JULY 2020
THE OFFICIAL MAGAZINE OF GERACI
3rd
Anniversary Edition Carlos Nodarse
THE MORTGAGE OFFICE
INSIDE:
CULTURE CORNER WE LEND, LLC
Guide to Selling your
FIX-AND-FLIP in the Summer
Appraisals
in the New World The Value of Social Media Ads
UNDERSTANDING FORBEARANCES July 2020 Originate Report 1
2
CONTENTS JULY 2020
Who To Know 6
Carlos Nodarse, The Mortgage Office
By Charles Peckman, Contributing Writer
12 Wisdom From The CEO
6
By Derrick Foote, Founder & CEO, Duner and Foote
22 Industry Spotlight
By Boris Dorfman, LBC Capital Income Fund, LLC
Features
12
16 Guide to Selling your Fix-and-Flip in the Summer
By Lou Forino, Gauntlet Funding
18 Culture Corner: We Lend, LLC
By Originate Report Staff
18
26 Appraisals in the New World
By John Tedesco, Appraisal Nation
30 The Value of Social Media Ads
By Ruby Keys, Geraci LLP
22
34 Understanding Forbearances
By Melissa Martorella, Geraci LLP
In Every Issue 38 Lender Directory
26 July 2020 Originate Report 3
PRESS RELEASE
Geraci Media Announces Conference Plan for Remainder of 2020 Dear Geraci Clients and Colleagues, The Geraci LLP Partners and Geraci Media team members met to discuss the best plan of action for our conference line amid the recent virus outbreak. Based on our research and outreach, we have come to the difficult decision that we will not be hosting any in-person events for the remainder of the 2020 calendar year. Our annual Captivate Conference, which was scheduled for August 19-21, 2020, in Las Vegas, has been removed from our calendar of events as we recognize the need to adhere to health and safety guidelines. However, we eagerly look forward to returning to live, in-person conferences and events in 2021. Our media team spent time reaching out to our clients, colleagues, and other event lines to determine the best course of action for the remainder of the year. We have also kept up with regulations in Nevada and California over the past few months to understand our options, and if we would be able to move forward with any in-person conferences in our planned locations. Though we are disappointed not to be able to hold our flagship conference this year, we have determined that this is the best course of action. However, we are going to come back even better than ever for both Innovate and Captivate 2021! We hope that you understand our decision and honor the meticulous research and care that has gone into this decision. We will continue to brainstorm ideas and work with our industry partners about how to fill the networking and educational needs our industry is facing for the remainder of 2020, and will release more information as those decisions get finalized. We miss all of our clients and the experiences that we get to have together through our event line, and cannot wait until we are able to see you all again. Thank you! Best, Alicia Carter Event Director Geraci Media
Alicia Carter, Event Director www.geracimediagroup.com | (949) 379-2600 | a.carter@geracillp.com
4
Letter Editor
from the
CEO ANTHONY GERACI, ESQ. a.geraci@geracillp.com Senior Vice President, Marketing and Media LESLEY BOYD l.boyd@geracillp.com Vice President of Geraci Media RUBY KEYS r.keys@geracillp.com Lead Graphic Designer LYNDA HIGHT l.hight@geracillp.com CONTRIBUTORS Lou Forino • Melissa Martorella John Tedesco • Ruby Keys Derrick Foote • Boris Dorfman Charles Peckman • Carlos Nodarse
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 July Edition of Originate Report.
This edition shares the history of an established loan origination platform in private lending, and also marks the third anniversary of Originate Report! This magazine was created to be the Loan Originator’s guide to private lending. Through columns such as Wisdom from the CEO, Industry Spotlight, and Culture Corner, we provide value and insight in a way that no other magazine does. We believe the most important aspect in any business is building key relationships with strategic partners. Through Originate Report, you can learn about the personal and professional aspects of industry leaders and companies in private lending. We hope you learn and grow to further your career in private lending through Originate Report. In this edition, you will learn about Carlos Nodarse and his journey with one of the leading loan origination software’s, The Mortgage Office. Unusual in today’s day and age, Carlos worked his way up through the company over the past 30 years. Thus, his transition to CEO was not met with any uncertainty or miscommunication; rather a seamless evolution into a leader who understands the products his company designed from the ground up and helped shape the entire business model over the course of his career. Just as our cover story details the Mortgage Office’s transition of leadership, our leadership at Originate Report has also changed. Moving into our third year of publication, Lesley and I have taken over the helm and we look forward to continuing to share the stories of innovation, resilience, and fortitude that abound in this industry. We are forever grateful to share the stories of many established innovative leaders and companies within the private lending industry. Thank you for your loyal readership and cheers to you on our publication’s anniversary! Ruby Keys
Ruby Ruby Keys Vice President of Geraci Media July 2020 www.originate.report Originate Report 5
PROFILE
Carlos Nodarse, CEO The Mortgage Office
Carlos Nodarse
in private lending platforms. The predominant product of Applied Business Software, The Mortgage Office, has been an essential part of private lenders’ success for over 40 years. Even though a quick web search for lending platforms spits out millions of results, The Mortgage
THE MORTGAGE OFFICE By Charles Peckman, Contributing Writer
T
he the
year
was
blossoming
1978, field
and of
computer-based loan servicing
have since moved away from the nonconventional
lending
realm,
included Jerry and Eddy Delgado.
Office
has
remained
dominant
in loan servicing and origination software for four decades. As of this year, Applied Business Software has a new chief executive officer at the helm, Carlos Nodarse. In some instances, new leadership
and origination software was rife
This
with competition. These trailblazing
transformed
into
miscommunication. In the case of
entrepreneurs,
Applied Business Software, a leader
Nodarse, however, the transition to
6
many
of
whom
duo,
however, their
has
startup
since
is
met
with
uncertainty
and
CEO was not a difficult one; after
This sentiment was shared by Jerry
Loyola Marymount University with
all, he has been with the company
Delgado, who along with Eddy,
a degree in computer science. In
for over three decades. Speaking
sat down with Originate Report in
addition to learning the fundamentals
with Originate Report about a
2018 to celebrate Applied Business
of complicated machinery, he added
multitude of subjects, Nodarse
Software’s 40th anniversary.
that a computer science background was perfect for the bourgeoning
recalled the beginnings of a now booming enterprise.
