Originate Report- October 2017

OCTOBER 2017

SAVE the DATE! INNOVATE 2018 February 7-9

Newport Beach, CA $200 OFF during the month of October See page 19 for details

THE OFFICIAL MAGAZINE OF GERACI

Inside October: The FUTURE Isn’t What it Used to Be CLOUD SERVICE How to Choose?

Marketing to

REALTORS LENDING with

Self Directed

IRAs

www.originate.report 1

2 Originate Report | October 2017

ANTHONY GERACI CEO/Editor

RUBY KEYS Marketing/Editorial Director

JOHN PELACHE Account Executive

ALICIA CARTER Marketing Coordinator

PAM HUBER Graphic Artist

CONTRIBUTORS Alicia Carter • Scott Empringham Anthony Geraci • Tim Malburg Clay Malcom

FOUNDING UNDERWRITERS

Letter from the Editor “Why?”

Do you ask this question enough? I know I don’t. Why don’t we live in caves and

MARK HANF President, Pacific Private Money

away from each other? Why do we live in cities? In the old days this was an easy

answer – mutual protection and shelter. Biologically our fight or flight is hardwired

into our being, and we had to decide whether we were going to face the lion or run

away. Why do we still live in cities? Same reason? I believe that we are all connected together and the human fabric spins its way into the quilt of humankind.

In July, our inaugural edition brought you the lead story of John Ingoglia, whose

bought with alcohol and crashing into his child’s chair (his child wasn’t in it) woke

DAVID OWEN CEO, A List Partners

him to the reality that he was a force of nature. Later, Drew Louis shared with

us how he lost it all in the stock market, dealt with several lawsuits from stock

clients, and was psychologically frozen for months as the stock market crashed in 2000. Two different stories, but both of them fought their personal and professional

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

lions to the success they are today.

Within that suffering is the seed of hope and success in each of us. Hope is a

very powerful thing, and in my belief is the ideal that connects all of humankind together. These are the strands that make up the fabric of their life. What’s yours?

Do you have a story you need to tell? Reach out to us at articles@originate.report and if it is one of struggle and hope, we want to publish it.

To your success always.

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

GERACI CONFERENCES

Anthony

www.geracicon.com

www.originate.report 3

contents OCTOBER 2017

Personal Essay

8

The Future Isn’t What it Used to Be

What do you do when someone keeps moving your cheese?

By Scott Empringham, Flash Point Communications

8

Features

7

HERO Loans

A Primer for Alternative Non-Bank Lenders

By Anthony Geraci, Geraci Law Firm

16

Cloud Service Providers How Do You Choose?

16

By Synoptek

18

Lending with Self-Directed IRAs Consider Achieving New Tax Benefits

By Clay Malcolm, New Direction IRA

20

Five Tips on Marketing to Realtors Achieving new tax benefits

By Alicia Carter, Geraci Law Firm

22

Mortgage Shopping Online vs. Niche Lending Programs

22

20

By Tim Malburg, Capstone Mortgage Company

Special Sections

24

Upcoming Events

26

Loan Home 7

4 Originate Report | October 2017

DISCOVER THE

Symbol of Excellence

FOR PRIVATE LENDING

Members of the American Association of Private Lenders are the new trend-setters in the private lending industry. From their voluntary adherence to a Code of Ethics to their knowledge of the private lending process, they are the gold standard for the profession.

Activate your membership with the American Association of Private Lenders to give your business the professional advantage and career boost it needs.

You will: • Join a viable network of industry experts.

• Get immediate recognition as an industry professional.

• Have a voice in creating the standards for the industry.

• Have access to exceptional professional development opportunities.

• Get added marketing support and opportunities to enhance your business.

It’s time to take your business to the next level.

JOIN AAPL TODAY!

AAPLONLINE.COM  (913) 888-1250

www.originate.report 5

SPECIAL SERIES

HERO Loans:

QM loans can ignore Appendix Q, judges will likely look to it as a guideline. Hence, in determining whether a borrow-

A Primer for Alternative Non-Bank Lenders

By Anthony Geraci, Geraci Law Firm

F

or those loan officers who are advising alternative

er, even so, subordinations are limited to banks and credit

particularly nasty. As we discussed last month,

lenders. Thus, this double standard will affect underwriting

lenders or private lenders, HERO loans become

HERO stands for Home Energy Renovation Opportunity (HERO). It falls under the Property Assessed Clean Energy (PACE) program, which provides financing for en-

ergy-efficient, renewable-energy products to residential communities. As of this writing, 31 states have either ad-

opted or are adopting PACE programs (including HERO

loans). In most states, HERO loans are issued by state bond laws. What does that mean? In short and simplified terms,

it means these loans have the same priority as property

taxes. That means they are superior to the liens issued by mortgage lenders. Thus, failure to pay these liens puts all

liens junior to them (the very financing used to acquire the properties in most scenarios) at risk.

