larger group over their computer screens. step in opening the door to future discussions and be sharing. By inviting a guest speaker, you can also People from all over the world can attend, providing partnerships. It is essential to show both new and increase the webinar’s attendance by including your your brand or product with the potential to see huge established leads how your product or service can guest’s audience and following. This can grow the results. This global reach creates networking opporimprove or enhance their workplace. Depending on number of leads you may gain substantially. Results tunities for building relationships and partnerships. the prospect, the sales process can be slow. Businesscan be seen quickly from webinars. After hosting a our audience has invested time in registering and lises want to convert a lead into a cusWhile it’s cerwebinar you’ll have metrics to measure how well it tening to the information you plan to share. They’re tainly important to provide useful information and performed. These metrics include the number of at expecting valuable takeaways from the webinar, tips to your audience, it’s equally important to share tendees, number of those registered, and total views. even something they can put into place at their own how your brand or business can help them achieve The webinar can and should be recorded for you, the company. This positions you and your brand as an this. How can your product be a solution to their audience, and affiliates to share with others, grow industry leader, or expert. problems? Your webinar should show the audience ing the results even more. Each time a person com the value of your brand. Garnering interest in the pletes your webinar’s registration form they should Webinars can give your audience the chance to ask product and its potential impact is the first step in be considered a new potential lead, whether it be for questions and provide feedback. This is valuable becompleting a sale. a sale or a potential partnership. Webinars adds a cause you can address concerns, reservations, or any personal interaction that videos and commercials lingering questions they may have about your trainThere are numerous benefits to hosting a webinar. don’t. Webinars put a face and name with your prod ing or product in real-time. Though this article only touches on a handful of uct making you approachable, human, and someone them, it should be clear that webinars are an effecthey can trust. Educating them on how your product You can customize your presentation to your auditive tool for engagement and growth. As you take can benefit their company is the first step in opening ence based on their questions and feedback to keep these benefits into account, you should begin to the door to future discussions and partnerships. It them engaged. Ask them to take an action, such as think how you can use a webinar for lead generation is essential to show both new and established leads completing a task or answering a question. This will and to increase traffic, which will yield great results how your product or service can improve or enhance increase audience participation and interest. for your business. Webinars have grown in populartheir workplace.Depending on the prospect, the ity in recent years and have become an important sales formation and tips to your audience, it’s equalInclude guest speakers, such as industry leaders or marketing tool. These live web-based seminars can ly important to share how your brand or business affiliates, to speak during your webinar. These inconnect you with leads from all over the world. They can help them achieve this. How can your product be dividuals should be familiar with your industry and encourage interaction by allowing the audience to a solution to their problems? Your webinar should value of your product. They will be able to educate ask questions or provide feedback in real-time. show the audience the value of your brand. Garnerthe audience on the benefits or impact, validating inJust how beneficial can a webinar be to your busiing interest in the product and its potential impact is formation you have or will be sharing. ness? Here are 7 reasons why webinars are a fantasthe first step in completing a sale.There are numertic marketing strategy. ous benefits to hosting a webinar. Though this article By inviting a guest speaker, you can also increase the only touches on a handful of them, •it Upcoming should be clear Business Development • Fintech/Newest Loan Programs • Automation in Today’s Evolving Society webinar’s attendance by including your guest’s auWebinars are a cost-effective way to extend your that webinars are an effective tool for engagement dience and & following. This can grow the number of reach globally. Rather than pay for ights and hotels Trends Changes • Marketing & Outreach • Essential Tools & flTechnologies •and New Legal Issues and Regulations growth. As you take these benefi ts into account, leads you may gain substantially. to meet with individual leads, you can engage with a you should begin to think how you can use a webilarger group over their computer screens. nar for lead generation and to increase traffic, which 5. Results: will yield great results for your business. WebiResults can be seen quickly from webinars. After People from all over the world can attend, providnars have grown in popularity in recent years and hosting a webinar you’ll have metrics to measure ing your brand or product with the potential to see huge have become an important marketing tool. These
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Redwood Mortgage Corp. www.redwoodmortgage.com RMC@redwoodmartgage.com (800) 659-6593 San Mateo, CA 94402
Direct Lender
Zinc Financial Inc. www.zincdinancial.com office@zinc.net Tom Valentino
Direct Lender
5M 10M 2M
150K 200K 50K
55/33
Direct Lender
75/30
Pacific Private Money www.pacificprivatemoney.com loans@pacificprivatemoney.com (415) 883-2150
10M
Direct Lender
100K Helvetica Group www.helveticagroup.com loans@helveticagroup.com (310) 575-3301
*AZ, CA, NV
*All 50 States
*CA
*65% For commercial and mixed-use and 70% for multi-family and residential investment. 5 years (custom terms are available)
*CA
AZ, CA, CO, IN, MI, NM, OH, TN, TX, WA
LET LENDERS KNOW YOU FOUND THEM IN ORIGINATE REPORT! 38 Originate Report February 2020
REV. 06.25.19 2019
Direct Lender
* = STATES LENDING IN
Fidelity Mortgage Lenders, Inc. www.fidelityca.com psteigleder@fidelityca.com Peter Steigleder (818) 422-8879
70/30
50K
LENDER
65-5*/70/5*
H O M E
TYPES OF PROPERTIES
90/2
L O A N
15M
2020
TYPES OF LOANS
MI NI MU M LO MA AN XIM $ UM Co LO mm AN er $ Co ns cial um Br e r idg Co e rp o A c rat i o qu ns i /T No sitio ru s ns te s a n ts/ L Pu eg dD rc h a ev e l o l Ent Re ased itie pm ha s en b ts Bla / Re mo nk S e e t Lo d e l e co d/ nd ans Re Jo no int Mor va tg V te d a en Fo ge t re i g n u re s s Ot h e N at i r on als MA XL OA NCh TO ur -VA ch LU es La E( /T nd % em (B )/M Au ar p les AX to m e / /S TE Co o RM Re mm yn t ag t a i i ve (YR e og l( rc i S) S En ue al/ te r h o p s L s o t ai t) Ga nm / Str sS ip en Ma Le t at i o t lls isu ns ) re Ho (G sp olf i Co Mi t alit ur y( xe se d H R e - u s e o te s / M ls) sid ar Pr ina In e o n p Ra d ) n c t i a l I e r t i e u st r he nv s ial sa Se es tm lfnd s en Fa R e to ra tP ge rms st a ro pe rti O f u ra n fic es t s e
LENDER DIRECTORY
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