“What it takes [to remain successful]
Applied Business Software.
is moving with the times – you can’t “Our products represent decades of
be in what we call ‘the bleeding
Today, everyone understands at least
hard work and dedication,” Carlos
edge,’ but you have to be following
the basics of computing. During the
said. “We’ve been very successful
the market and upgrading your
late 1970s, however, Carlos said that
in marketing the product to a wide
software,” Jerry said. “For 40 years,
this understanding was not a given.
range
Launched
we have probably used four or five
Primitive computer interfaces were
initially in our own backyard of
operating systems, and every time
often clunky and required extensive
Southern California, the pre-internet
you change you have to re-write
days
geographical
the software – you have to keep the
market. As word spread, however,
technology current. The difficult
our popularity grew. When the
part of staying with the times is one
internet came about, it really opened
of the things that attracted me to
things up for us and allowed us to
the industry.”
and initially I wore many hats. We
markets.” “This ability to instantly
“It is difficult to think about this
started doing quite a bit of customer
communicate with customers across
success,” Carlos added, “without
the country – and the world ¬– was
harkening back to his high school
a game-changer for The Mortgage
days during the advent of the
Office,” Carlos said. “Now that
personal computer.”
feet wet with the developmental side
able
“I thought all of it was fascinating. It
all aspects of the business has been
to assist lenders across the U.S.
intrigued me. I’ve always loved math
and in over twenty countries,
and science,” he said. “I decided
serving some of the largest private
to take [a programming class] my
lenders, non-profits, tribes, cities
senior year in high school. Frankly,
and municipalities.”
that is really where I got hooked. I
of
industries.
limited
our
expand our reach to international
the suite could be disseminated instantaneously,
we
were
realized I loved the whole concept; I “[These examples] are a perfect
loved the creativity and the control
testament to the flexibility of our
I had of these machines. By that
product,” he said. “We designed the
time, Jerry and Eddy [Delgado]
product so it can be used, frankly,
were looking for someone to help
by anyone servicing a debt. We’ve
at Applied Business Software with
been at this for a long time, and our
product manuals and asked me if I
team has been here for many, many
wanted to come help.”
years. We focus on our product, on providing top quality customer
Although this originally started as
support, and listening to what our
a summer job, Carlos returned to
customers need from our software.”
the company after graduating from
knowledge to operate. “In 1987, I was offered a full-time job at ABS,” he said. “That was my ‘official’ beginning of a career here, were a small company back then. I support, which helped me learn a lot about the product and the industry. At the same time, I was getting my of the software. Getting involved in one of the most rewarding factors of being at ABS.” “At so many companies,” he said, “it is easy to get locked in a cubicle or shoehorned into working on one specific piece of a product. When part of a small-but-mighty group, and
however, professional
these
creative
‘barriers
to
diversification’ easily dissipate.” “You’re not stuck in one little cube,” Carlos said. “You learn about marketing, you learn about sales, and of course, you certainly work Carlos Nodarse: Continues on pg. 8
July 2020 Originate Report 7
all;
Carlos Nodarse: Continued from pg. 7
on the development of the product. Eventually, I started doing a lot of the development together with Jerry. I became the Vice President of
Software
Development
and
subsequently the COO. Just this year, I was promoted to CEO. It’s been challenging and fulfilling.”
Sales,
Marketing,
toes. We’re a successful company,
Accounting, Deployment, Customer
but we don’t take that for granted.
Success. For example, when I talk
We realize that we need to keep
to my Support Team, and I demand
pushing, and we do that daily. We’ve
things from them, I know I can look
seen many changes over the years,
them in the face and say ‘listen, I’m
and adapt quickly, which has given
asking you to do something that
us the experience that has placed us
I’ve done.’”
where we are today.”
When
Support,
pushes
something,
Throughout his career thus far,
team
understands
Carlos said he has watched a myriad
that these suggestions come from
of competitors shut their doors. As
the perspective of someone who
the technology changes – and new
has been in the field for over three
players continue to enter the space
decades. His experience in a number
– some entrepreneurs, even if they
of different departments, allows
have been successful in the past, fail to
him to ‘keep a pulse’ on the day-
adapt to an oft-turbulent climate. The
to-day company operations while
key to counteracting this? Carlos said
also trusting key players in all the
it lies in a company’s ability to think
departments to execute their tasks
on its feet and remain comfortable in
with competence.
the face of the unknown.
In his role as CEO, Carlos said it is
This philosophy – which Carlos
often challenging – yet rewarding –
describes as ‘move and move quickly’
all aspects of the company. If I
to stay up to date on the company
–
were to have just been involved in
when the technology associated with
Software stay in business for over
development alone, I wouldn’t have
lending changes daily.
four decades. Even though this
Working in so many roles over the years, has allowed Carlos to appreciate and deeply understand the many facets of a complicated business.
New
players
in
the
nonconventional lending and loan origination fields were not present for the evolution of the space. Newer players are constantly entering the market now, and Carlos deems this as healthy competition and signs of great times. “In my new role [as CEO,] I oversee
his
Carlos
tight-knit
has
helped
Applied
Business
adaptation is often the subject of
obtained the experience I need to run the organization.” he said. “The
“That’s the way it’s always been,”
serious meetings and a certain
fact that I know exactly what my
he said with a chuckle. “Frankly, it’s
amount of angst, he said there are
team members are going through
one of the reasons why I love this
moments in which the changing
is invaluable; I can relate to them
business. We are constantly on our
times cause him to laugh.
Applied Business Software Team The Mortgage Office
8
“The other day, I was speaking with a few of our new developers. They’re younger guys and the topic of Rolodex cards came up,” he said. “Now adays, everyone has a computer on their desk. This was not always the case. Computers were expensive, so our customers would print their borrowers’ and lenders’ contact info on Rolodex cards for reference throughout the office. When this came up [with the new developer] he asked. ‘what’s a Rolodex?’ Here’s a young man out of college and the concept obviously just no longer exists…it was funny.” Support Department The Mortgage Office
Although this instance of generational knowledge
amused
Nodarse,
he
added that it got him thinking about how some technology-based companies cut corners when coming
demand it. It is what has made our
the ways in which some corporate
company successful.”
communications at other firms have been stunted by a mix of in-person
Paired with these advancements –
and
not to mention Carlos’ naming as
were made, naturally, to the ways
CEO – has been the unimaginable,
in which the company operates, but
longer. This has always been a core
a global pandemic with disastrous
Carlos said that team cohesion and
design philosophy here at ABS.
consequences. When the news of the
effectiveness have been critical tools
novel coronavirus first hit the United
when grappling with a once-in-a-
“Customer requests are important
States, he said the Applied Business
century pandemic.
driving forces behind our products”.