As discussed last month, get the Preliminary Title Report (PTR) from title to see if a HERO loan exists on the property. If one does exist, keep reading.

The Alternative Non-Bank Lender’s Problem

Most HERO loans have the ability to subordinate if/when you...As argued last month, however, it is very difficult and the process alone is expensive and not guaranteed. Howev-

unions – they will not subordinate to alternative non-bank alternative lending loans.

Consumer Loan to Value Analysis

Alternative non-bank lenders will have to take into ac-

count the HERO taxes as part of their Consumer Loan to Value (CLTV) analysis. Due to HERO loans’ high interest

er has the ability to repay a loan, a lender should consider the HERO loans’ impact on the borrower’s debt-to-income (DTI) ratio.

An Easy Checklist

If you’re considering lending on a property that has a HERO loan, here is a good checklist for you to consider: 1. HERO Loan Analysis a. Loan Amount b. Interest Rate

c. Property Tax Supplement 2. CLTV

a. What is the CLTV without regard to the HERO? b. What is the CLTV with the HERO? c. Within tolerance?

3. Ability to Repay (ATR)

a. Does the borrower have the ability to repay both the loan and the HERO taxes?

rate, alternative non-bank lenders should consider creating

Be careful with HERO loans. They won’t subordinate and

lessen the lender’s risk on their file.

written property if a HERO loan exists. Do your home-

an impound account to ensure these taxes are paid and

Non-Qualified Mortgage Loans

HERO loans become especially problematic in the

non-Qualified Mortgage (QM) world. Even though non-

you could be holding the bag on an otherwise great underwork and save yourself a fortune of headache and worry

by considering the cost of the HERO loan in your underwriting.

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 | anthony.geraci@geracilawfirm.com | www.geracilawfirm.com

www.originate.report 7

ESSAY

The Future Isn’t What It Used To Be

By Scott Empringham, Flash Point Communications

8 Originate Report | October 2017

H

ave you ever read the book, “Who Moved My Cheese,” by Spencer Johnson? It’s a really short book with a really big message: The world is constantly changing around us. We need to embrace that change to survive and grow.

email campaigns for both individual dealers and their dealer associations. Our core pitch? Social media connects products and customers to one another at a fraction of the cost of a newspaper ad or junk mail. So with this in mind, our modest company started to grow.

Today I am the CEO of Flash Point Communications, a digital communications company based in Costa Mesa, Calif. I am proud to say that we are at the cutting edge of the digital and social media revolution. We specialize in turning clicks into customers for car companies.

In 2009, our main client, Ford, moved their entire digital marketing operations in-house. Our small company went from having a growing base of client contracts to having

That, in a nutshell, is the story of my professional life.

And then, as Spencer Johnson would say, someone moved our cheese.

My interest in digital media began 19 years ago at Young & Rubicam, one of the large, multi-national advertising agencies based in New York. I worked in Y&R’s Detroit and Irvine, Calif., offices serving Ford Motor Company’s Lincoln and Mercury brands. As an early champion of all things digital, I spent many hours and a huge number of frequent flier miles telling car dealers, dealer associations, and national marketing executives about the marketing opportunities available on the internet.

Several years later, I got that entrepreneurial itch. My father was an entrepreneur and, at heart, so am I. So, in 2006, I, along with three business partners, launched our company.

In 2006, the internet was still in its infancy as a marketing tool. Facebook was only beginning to replace MySpace as the dominant social media platform. Twitter was just being invented. YouTube was one year old. Instagram would not be invented for another four years.

Our initial clients were car dealers who wanted to connect with their customers on the internet. So we got into the business of creating web sites and product-oriented

Sometimes, even large corporations with smart, experienced staffs have trouble moving the cheese.

And digital media is our generation’s most profound cheese-mover. no contracts at all. And with only 45 days of income left from existing contracts, we needed to re-invent ourselves, and fast.

Fortunately, YouTube was emerging as a viable way for companies large and small to engage with their customers.

So we were given a single assignment from a single Ford dealer association to create a new YouTube campaign. We got to work and, within a few months, other clients saw what we were doing and gave us additional YouTube assignments.

In one campaign, we hired two women who appeared on the TV show Deal Or No Deal. We followed the women on a road trip from Maine to Boston using live tweets and live video on YouTube and integrated the campaign with an emerging new medium called Facebook. We tied into local businesses along the way to create as much publicity as we could.

Ultimately, we generated millions of social media clicks.