Software team was a bit apprehensive.
to terms with new software and interfaces. We never cut corners, even if it means things take a little
Electronic
signature
processing,
remote
work.
Adjustments
“I certainly didn’t have pandemic
SMS texting along with a new loan
“The issue of working remotely,
penciled in on my calendar,” he
application portal in our origination
obviously, became a topic. With
module has been met with high
the
said. “But for years now, we have
praise. To Carlos, this praise is
employees, we all stayed here [at
important. After all, the Mortgage
the office,] providing support for
Office has been built with the
our customers” Carlos said. “We’re
customer in mind.
part of the Essential Services in the
exception
of
a
couple
of
financial sector. The value of a team “We have our goals, we know
environment is just something you
where we want to get to in our
can’t replace, and it makes us more
product development,” he said.
cohesive, solid and simply better.”
“We’re constantly plugging away at those goals because we know
Applied Business Software is a very
that our customers are going to
close team, he said, referring to
been preparing for emergencies. All our internal servers and email system were moved to the cloud. We are prepared if something were to happen to our offices today. It would take no time for us to be back online. We let our customers know we were here to help; we have their backs. A big part of their business depends on us and we take that very seriously” Carlos Nodarse: Continues on pg. 10
July 2020 Originate Report 9
Carlos Nodarse: Continued from pg. 9
As states began issuing stay-athome orders and the closure of non-essential
businesses,
Carlos
admitted to feeling apprehensive. Despite these natural trepidations, he added that the growth curve for Applied Business Software is looking ‘robust’. ABS is experiencing a
phenomenal
year
and
has
surprisingly seen a steady growth. It predicts a ‘pretty spectacular’ end of year. He attributes this steadiness even in a pandemic year to his committed team members and loyal customers.
will continue to stay low (and may
gone through more change during
even drop further,) and although
the COVID-19 pandemic.
the demand for luxury properties has decreased, this may present as
“All my three children did remote
a unique opportunity for investors.
learning, and my daughter’s last
In any case, Carlos said Applied
semester of college was basically
Business
Software
is
closely
monitoring the situation. From a business standpoint, he added, the day-to-day operations of the company have not changed much because of the pandemic. The newly appointed CEO’s days still start with him driving to work (minus the traffic, of course.) Implementing social distancing at
canceled. To my fortune, my wife is a former teacher and that has really made the difference in our children’s lives. I feel very blessed. She does a fantastic job with them and their education has felt no interruption.” Having everyone spend so much time together is quite a change from what we deemed as pre-pandemic ‘normal
According to the California Association
the workplace and following the
life’.
of Realtors, the coronavirus pandemic
county’s guidelines posed a challenge
at home, has been the opportunity
has already had an impact on the
at first, but Carlos said he took this
to just ‘sit down and talk’; simple
state’s
in stride. His family, however, has
concept, yet so fulfilling.’
market.
Mortgage
rates
One aspect of quarantining
Accounting Department The Mortgage Office
10
“It’s not that I didn’t [sit down and
have made it through the pandemic
here. We are always here for them
talk with my family] before all of this,
without its amazing employees and
sharing our experience and expertise.”
because I’m a strong believer in open
the support of its customers. He said
communications with my children,”
his employees step up to the plate
he said. “My children are at an age now where we can carry on some pretty
interesting
conversations.
daily and constantly surprise him with an A-Grade performance.
And in that respect, it has been fun.
From his perspective, it has been
But we live in California and we’ve
‘invaluable’ to still have customers
got great weather, so I miss doing
from when he first started at the
‘California things’.”
company. “Our customers have been
Very telling of a true passionate CEO, Carlos closed our interview with a certain elation in his voice when he said: “I am excited about the new technology we will be unveiling soon. Stay tuned.”
Carlos Nodarse CEO The Mortgage Office www.themortgageoffice.com
wonderful,” he said. “We’ve got Although trite, Carlos reiterated
incredibly loyal customers, who have
Applied Business Software could not
been with us for as long as I’ve been
INDUSTRY JOB WATCH
LOOK WHO’S HIRING! Looking to fill a position? Advertise it here in Originate Report’s Industry Jobs to get it in front of thousands of qualified candidates. Contact us at (949) 629-3961. Fidelity Mortgage Lenders, Inc. has been funding real estate loans in Southern California since 1971.
Founded as Fidelity Home Loan Co. Inc., we originally specialized in residential equity loans, and later expanded in to commercial lending. We make loans on both commercial and residential properties in the state of California, providing first trust deeds, refinances, and/or purchases. Now in our fifth decade, Fidelity Mortgage provides loans to borrowers which larger institutions are unable to fund. We grew by responding to the needs of a changing real estate marketplace while serving a growing community of property owners and investors. Our reputation for fairness and reliability brings us referrals from our borrowers and other professionals. As a result, we service a network of real estate brokers, attorneys, accountants and business managers who seek our professional help for their clients. All of our combined departments work together to completely service loans. From loan advisers to escrow officers to loan servicing, there is only one goal… our clients’ total satisfaction. The Role: We are seeking a candidate with knowledge of commercial lending to be part of our loan servicing team. Responsibilities: • Service Loans - Monthly payments processed and scanned - Monthly check to investors • Collections - Track and file late notices - Read fees and statements, and conduct appropriate follow-ups - Use judgement to escalate concerns to immediate Manager or to the Company’s Chief Operating Officer • Insurance - Read and understand Property Fire Insurance - Track insurance notifications - Monitor requisite insurance on properties - Communicate to investors and property owners • Customer Service with Investors and Borrowers - Answer general questions, and display problem-solving skills • Knowledge “The Mortgage Office*” loan servicing software system Qualifications: • ~3 years Real Estate Loan Service Specialist • Knowledge “The Mortgage Office” loan servicing software system • Familiarity with foreclosures • People skills and rapport with borrowers, customers • Computer skills: proficient in Word, Outlook and excel • Able to manage multiple projects, deliverables, milestones, and schedule
July 2020 Originate Report 11
WISDOM FROM THE CEO
Derrick Foote Founder & CEO of Duner and Foote
12
evolve and try to better the people around me. During those times of turmoil there was increased pressure that emphasized going above and beyond to stay relevant. What did you do in the beginning of starting your business? I stepped into an existing practice, so I spent a great deal of my time understanding and getting to know the client base. I luckily was working with David Duner who helped me along the way and provided support. I felt based on my twenty years of industry experience that I had the technical tools to be successful and provide a high level of service. Even with my background and the support of David Duner there were still risks associated with business. With any new business you have to build the right team internally, which takes time and understanding.