That raised awareness for a vehicle that had very low awareness (the Mercury Milan) and begin the shopping process for lots of potential buyers. Just as important, turning our business model quickly saved us as a company. I learned not to resist change, but to embrace it and enjoy the ride.

Sometimes, even large corporations with smart, experienced staffs have trouble moving the cheese. And digital media is our generation’s most profound cheese-mover.

So when our largest client was looking for new strategies regarding social media use, I developed a template that turned into a strategic cornerstone moving forward.

It was intuitive, as so many strategies are. It featured three goals for every social media campaign: community building (having a conversation with your customers), dealership event promotion (getting them to the dealership), and shopping information and tools (helping them make the sale). It gave them a template with which to reach customers on this new medium.

But there was still something missing. So we took the customer information we had gathered during our various promotions and added a sweepstakes to the mix.

Suddenly, we were generating thousands of “hand-raisers” — people who identify themselves by sharing contact information — and sales leads for our clients. Best of all,

CONTINUED ON PAGE 10

Quit Guessing.

Start Knowing.

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

SYNOPTEK.COM 888-SYNOPTEK

www.originate.report 9

The Future Isn’t What it Used to Be | Continued from Page 8

vehicle sales rates using social media were twice the rate of direct mail.

Then, the cheese moved again.

As smart business people, individual dealers want to steer people who are in the market for a vehicle directly to their own web sites. That means if they start with a national promotion using a single sweepstakes, there has to be a way to divvy up the sales leads generated among 2,500 very competitive individual dealers. No easy task. Fortunately, my business partner Steve Getman is a code-writing genius.

I was smart enough to get out of his way and he solved the problem. Never underestimate the value of having the right people with the right skill sets around and letting them do their jobs.

Then the cheese moved again.

Facebook combined with R. L. Polk, a company that gathers customer information. Suddenly, we could clearly identify who was in-market for a new car or truck at any given moment. And when we launched our first promotion combining these two data sources, we did something that we thought was impossible: we broke Ford’s customer database.

Today, large national advertising agencies are really good at buying social media ads en masse. They can buy them cheaply because they buy in volume. So where does that leave a smaller company like ours?

On the morning of a new program launch, I received a phone call at 4 a.m. from the Ford IT department. It seemed that Ford was receiving an unprecedented 7,000 leads per minute. Unable to handle the load, the Ford database shut itself down. The Ford IT guy was sure our company had been hacked.

I checked with Steve and he checked the system. Turns out we had not been hacked. The combination of all these databases and technologies found shoppers in such huge numbers that the Ford database couldn’t handle the volume quickly enough. So we adjusted our software to slow the flow of leads to a level that the Ford IT system could handle. Then we popped a bottle of champagne.

Then our cheese moved again.

Facebook is enormously successful because it encourages sharing. Sharing stories. Sharing pictures. And for businesses, sharing brand experiences and great deals with friends.

But what if you’re a car dealer who wants to offer $50 to persuade your best prospects to come in for a test drive at the dealership? And you don’t want those people to share the promotion with just anybody who’s looking for a free $50? Suddenly, Facebook sharing can be a very bad thing.

We talked to Facebook. And because sharing is at the core of their brand experience, they said they would not allow us to offer an exclusive, non-sharable offer. Period.

But there had to be a middle ground. So I asked, “What about a test drive offer that couldn’t be shared, but we’ll tell people up front that it is exclusive to them? And what if we tell them that if they share it, their friends will be served with a screen that politely says, ‘Sorry. This promotion is now closed?’” The Facebook guy thought for a moment and said, “Well, if you tell people up front that they can’t

10 Originate Report | October 2017

CONTINUED ON PAGE 12

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 11

share…and you let their friends down nicely, that’s not really a bad user experience. I will approve that.”

So that’s what we did. We created what I think was the very first Facebook offer with a monetary incentive that couldn’t be gamed by others. And it worked. Dealers got a great response from the offer, and lots of vehicles were sold in a relatively short period of time.

Then, our cheese was moved again.

Today, large national advertising agencies are really good at buying social media ads en masse. They can buy them cheaply because they buy in volume. So where does that leave a smaller company like ours?

The answer can be found in the world of fast food. McDonald’s, the 800-pound gorilla of the fast food industry, can deliver food en masse. So what do you do if you’re Burger King? You sell personalization. Have it your way!

That was our solution.

To counter the buying power of big agencies, we came up with a customized solution because different kinds of customers need different kinds of messages. After all, if a customer who already owns your product walks into a dealership, they don’t need much convincing to make another purchase. They just want a great deal. But if a prospect walks in who prefers someone else’s vehicle, you’ve got to

12 Originate Report | October 2017

convince them that what you have to sell is really the better choice. These are two totally different selling situations.

So we separated customers in our databases into three distinct groups. The HOT Group includes current owners who are shopping; we send them an ad showing current available inventory. The WARM Group includes people who have showed an interest in our brand but don’t yet own one; we send them information about our product.

And the COLD Group includes people who own other brands and aren’t interested in our products; we send them a video showing a competitive owner explaining why he just made the switch to our brand. Later, if the WARM and COLD groups show some interest, we’ll also send them a shopping ad listing current offers.

The results? Dealer clicks increased from about 40 clicks per month to almost 4,000 clicks per month. We became

many dealers’ greatest source of internet traffic. And sales went gangbusters for participating dealers.

Which brings me back to the beginning.

My career has faced many seminal moments. Thankfully, I made it through all the twists and turns by recognizing the need for change and embracing it. My goal in the future is to be better at anticipating change before it happens.

This works in the world of marketing and I’m pretty sure it works in almost all professional and personal paths. Because, try as we might to think otherwise, the future is never what it used to be. Change is an integral part of life.

And, chances are, while I’ve been writing all this down, somebody somewhere has moved my cheese again.

ABOUT THE AUTHOR:

Scott Empringham has worked with virtually every major OEM (Ford, Toyota, Cadillac, GMC, Buick, Honda, Lincoln Chrysler, Jeep, Fiat, Dodge, Lexus, etc.), their Dealer Groups and well over 2,000 Dealers, both in the US and overseas. He’s also worked directly with owners, CEOs and Marketing Departments of major Juice, Insurance, Plastics and Financial Institutions to share his digital marketing and social media expertise on how best to drive new business, retain current customers and conquest the competition. Winning awards like “Best Use of Technology” and “Best Use of Facebook” has captured media attention and kept Scott’s public speaking schedule quite busy lately-but it’s also brought dozens of new opportunities in the Restaurant space, among others.

CONTACT: 949-315-5585 | scott.empringham@fpcdigital.com | fpcdigital.com

www.originate.report 13

Our purpose is more than just providing expert legal advice. Our purpose is adding value and providing peace of mind. Our purpose is helping you grow.

Helping you succeed. Helping you conquer the lending market.

Media. Consulting. Law. Geraci Law Firm is now Geraci LLP.

Now, Let’s Get to Work.

14 Originate Report | October 2017

Geraci LLP 90 Discovery Irvine, CA 92618

Geraci Law Firm Becomes Ger aci LLP With the Launch of its Media and Consulti ng Divisions

IRVINE, Calif., October 1, 2017- Ger aci Law Firm officially transitions to Geraci LLP with its media and con sulting divisions’ successful launch. Ger aci, which celebrated its 10 year ann iversary in July of 2017, launched its media division this year, which curr ently hosts three annual conferences (Innovate, Activate and Captivate) and a monthly magazine, Originate Report, which showcases hard-hitting, raw, and real stories that weave the fabric of the human story, and targets loan originators looking to place its loan s in the alternative non-bank lending and traditional banking space. During the last six months, CEO of the firm , Anthony Geraci, played a key role getting the consulting business up and in running. Geraci’s goal in adding thes e two divisions to the Geraci name to be the primary “go to” for profess is ionals in the alternative non-bank lend ing, private money lending, and hard money lending space.

The Geraci vision is to be more than just your law firm. “We are constantly striving to provide value and peace of mind to our clients, which is why that is our brand purpose” said Christina Geraci, managing shareholder of the firm. Geraci Consulting pairs banks, family offices, and high net worth inve stors with alternative non-bank lend for mutual synergy - investors get high ers returns and alternative non-bank lend ers get the capital necessary to fund their loans.

With the merger and launch of the media, consulting, and legal division s, this trifecta will continue to dominat the alternative non-bank, private mon e ey, and hard money lending space. “We are building a megaphone to tell the world about the benefits of the alterna tive non-bank lending space. We hop e to pair investors with great loans that work as a fixed-income product for thei r investing portfolios. Our main goal – add value to everyone, everywhere, every time,” said Anthony Geraci.

For More Information: Geraci Media Ruby Keys Marketing Director 90 Discovery Irvine, CA 92618 (949)379-2600

www.originate.report 15

FEATURE STORY

16 Originate Report | October 2017

Cloud Service Providers: How Do You Choose?

By Synoptek Cloud use continues to grow as the potential for operational efficiencies and cost savings continues to be realized by mid-size and enterprise organizations. However, when you choose the wrong cloud services provider to migrate and manage your cloud there can be serious business consequences. Therefore, we’ve put together a 10-point checklist to ensure you select the right cloud partner.