I have
always been hands on, so I had to work to develop trust with my work colleagues. Also, it took me some time to get comfortable with the financial aspect of the practice. There were a few sleepless nights as I endeavored to be in business on my own. There were worries that I hadn’t been exposed or accustomed too. With all my new experiences and tribulations with being a business owner, I found Derrick Foote, Founder & CEO Duner and Foote
Can you explain a time where you
tech bubble bursting, the collapse of
faced adversity or had struggles
Arthur Anderson, and the Financial
early on in your career?
crisis of 2007.
I started my career in 2000 and
events
during the first decade in business
helped shape me into the financial
there were three major events in the
leader I am today. These experiences
financial world that had a significant
taught me to not take anything for
impact on me as a professional. The
granted, to work to constantly to
created
All three of these uncertainty
and
courage in my convictions. Before I went out on my own I had ideas of what I wanted to accomplish and how I envisioned my business three and five years later. By staying true to what initially inspired me to take the risk of going on my own provided me with “wind in my sails� as I was faced with challenges. Derrick Foote: Cont. on pg. 14
July 2020 Originate Report 13
Derrick Foote: Cont. from pg. 13
What habits, mindset, or perspective have helped you succeed as a business owner? Always looking to improve how we conduct our business.
There are
constant changes in our industry, either from a technical perspective or from an operational standpoint. I think having the mindset to being seeking change will help us grow and better position us for the future. Also, there needs to be balance. Getting a business started can be very consuming.
I was thinking
constantly about the business. I am working to find balance and that when I am out of the office I can “check out�. What excites you about your role as CEO currently today? I enjoy what I do. Even as CEO I like to be involved in the business and doing the work. I like setting the tone and the direction that the business goes in. What has been your favorite aspect of being an entrepreneur over the years? The freedom. I spent the majority of my career in the corporate world and switching to an entrepreneur role,
14
it allows me the freedom that I can
How do you make sure your company
appreciate and have always wanted.
stays ahead in this industry?
What piece of advice do you have to share with other entrepreneurs and CEO’s that are in the early stages of building their company? Stay
true
to
your
convictions.
There will be instances that will feel overwhelming.
Think back to
why you started your business and recall what led you to take the risk. The wonderful part of my business as a CPA, is I work with business owners regularly. I appreciate the feedback I receive from our clients regarding their challenges as well as their insight into how we deliver our services. At the end of the day it is a marathon not a sprint, so not
From my perspective, education is a big component for staying relevant. In accounting the better trained your staff is the more value you can provide your clients. Is there anything that you wish you could go back and tell yourself at the inception of your company? I remember when I went into business there was so much to learn and get an understanding of. I wish I would have spent more time on the marketing side of our business. Even to this day I am striving to increase our media presence as well create industry specific content that furthers our mission.
immediately start investing time
What tools do you use to aid you in your role as CEO to be most efficient, organized, and focused? To help me stay focused, I find outlets outside of work. For me, stepping away and focusing on outside interests are a big part of me being able to stay focused while I am in the office. It is real easy to become consumed during the initial stages of starting a business but
into trade organizations, net working
finding balance was key for me.
everything will not change overnight but it is helpful to have a plan in place and the flexibility to
make
adjustments along the way. What activities or resources would you recommend other entrepreneurs to invest their time in? My recommendation would be to
groups, and professional coaching. My goals in joining these organizations is to increase my network and meet like-minded professionals.
Derrick Foote Founder & CEO Duner and Foote www.dunercpa.com
PRESS RELEASE
ABS Appoints Jasen Portero as Chief Operations Officer LONG BEACH, Calif., May 5, 2020 - Applied Business Software, Inc., (“ABS”), leader in loan servicing and origination software in the private lending space, announced today that Jasen Portero, its current Vice President of Development for the last 12 years, has been appointed Chief Operations Officer. As a Full Stack Developer, Jasen oversees the Development Department, manages all online services, and spearheads all new projects. As VP of Development he has created a multitude of Front-End Service capabilities: iPad app, electronic signature, online loan application and borrower portal, text notifications, loan geo-mapping, API, and the first fully browser based version of The Loan Office® servicing software. As a Chief Operations Officer he will be extending the online services and will oversee development of both products, The Mortgage Office® and the Loan Office®. Prior to joining ABS, Jasen spent 18 years working for Universal Music Group, WellPoint, Warner Bros., and Evite where he took part in developing some of the technology people around the world have come to use and love. “I am honored and humbled to take on this new role and take ABS to a new level. Our software is a testament to hard work, excellence in coding, and continuous innovation. ABS as a trusted brand is experiencing incredible growth, and I am excited to be a part of it and take the company to the next phase.”, said Jasen Portero. “Since joining in 2008, Jasen has been instrumental in our growth. He is an excellent addition to our senior management team and will play a critical role in ABS’ future product development strategy. His proven track record and ability to build a winning team are a great combination for what lies ahead”, said Carlos Nodarse, ABS’ CEO. About Applied Business Software Applied Business Software is a market leader and global provider of software systems and solutions to the lending industry. ABS offers a complete suite of software products designed from the ground up to specifically address the needs of those who originate and service loans. All our products are consistently rated superior in design, system interface, expandability, and ease of use. ABS is based in Long Beach, California. For additional information about ABS’s products and services, visit www. themortgageoffice.com or call (800) 833-3343. Elizabeth Morales, Chief Marketing Officer www.themortgageoffice.com | (800) 833-3343 | elizabeth@absnetwork.com July 2020 Originate Report 15
FEATURED
Guide to Selling your Fix-and-Flip in the Summer By Lou Forino, Gauntlet Funding
M
ore and more, the fix-and-
at a price point that will yield a
For
flip real estate investment
favorable return on investment. The
difficulties, it may be time to
approach is becoming the
data backs up these claims—with the
revamp their sales approach. It can
go-to method for turning a profit in the industry—with the year-end 2019 U.S. Home Flipping Report indicating that 245,864 single family homes and condos across the country were flipped in 2019, up 2 percent from 2018 to the highest point since 2006.
aforementioned U.S. Home Flipping Report showing that homes flipped in 2019 typically generated a gross profit of $62,900 nationwide (the difference
between
the
median
sales price and the median paid by investors), a decrease of 3.2 percent from $65,000 in 2018 and a 6 percent downturn from the post-recession
While fix-and-flips are undoubtedly
spike of $66,899 in 2017.