Checklist for Evaluating Cloud Services Providers 4. Uptime and service level agreements (SLA)

now, it’s still a fairly new technology, so considering the

details scheduled maintenance communication and how

verify the provider you’re interested in has experience in

do if there’s a data breach or a server goes down? They

with the applications you need to run your business?

2. Customer Service

Along with experience is their view and focus on custom-

The cloud service provider must have a process that

employees handle mission-critical events. What do they need to provide maintenance scheduling information well ahead of time for you and your workforce to prepare.

Mission-critical events can be extremely costly if your

provider doesn’t handle them properly, so don’t take this evaluation portion lightly.

er service. The biggest question is, “How are they available

6. Disaster recovery and backup

encounter a failure? Do they provide an access to an esca-

provider’s business continuity plan? Does the provider

to you and when?” Will they be available 24/7 should you lation contact in the event you need immediate support?

3. Assessments

Do they have the resources and expertise to assess your existing infrastructure to understand your specific requirements? How long does their assessment process

take? Can they provide an agnostic cost overview of all major cloud providers?

centers? How can you be assured the provider will keep

your business safe from cyberthreats? How big is their cybersecurity team?

How do they work with corporate standards — like those

1. Experience

your industry’s compliance regulations? Are they familiar

cybersecurity? Do they have physical security at their data

vice due to maintenance or device failures. Are they will-

5. Scheduled maintenance and mission-critical events

your industry or a similar one. Are they familiar with

buying decision. How does the provider stay on top of

8. Compliance

ing to provide an SLA? What does it look like?

provider’s recent experience is important. You need to

conversation as this is an important component of your

This is connected to customer service as it guarantees your data will be available with few interruptions in ser-

Though cloud services have been around for a few years

er. You need to address all security levels in your initial

Is Disaster Recovery as a Service provided? What is the regularly test your backups to ensure proper operation?

7. Security

Security is one of the most critical components to consid-

How do they handle various IT compliance standards? in the finance industry — to properly store data?

9. Ability to Scale

Does the cloud service provider allow you to turn up or

turn down utilization as your needs change? Does the provider work with you on a regular basis to determine this? Can the provider’s employees accommodate chang-

ing needs associated with your customers’ data needs, your employees’ devices, and other demands on your data and services?

10. On-site services

Though it may seem virtual, there are physical compo-

nents to cloud services. Does the provider offer onsite service and training to properly maintain your data infrastructure?

By using this 10-point checklist you’ll be on your way to finding the right partner that can meet your immediate and future business and IT requirements.

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

FEATURE STORY

Lending with Self-Directed IRAs

By Clay Malcolm, New Direction IRA

Y

ou’re already well versed in the world of loans, especially as the real estate market continues to produce a demand for mortgage origination. Business may be booming, but the next financial edge is always in your crosshairs. Drumming up additional clientele is an obvious solution, but what if you could achieve new tax benefits in the process? Loan origination with a self-directed retirement plan may provide such an opportunity.

Unbeknownst to many investors, the IRS has allowed alternative assets — including notes — in retirement plans since the 1970s. Furthermore, self-directed IRA custodians and financial technology have evolved to simplify transaction initiation like never before.

Although they are similar, an IRA and investments with personal funds have key distinctions. Your personal money may never commingle with IRA money while situated in your account; all applicable paperwork must be titled to reflect ownership by the plan; and you may never conduct IRA business with disqualified persons. Among others, disqualified persons include you, immediate family members (parents, children, etc.), their spouses, and any fiduciaries to your retirement plan. Aside from these considerations, you may issue mortgage loans with your IRA dollars without deviating from the business practices you’ve come to master. You’ll instead discover a new investment arena that may change the way you think about the lending business. Originating notes with a retirement plan allows you to utilize your expertise, tap into a new pool of capital, and discover tax advantages you may have never known about. Some other key benefits — tax-free interest payments and differences in types of IRAs — are discussed below.

Tax-Free Interest Payments

Under normal circumstances, interest payments would be added to your income and taxed accordingly. With a loan originated by your IRA, those interest payments would

18 Originate Report | October 2017

accumulate in your account without qualifying as earned income for the year. Taxes would only come due (if at all) upon distribution of funds or assets from the plan. Circumstances surrounding taxable distributions will depend on the account type, but every plan will involve tax-deferred earnings.

There’s a Plan that Suits your Needs

You may originate loans on behalf of one or multiple qualified plans depending on your financial situation and desired approach:

• Traditional IRA: Contributions (deposits) to Tradi-

tional IRAs may be deducted from income for tax purposes. You’ll pay taxes on distributions (withdrawals) down the road, ideally when you’re in a lower income bracket.