investors
experiencing
such
be challenging to decide where to begin overhauling your strategy, so here are a few tried-and-true tips to increase the chances of your fixand-flip property being snapped up immediately upon hitting the market. Set the Stage…Literally If the property has been completely rehabbed and is ready for the sales
in-demand in today’s market, some investors are finding it challenging to
Lingering properties on the market
sign to be pitched out front, ensure
offload their refurbished properties
equate
you’ve devoted the time and effort
16
to
lower
sales
prices.
to correctly stage the home. When
respectable profit. If you don’t know
market. Resist the temptation to go
it
comes
your ARV then you have no reference
with the first realtor you see on a
is
everything.
focus
point. The first step in determining
quick internet search. Putting in the
should be to accentuate the most
ARV is to look at comparable or
legwork to compare agents and find
sought-after features of the house
“comps” which are recently sold
one with the ideal profile will pay
while attempting to downplay any
properties that are similar to your
dividends in the long run.
negative aspects of the property. For
subject property and located in the
example, consider using flattering
same vicinity. Next, you will need
Selling Your Flipped Property in
to estimate the cost of repairs and
the Summer
account for closing, holding, and
Summer homebuyers are usually
financing expenses. After calculating
eager to get their families settled in
all of these variables, you are then
a new location prior to the beginning
ready to determine your selling
of a new school year—which is great
price. While there are a number of
news for investors looking to offload
formulas utilized in the industry, one
rehabbed
of the most commonly implemented
hours of daylight also work in your
is: (ARV) – (Repair Costs) – (Closing
favor as there is more time during
& Holding Costs) – (Desired Profit) =
the day for potential buyers to view
Offer Price.
the property in ideal conditions.
to
staging, Your
aesthetics
main
lighting throughout the house to brighten up dark corners and create playful
shadows
or
incorporate
texture through textiles that entice touching by potential buyers, which promotes a personal connection to a space. Even if the property has some quirky architectural aspects, it’s best to showcase them rather than try to cover them up—after all, a house’s personality is an element of its overall charm and appeal. Imagine
Team Up with an Agent
there’s
space
Having a trusted and experienced
underneath a staircase. Consider
realtor with a proven track record of
transforming it into a reading nook.
selling properties quickly in the local
This preparation will help you make
market is a priceless commodity for
the most of showings.
any real estate investor—particularly
seemingly
wasted
those interested in focusing on fix
properties.
The
extra
Additionally, a significant number of summer purchasers could already be months into their new home search and just haven’t located the perfect property yet, meaning they have a sense of urgency when it comes to sealing the deal. Be sure that your property is ready to show in the
Settle on an Asking Price
and flip projects. They’ll have the
Deciding how much to ask for your
skills and know-how to walk you
rehab project can be a tricky topic—
through the selling timeline step-
that you usually wood and keep the
as asking too much can mean your
by-step and assist you in making
air conditioning running to maintain
property will be stuck on the market
sure there are no overlooked details
a cool and comfortable environment
indefinitely and asking too little
in preparing your property for the
for walkthroughs.
risks, not making a profit on the
ABOUT THE AUTHOR: Mr. Forino co-founded Gauntlet in 2013, and is responsible for strategic direction of the company. Under Mr. Forino’s direction Gauntlet is has lend over $250 million dollars in private loans amongst its product lines. Founded on the principals of building wealth through real estate Mr. Forino has dedicated himself to help his borrowers, investors and employees achieve or enhance this dream. Since 2010 Mr. Forino has been involved in over 100 real estate transaction, as a real estate investor/developer. Previously Mr. Forino founded and later sold Infinity Consulting Group (ICG), an IT staffing and consulting company with 145 FTE employees and over $20 MM in runrate revenue. Mr. Forino managed multi-million dollar projects for global Fortune 100 companies such as Pfizer and UBS. While at ICG, he completed six acquisitions of competitor’s businesses. CONTACT: louforino@gauntletfunding.com | www.gauntletfunding.com
transaction. A key tool used by many flippers is what is called finding the “ARV” or “After Repaired Value”. It’s basically what the home will be worth after repairs and upgrades have been completed. After you know the amount people are willing to pay for your project, you can then determine all your other expenses and figure out the ideal place to start to turn a
summer—water the lawn more often
July 2020 Originate Report 17
CULTURE CORNER
We Lend, LLC Celebrating Milestones
WE LEND, LLC Welcome to the Family
W
combines service,
exceptional expertise,
customer
and
simple,
relationships with clients.
e Lend, LLC, a hard
rewarded, and integrity matters
money
above all else.
based
and We Lend was born. The firm
fast processes to build trusted
By Originate Report Staff
lender
lending space needed innovation,
Every member of the We Lend team shares a passion for real estate investment. To ensure that passion
in Queens, New York,
translates into superior customer
believes the customer experience
We Lend was founded by a group
is defined by internal values and
of real estate investors who cut
culture. That’s why We Lend fosters
their
a
atmosphere
properties during the 2009 financial
like one big family, hosting events
where passion and hard work are
crisis. They realized the private
family style, including barbeques,
18
tight-knit,
family
teeth
fixing
and
flipping
service, We Lend starts by taking care of the team. As a family-owned company,
We
Lend
treats
staff
dinners, and holiday parties. Just
advice. It reinforces this culture
The hard-working culture and open
like family, the team never misses
internally
open
communication at We Lend are
a birthday celebration. We Lend
feedback and exchange of ideas
built on a foundation of expertise
also offers in-office perks like
via group Slack channels, weekly
company lunches and massages on “Wellness Wednesdays.� Its motto is to treat each team member the same way they treat clients: with dignity and respect. We Lend’s founders, acutely aware of the perception of the hard money
by
encouraging
company meetings or regular oneon-one meetings. We Lend extends this ethos to the broader community. It recently expanded its office to
bring extensive experience to the table. This ensures every member the best possible experience for
can drop-in. The community office
borrowers. Not only does We Lend
which often develops into new
integrity,
keeping
opportunities
informed
and
trusted
by a member of the senior staff, who
family, clients and industry partners
to build a culture of honesty and offering
junior staff members are mentored
of the team is prepared to provide
environment sparks open dialogue,
well-
expertise and company culture, all
create a coworking space where
lending industry, also worked hard clients
and teamwork. To instill industry
for
clients
that
otherwise may not have occurred.
strive to secure the best possible loans for its borrowers, but it also spreads the love, connecting We Lend, LLC: Continues on pg. 20
July 2020 Originate Report 19
We Lend, LLC: Continued from pg. 19
borrowers to a network of real estate professionals throughout the supply chain. The We Lend culture of passion, integrity and teamwork is a market differentiator. This culture helped carry the team through the recent challenges of the COVID-19 pandemic. The firm upped its game internally, enhancing communication and digital systems, in turn optimizing the customer experience. The emphasis on detail and communication helped the team remain connected and ensured client relationships stayed strong while working remotely. Even apart, the team culture continues to unite the We Lend family. Connect With Us: www.welendllc.com
We Lend, LLC Employee birthday shout outs.