• Roth IRA: You’ll pay taxes on contributed funds, but future distributions will be tax-free if qualified.

• SEP IRA or Solo 401(k): These accounts are spe-

cifically designed for self-employed individuals. They mirror the tax status of a Traditional IRA in regards to contributions and distributions, but annual contribution limits for SEP IRAs and Solo 401(k)s are much higher.

• Health Savings Account (HSA): An HSA offers a

combination of the aforementioned tax benefits. Contributions are tax-deferred and distributions are tax-free,

ABOUT THE AUTHOR:

provided they reimburse the plan holder for qualified medical expenses or pay said expenses directly. You may therefore collect interest without ever having to pay taxes, all while covering the medical costs that everyone experiences at some point.

A Plan for the Future

If you make your living in the lending business, your focus may not extend beyond individual deals or present concerns. However, your overall financial future warrants the same degree of attention as your current affairs. Few retirement investors have the ability to leverage their business skills to build retirement; most pump money into hands-off retirement models and hope their mutual funds continue to bear fruit. By supplementing your existing business practices with IRA investments, you can promote strong financial growth in the near and long terms.

It always pays to review new business opportunities, especially when you can build a retirement portfolio using strategies you already know and trust. Financing home loans through a self-directed retirement plan may seem farfetched, but with the help of an education-based IRA provider, you may find unexpected rewards in exploring this growing investment avenue.

Clay Malcolm is Chief Business Development Officer at

New Direction IRA, Inc., a provider of self-directed retirement plans that hold alternative investments. With over 20 years of management experience, Clay draws upon his comprehensive processional background to cultivate an education-based culture and impart knowledge about self-directed IRAs to clients and partner issuers.

CONTACT: 877-742-1270 (Ext. 113) | cmalcolm@ndira.com | www.ndira.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.

OCTOBER SPECIAL $200 Discount for Registering During the Month of October!

Use Code CONFJUNKIE

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 19

FEATURE STORY

Five Tips

on Marketing to Realtors

By Alicia Carter, Geraci Law Firm

20 Originate Report | October 2017

L

oan officers and real estate agents have always had something in common: They each play a fundamental role in helping homebuyers find their perfect home. The real estate agent acts on behalf of the client to locate and negotiate the sale of a home, while the loan officer works to find the homebuyer the best possible financing solution. So, why don’t loan officers and realtors work together more?

The majority of homebuyers purchase a property with a personal down payment, but they typically take out a mortgage to fulfill the balance of the purchase price.

While it is true that some buyers are savvy enough to

Building strong relationships with real estate agents and offices can help loan officers obtain solid mortgage leads while forging bonds within their community. Those relationships can be developed and nurtured to build an upstream lead generation machine that will drive more consistent and qualified prospective clients. perform their research on the types of mortgages and loan amounts available to them, most peruse available properties before they ever engage a mortgage professional.

This means that the first interaction they have during the home-buying process is with a real estate agent.

Building strong relationships with real estate agents and offices can help loan officers obtain solid mortgage leads while forging bonds within their community. Those relationships can be developed and nurtured to build an upstream lead generation machine that will drive more consistent and qualified prospective clients. Here are five tips for loan officers on how they can better interact with real estate agents to boost loan volume.

1. Finding the Right Real Estate Professional

While every loan officer would love to access a top agent’s book of business, the truth is they most likely have a trusted mortgage professional with whom they currently work. While landing a referral deal from a top agent is always possible, sometimes getting your foot in the door with an up and coming licensed agent is the best way to get an introduction to others in their realtor network.

By offering the right mix of loan products and qualifying buyers quickly for an emerging agent, the news that

you are a valued partner and performer will flow through the office and trickle down to other agents. You will also be in a better position down the road to offer your services to the top agents who work alongside your new referral source.

2. Work in the Best Interest of Your Agents and Their Clients

As with loan officers, real estate agents need to establish the trust of their customers. Part of building that trust is making clients understand that agents work for the homebuyer. Likewise, a realtor wants to ensure their loan officer partners act in their client’s best interest. Assure your agents that you want them to be successful and that you are both on the same team with the same goal: a closing.

False promises do nothing to build trust, but honesty and integrity for every prospective deal will ingrain your value to the relationship.

Many times an agent comes across a homebuyer who did not know they wanted to buy a home until they toured the property. It may be the house of their dreams, and they have not had the time to research mortgage products. When these leads come your way, finding a suitable mortgage program and making a quick decision on qualification may be the difference between a sale and one that got away. Treat your agent’s leads with the utmost priority and do your best to be responsive to the needs of both the agent and the client.