20
We Lend, LLC Hosting a team dinner after a weekend long event.
We Lend, LLC Zoom team calls for remote working.
We Lend, LLC Company working space.
July 2020 Originate Report 21
SPOTLIGHT SPOTLIGHT
INDUSTRY SPOTLIGHT Boris Dorfman
LBC Capital Income Fund, LLC
22
It’s all about location, location, location, and quality, quality, quality. How has your company evolved since its inception? (ie: new products, new divisions, grown, merged, etc?) We have stayed about the same but started thinking about opening a new higher-risk, higher- yield fund. We are testing the water now with this product. What
will
be
its
focus?
Stay
tuned. Mostly 2nd TD’s and equity participation. What is something most people don’t know about your company? Most people don’t know that we have been in business since 2003 and still have same 3 friends/partners as we did in 2003. Our company underwrites
primarily
on
“feel
good” underwriting guidelines, so Boris Dorfman, President & Broker of Record LBC Capital Income Fund, LLC
sometimes for best borrowers, best locations and best properties we can go very aggressive. We approach each
How has your outlook of the private
area.
We are only concentrating
and every loan scenario individually
lending industry changed in light of
on primary markets in California;
and come up with possible ways or
the new normal?
sometimes secondary, if near Los
creative structures of closing the
This looks a lot like 4-5 years ago,
Angeles or Orange Counties.
loans. In addition, we are currently
before aggregators got into the hard money space and dropped the rates. Now, private lenders are doing what private lenders do and have offered reasonable
guidelines
for
savvy
investors. I think it is very healthy for the market and for the industry. 90% LTV loans were not really good for us. What are you doing differently
working on creating a new higher Dropped LTV’s, especially for Cash
yielding fund (12%+ return. Our
Out transactions.
current fund targets 8% ROI)
Increased borrowers’ and referral brokers’ qualifications. We are now looking for the absolutely highest quality
of
borrowers.
referral We
sources
started
and
dropping
brokers that send us deals – guys
today to move your company
that
waste
time,
don’t
really
forward than you were 6 months ago?
understand the industry, and have
Narrowed down our geographical
been misrepresenting values.
What has been the highlight so far in your career? The highlight would be when I started this business with Alex and Vladimir in 2003. The first year was brutal. I was 25-years-old coming from a very lucrative, mostly 9-5 job, at a Real Estate Development company. Boris Dorfman: Continues on pg. 22
July 2020 Originate Report 23
Boris Dorfman: Continued from pg. 21
What advice would you give to your younger self? For business: Start with the CRM and contact management system. Create as much structure from day 1. Overall: My younger self would not understand or trust my older self so it would be useless! What piece of advice did you personally receive early in your career that has helped shaped decisions you’ve made? First, I was taught about the 80/20 Rule. Secondly, I learned that loyalty is not a given when borrower becomes your client. You constantly have to earn it. Tell us about a person or organization you admire. How have they made an important impact on you, the industry, or the world? The California Mortgage Association (CMA) has made a lasting impact on me, my business, and the industry as a whole. They really propelled my entire team’s education. They are a
24
very tightknit group of people who
the secondary market being almost
have made a tremendous impact
as strong as it was pre-COVID.
on me personally – interactions,
Overall, I am very bullish on the
friendships, training, and an excuse
California Real Estate market for at
to leave home for 3 days and go to
least next 3 years, maybe excluding
Vegas. They represent the industry
the retail sector.
in California, and everyone knows that members of CMA are held to higher standards. How have you turned a career mistake or failure into success in your career? Anyone that’s been in the Hard Money industry for longer than few years knows that you learn every day. Mistakes happen, lessons are learned, and we move forward. Mistakes are part of success. Today, I hire better people, I am a better manager, and a more pleasant boss. What do you predict for the future in private lending throughout the end of this year and beyond? I see tighter guidelines and not a lot of institutional activity in the near future. Eventually, towards next year, I see institutional money and aggregators coming back and
If you had a clean slate to start over and do anything you wanted to do, what would that be? I would have liked to travel the same roads for experience. I really like what I do. I would, however, start fund a lot sooner and would put a lot more emphasis on raising capital initially. How do you want to be remembered? What have you done to cultivate that feeling from others? I want to be remembered for what I did, for who I helped, and for my shining personality. That is when I die. Boris Dorfman President & Broker of Record LBC Capital Income Fund, LLC www.lbccapital.com
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
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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
July 2020 Originate Report 25
FEATURE
APPR AISALS IN THE NEW WORLD By John Tedesco, Appraisal Nation
T
he appraisal industry has
lenders, and over 6,000 independent
The second biggest generation, Baby
been under a great pressure
mortgage brokers as we perform
Boomers, are starting to downsize.
for
now.
150,000 residential and commercial
Both the selling and buying in their
Increasing demand, shrinking pools
appraisals annually across all 3,143
transactions typically require an
of aging appraisers, evolving data
counties in America. We also work
appraisal; granted large portions of
and technology, growing regulations,
close with federal regulators, state
the selling may overlap with many
and difficult entry barriers into the
licensing boards, numerous industry
of these Millennial home buyers.
profession, are just a few of the
associations, along with institutional
Additionally, interest rates are at an
items that have contributed to the
and private capital investors to
all-time low driving a refi boom and
current climate over the past 10
understand key critical needs and key
requiring valuations in many cases.
years.. Now add the impact from the
touchpoints impacting the industry.
Covid-19 pandemic and the industry
First let us talk supply and demand,
The 2019 Fact Sheet from the
challenges expand even further. The
the key pressure on the industry. With
Appraisal Institute (AI) highlights
impact is being felt by mortgage
Millennials becoming the largest
79,000 active appraisers in America.
lenders and borrowers across the
generation
history,
Less than 50% of those are active
nation and they will need to navigate
housing demands are at an all-time
residential field appraisers; that
these concerns in the new world.
high both for the Single Family and
means many others may work for an
Multi-Family
as
organization like ours doing quality
As one of the premier mortgage
well as first time homeowners. The
control or review work, may serve
service providers in America for real
National
as Chief Appraisers for public and
estate valuations we work with over
is
new
private organizations, work directly
26,000 appraisers, 1,400 national
homeowners over the next 10 years.
on staff for a lending institution, or
26
several
years
in
American
Rental
Association
predicting
12
markets of
Realtors
million
states
can
significantly.
Fannie reported 60,000 of their
the
annual
1.2 million loans (5%) received a
Valuation Expo (largest expo for the
waiver. Other exemptions from the
valuation community) reported 2017
Federal Reserve and FDIC were put
that metro Atlanta has 60 appraisers
in for commercial properties under
per 100,000 people, San Francisco
$250,000, and then in 2018 that was
had 30 per 100,000 people, while
raised to 500,000. In 2019, the FDIC
Cincinnati had 14 for 100,000 metro
raised the residential exemptions
residents – and shrinking. In Illinois
from $250,000 to $400,000 and
their state appraisal board reported
required alternative valuations for
nearly 1,500 new trainee licenses
items below that for non-GSE loans.
issued in 2005 and only 53 licenses
In September of 2019, HousingWire
ten years later, in 2015. Following the
reported these waivers represented
Clearbox,
deviate host
of
housing market recession of 2008, increased regulations, added risk, and stagnant fees had compounded with added education and trainee requirements to deter many from
several other important facts. First,
Initially, ita dded costs to appraiser fees and delayed turn times; it has also extended times that killed rate to loan expenses. In recent years,
and has been on a steady decline for
the impact forced federal agencies,
more than 10 years. The average age
lenders, and key decision makers
of an appraiser is 55+. More than
to take measures to combat the
50% of appraisers have been in the
challenge. Some measures pushed
industry over 20 years, while less
to increase supply with reduced
than 16% have entered the industry
barriers to becoming an appraiser
in the past 10 years. Nearly 41% of
trainee, scaling back the added
the appraisers which were surveyed
education requirements and field
in 2018 by the National Association
hours. Other measures focused on
of Appraisers responded that they
reducing demand. In 2017 and 2018, Fannie and
All of this is exacerbated regionally.
Freddie
Rural
adopted
and
expanded
have
been
waiver policies that allowed low risk
underserved
by
borrowers with previous appraisals
lower
on file and higher down payments to
populations, but even cities and
secure appraisal waivers. In 2018,
by
nature
of
an
additional
214,000
appraisal
waivers. Government entities also
are some differences). These reports allow the appraisers to complete key portions of the report from home while other methods can be used to acquire photos and inspections. As we entered 2020, those changes were
still
being
significantly
outpaced by the growing demand from new home buyers, low-rate refi’s, and new construction. In addition to the conventional demand the rapidly growing demand from private capital investors acquiring residential assets through Private Lenders,
REITS,
Family
Funds,
Institutions and more have surged. In 2005 it was projected that this
plan to retire in the next 10 years.
appraisers
that 2017 data would have added
reports (although technically there
is down more than 10% in 5 years
dramatically
stated
This supply and demand pressure
locks, delayed closings, and added
always
threshold
what many of us know as hybrid
that number of active appraisers
areas
updated
started using bifurcated reports, or
the lending industry across America. appraisals. The AI Fact Sheet notes
the
entering the industry.
has been dramatic and painful to perform only commercial asset class
750,000 residential loans in 2017;
represented 5% of all residential lending in America; many experts suggest that the overall number has
grown
closer
to
12%-15%.
Further, these private lenders who Appraisals in the New World: Cont. on pg. 30
July 2020 Originate Report 27
Appraisals in the New World: Cont. from pg. 29
fund investors with fix-&-flip loans, rental loans, refi’s, bridge loans and more have seen a dramatic boom in recent years with the emergence of a secondary market. In March of 2020, ATTOM Data released their 2019 Home Flippers report. They reported an 8- year high with over 245,000 homes flipped in America in 2019. That alone represented 6.2 percent of all lending in America for $32.5 billion in Financed Flips in 2019. Rental programs were even stronger for these private lenders and had more than doubled in recent years, while public and private REITs contributed even more with greater residential rental asset acquisitions than ever. In 2019. NAREIT (National Association of Real Estate Investment Trusts) reported their 2018 holdings now had 150,000 single family rentals and over one million multi-family units. All this driving valuation demand. In the beginning of March, we saw record breaking volume for ourselves and many of our clients. By midmonth this all came to a screeching halt with Covid-19 shutdowns. The conventional Spring/Summer house buying flood that normally backlogs appraisers and drives added delays had turned into a trickle; virtually no one was house hunting while in quarantine. The secondary market funding, which helped the private lending boom was now on lock down. Government agencies like Fannie and Freddie were scrambling to find ways
28
to accommodate the lending that
as appraisers do charge more when
was continuing. The laws that would
demand is greatest. Further, we do
allow appraisers to enter a home to
not believe this temporary crisis will
inspect or leave their own homes was
have quelled the housing shortage
different state by state and county
we were experiencing pre-virus.
by county. The law in some states
With such demand for conventional
deemed
essential
homeowners and private investors,
workers in line with inspectors and
the industry will need to continue to
appraisers
as
contractors, while others deemed them unessential. Exemptions were being made to allow conventional single-family interior 1004 reports to be done as an external driveby reports, and the agencies began allowing lenders to use a desktop report
in
certain
circumstances.
GSEs and lenders began evaluating further
alternatives.
As
an
alternative to in-person inspections, HomeLink, Appraisal Nation’s app, allows borrowers to use a carefully guided tool to take inspection photos according to all key guidelines. These pictures are then geo-coded and timestamped, and sent directly to the appraisers. This became a valuable tool for many lenders. As states begin to open, we are seeing demand return quickly. We anticipate this will grow as we reach a full easement of restrictions in all states over time. We feel the
address these appraiser issues that impact consumers with significant delays and higher costs. The
pre-Covid
waivers
were
exemptions easing
and
pressures
slightly, however, it was still too early to access the risks these taxpayer- backed agencies would face. While we have been seeing great success with our hybrid and alternative valuation products, we recognized they are best used in lower risk scenarios. At the end of the day, a computer cannot see nonconforming conditions on a property. They cannot smell carpets soaked in pet urine or a nearby waste site that may drive down value. It’s important to grow the appraiser pool by making it a more attractive profession, limiting barriers, and expanding their tool belt. Alternative technologies, further exemptions,
backlog from spring volume may
and added tools that emerged during
just add to summer demand, so we
the Covid-19 crisis should be a
are advising lenders to be aware of
valuable resource as we continue to
added turn times and potential fees
grapple with these challenges.