3. Establish a Clear Line of Communication

Real estate professionals gain new clients through open communication. They walk door to door, participate in seminars, and hold community events such as car washes and garage sales, to build relationships. The goal is customers, but the tool is communication. Likewise, your agents want the type of two-way communication that will give them the confidence to send more business your way.

Establish a clear line of communication from the beginning of the relationship. Exchange all contact information, including emails, web sites, and social media accounts.

Stay in touch with your referrers even if you have not received a lead from them. Sometimes, an agent just needs a reminder that you are available to help them land and close deals as a prompt to send over a prospect.

4. Provide Information on Products and Services

Many times, real estate agents know more about building relationships than they do about the mortgage-lending marketplace. Set aside some time with your agents to review the various loan products and services you provide.

Run through different scenarios for homebuyers and provide insight into how you work to get prospects approved.

Offer real-world examples of how you have worked with an agent to get their buyer qualified to purchase a property. Some will not show much interest in loan products, but demonstrating how your expertise in lending can benefit their business will resonate with them.

5. Help Agents Build their Business

By helping an agency build its business, you can increase your loan volume. New realtors are getting licensed each week. Some agents may be new to the industry and not yet understand everything that is required for a successful home sale. Use your experience and skills to educate them on the various techniques that can be used to close a deal.

Help them grow their brand by exchanging partner links on web sites or social media platforms. If possible, refer leads or prospects to your agents. Remember, when they increase their sales, you both win.

In the end, real estate agents are people who want to be successful, just like you. Most understand they need to provide exceptional service to earn their client’s business, and they likely expect nothing less from their partners.

Seeking out reliable real estate professionals who have the same goals and aspirations as you can help increase your loan volume, expand your reach, and build a pipeline that can last well into the future.

ABOUT THE AUTHOR: Alicia Carter is the Marketing Coordinator at Geraci LLP. Alicia supports all marketing campaigns, projects, and events throughout the corporation, using her strong social media skills, a background in web development, event planning, and experience with respective PR roles. As the Marketing Coordinator at Geraci, Alicia holds a key position in the development of the overall marketing vision and contributes to the execution of the firm’s growth. For Marketing inquiries or ideas to partner with Geraci Media, contact Ms. Carter. CONTACT: (949) 379-2600 | a.carter@geracillp.com | geracilawfirm.com www.originate.report 21

FEATURE STORY

Mortgage Shopping Online vs. Niche Lending Programs

By Tim Malburg, Capstone Mortgage Company

T

he Internet is the great equalizer. It has turned action activity and healthy balances. These potential red many fragmented, inefficient industries into effiflags will determine if a loan application is approved or cient, price-driven marketplaces. There is no better denied. The internet is great for comparison shopping, example of this than the residential mortgage industry. but it fails to identify potential deal killers. The survival Not too long ago, applying for a mortgage meant sitting of the mortgage loan officer is predicated on successfully down with a loan officer to shifting from filling out forms discuss pricing options, foland quoting rates to identifylowed by filling out paperIs the residential loan officer an ing and resolving a borrowwork. It was a time-consum- endangered species? If all borrowers er’s red flags. ing and often unproductive Special niche lendwere the same, then the answer is process. Today, the majority ing programs should also be yes. But not everybody has a credit avoided by online mortgage of residential mortgage appliscore above 720. cants do their own research shoppers. These programs and compare rates online. frequently have geographic, Then, they apply online, pay asset, and income restrictions for their appraisal and credit report online, and submit that are not revealed by a lender’s online mortgage softtheir income and asset documents online. By the end of ware. One of my favorite niche products is the 1% Down 2018, I expect the majority of residential real estate closPayment Purchase program, in which the borrower’s 1 ings will also be completed online. percent down payment is supplemented with another 2 Is the residential loan officer an endangered species? If percent from the lender. You read correctly: The lender all borrowers were the same, then the answer is yes. But gives another 2 percent with no strings attached. The final not everybody has a credit score above 720. Nor does loan amount is 97 percent of the purchase price. This is everyone have a stable employment history with debt-toa great program, but it is targeted for a very specific type income ratios below 38 percent. And, many people do not of borrower, and a loan officer would be most helpful in have asset account statements that reflect minimal transidentifying that borrower.

22 Originate Report | October 2017

Loan officers will also continue to play a major role

in helping borrowers with construction and rehab loans.

These products include, but are not limited to, Construction-to-Perm, FHA 203k Standard, FHA 203k Streamline, and FNMA HomeStyle loans. All of these products can be

researched online, but they are extremely complicated and have numerous nuances. A borrower is best served by discussing them with a knowledgeable loan officer.

ABOUT THE AUTHOR: Tim

Malburg has 30 years of experience in financing residential properties.

During that time, he has originated over $1 billion of mortgage loans. In 2000, Mr. Malburg became President of Capstone Mortgage Company, a full service mortgage brokerage firm, specializing in prime paper. Mr. Malburg received his BS from North Carolina State University and his MBA from Cornell University.

CONTACT: (203) 834-6293 | TWM41@aol.com

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 23

UPCOMING EVENTS

Upcoming Events

Don’t be left out! Showcase your upcoming event here! Contact Ruby@originate.report for more information.

OCTOBER

NOVEMBER

DECEMBER

JANUARY

FEBRUARY

MARCH

APRIL

Innovate 2018 Conference FEBRUARY 7-9 2018 Newport Beach, CA www.geracicon.com/innovate

AAPL Conference 2017 NOVEMBER 12-14, 2017 Las Vegas, NV www.aaplconference.com

24 Originate Report | October 2017

All event dates subject to change.

Please visit conference websites for agendas and details.

Presented by

Northern California

www.crelc.com

THURSDAY, NOVEMBER 2, 2017 G R A N D H YAT T S A N F R A N C I S CO

OPENING SESSION A View From Fannie & Freddie Christina Flynn Director, Credit Underwriting FannieMae - Western Region Tony Nargi Director - Production & Sales FreddieMac - Western Region

~ FEATURING ~

The LoanMakers FORUM

Jeff Hudson - Moderator SVP - Managing Director Walker & Dunlop

Where Lenders Compete For Your Loan Requests LIVE!

FEATURING Jesse Gundersheim San Francisco Market Economist CoStar Group - Commercial RE

SPECIAL SESSION:

NORTHERN CALIFORNIA

COMMERCIAL RE STATE of the MARKET

FEATURING Katerina Cheok Sr. Market Analyst CoStar Group - Multifamily

MEE T, GREE T & NE T WORK WITH THE FOLLOWING PARTICIPANTS:

CreNetEx.com

Commercial Real Estate Network Exchange

www.crelc.com • 818-532-7660 www.originate.report 25

LOAN HOME

26 Originate Report | October 2017

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

100K 3M

√

√

√

√

√

80/30

√

Direct Lender

Asset-Backed Lending Partners, LP www.ablp.com bws@abp.com (805) 371-8020

Columbia Pacific Advisors, LLC

www.columbiapacific.com bridgelending@columbiapacific.com (206) 294-7932

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

100K 50M √

√

Direct Lender

500K 5M

www.money360.com/getaloan getaloan@money360.com (888) 283-7809

√

√

√

√

√

√

√

√

√

5M 50M √

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

* TX

√

√

√

√

√

√

√

√

√

√

75/3

√

√

√

√

√

√

√

√

√

70/2

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

√

* CA

75/10

√

√

√

√

√

√

* AL,AK,AZ,AR,CA,CO,CT,DE,FL,GA,HI,ID,IL,IN,IA,KS,KY,LA,ME,MD,MA,MI,MN,MS,MO, MT,NE,NV,NH,NJ,NM,NY,NC,ND,OH,OK,OR,PA,RI,SC,SD,TN,TX,UT,VT,VA,WA,WV,WI,WY

√

√

√

√

√

√

SFR

√

√

California Properties, 1st & 2nd TD’s

1M 20M √

150K 5M

√

70/30

√

√

√

√

√

√ 2017

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

√

* AL,AK,AZ,AR,CA,CO,CT,DE,FL,GA,HI,ID,IL,IN,IA,KS,KY,LA,ME,MD,MA,MI,MN,MS, MO, MT,NE,NV,NH,NJ,NM,NY,NC,ND,OH,OK,OR,PA,RI,SC,SD,TN,TX,UT,VT,VA,WA,WV,WI,WY

Direct Lender

√

√

* AL,AK,AZ,AR,CA,CO,CT,DE,FL,GA,HI,ID,IL,IN,IA,KS,KY,LA,ME,MD,MA,MI,MN,MS, MO,MT,NE,NH,NJ,NM,NY,NC,OH,OK,OR,PA,RI,SC,TN,TX,UT,VA,WA,WV,WI,WY

Direct Lender

250K 5M

√

68/3

√

Direct Lender

Pacific Private Money

70/5

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

Direct Lender

Money360

√

EB-5

www.alistpartners.com scott@alistpartners.com (512) 687-6263

Senior Housing

A List Partners Management, LLC

* AZ, CA, CO, CT, DE, FL, GA, IL, MD, NV, NJ, NC, PA, SC, TX, VA, WA

* = states lending in

ACC Mortgage

MA

MI

NI

LENDER

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

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

Direct Lender

* CA

Look for this Lender’s Ad in this issue of Originate Report www.originate.report 27

28 Originate Report | October 2017