ABOUT THE AUTHOR: John Tedesco is the SVP of Business Development at Appraisal Nation - Appraisal Nation is America’s leading AMC. As an INC 5000 fastest growing private companies’ winner four years in a row, we boast some of the fastest turn times, lowest revision rates and highest-rated customer service in the industry. CONTACT: clientrelations@appraisal-nation.com www.appraisalnation.com
July 2020 Originate Report 29
FEATURE
THE VALUE OF SOCIAL MEDIA ADS
lead generation, can help determine spend and narrow focus to a specific message. The best social media ads are consistent in message and identity across platforms. Lenders should also be sure to budget for training,
By By Ruby Keys, Geraci LLP
A
goals, like awareness, engagement or
content creation, advertising costs
mid the COVID-19 pandemic,
jumped 74 percent since February,
social media has emerged as
according to a May 2020 survey
a critical marketing strategy
of more than 2,600 marketing
Armed with goals and a budget, lenders
for private lenders and brokers. Even
professionals
industries.
can start to assess which platforms
before the pandemic hit, 70 percent
Companies are now spending nearly
are best suited for the way they want
of Americans were on social media,
a quarter (23.2 percent) of their
to engage with clients and prospects.
engaging for an average of 2 hours
marketing dollars on social media,
Here is a guide to advertising on five
per day, according to the Digital
up from about 13 percent prior to
social media platforms:
2020 report from We Are Social and
the pandemic.
across
HootSuite. Now with more people at
and analysis.
1.
is
considered
the
home, inside and online, brands have
But for private lenders who typically
gold
an even greater opportunity to make
rely on face-to-face networking,
business marketing. The professional
an impression.
social media advertising can feel
networking site has more than 160
completely foreign. The best place to
million users in the U.S., and with
Many businesses anticipated this
start is by defining a strategy, starting
each of these users providing detailed
shift. Social media budgets have
with goals and a budget. Outlining
professional work history, it’s easy
30
standard
for
business-to-
quality lead generation frictionless.
generally
Facebook is the perfect platform for
awareness.
promoting other digital marketing
Twitter users (54 percent) will visit
efforts like gated content and
a brand website or Twitter profile
virtual events.
after seeing it mentioned in their
build
greater
More
than
brand half
of
feed. Short-form text content with 3. Instagram has 120 million users in the U.S., and its reach is growing. The photo-sharing platform attracts a younger user base, with 35 percent of users between ages 25-34 and 30 percent of users ages 35 and up. Instagram users often use the platform to discover and research brands, according to Facebook, its parent company. As a visual platform, image-based content like photos, videos and graphics are essential to advertising on Instagram. It is an ideal network for sharing your for lenders and brokers to ensure they are targeting the right audience. The platform offers a variety of ways to advertise, including sponsored content, text ads, display ads and an option to directly message target clients. LinkedIn is the best platform for longform, thought leadership-
company
story,
building
brand
awareness and driving potential customers to your website. The best performing brand content on Instagram functions almost as a short blog, offering personal insights, inspiration
and/or
information
for users.
attached photos or graphics performs best on the site. It also offers robust advertising options and requires no minimum spend. 5. TikTok is still a new frontier for B2B advertisers. It has 30 million users in the U.S., most of whom are under age 25, according to AdAge. The short-form video platform was popularized by Gen Z, the generation born
between
1995
and
2015.
While there’s no set B2B marketing playbook for TikTok, authenticity is key. Weird, funny, inspirational or
personality-driven
content
gains traction here. Ad captions are limited to 100 characters, so more than any other platform, it’s all about the video. TikTok has recently pledged support for more informational
content
for
users,
making it an ideal space for lenders or brokers who want to establish
style content. It is ideal for lenders
4. Twitter boasts more than 53 million
and brokers seeking to establish
users in the U.S. With its 280-character
themselves as trusted advisors in
limit, the platform is built for
major perk of TikTok is the app is
the field.
conversation. It offers businesses
designed for sharing across other
a great way to ask and answer
social platforms like Instagram and
questions; engage with potential
Twitter, broadening the potential
clients and industry peers; and
reach of your content.
2. Facebook is a powerhouse platform due to its enormous reach — 180 million Americans — and engagement. The typical Facebook user clicks on 18 advertisements a month, according to the Digital 2020 report. The platform is ideal for lead generation. Facebook’s “lead ads” option prepopulates users’ contact information when they click on your ad, making
themselves as industry resources. A
ABOUT THE AUTHOR: Ruby Keys is the Vice President of Geraci Media. She joined Geraci LLP in 2015 as the Marketing Coordinator for Geraci Law Firm. As she enters her 5th year with Geraci, she is now the Vice President of Geraci Media, a full service marketing agency, which caters to the Non-Conventional Lending space. Geraci Media was founded in 2016 and began as an event line. Ruby has helped grow and manage Geraci Media to where they now host 2-3 in-person and virtual conferences a year, produce a monthly magazine for Loan Originators, and offer marketing services for lenders nationwide. CONTACT: r.keys@geracillp.com | www.geracilawfirm.com
July 2020 Originate Report 31
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FEATURE
Understanding Forbearances By Melissa Martorella, Geraci LLP
A
natural disasters, unemployment, or unexpected injury. This form of
assistance
will
not
eliminate
the amount owed on the affiliated mortgage, as the borrower will sign an agreement obligating them to repay the loan in a specific time frame.
forbearance is the process
obligated to repay the remaining or
of
Forbearances can range from a fairly
deferred amounts back.
straightforward
offering
borrowers
a
temporary reduction in the
arrangement
with
your borrower (a temporary payment
amount they pay on their regular
A forbearance is a tool implemented
deferral, as an example), to a complex
installments or a periodic deferment
to
are
agreement to help a borrower navigate
of mortgage payments. Debtors opting
experiencing
hardship
through a loan default (including
into forbearance agreements will be
due
such
staged payments, requirements to sell
34
assist to
borrowers financial
circumstances
that
as
loan collateral, or the addition of new
requirements of the given loan, and
agreement, borrowers are permitted
collateral or guarantors).
lender policies.
to
temporarily
payments
for
cease a
submitting
predetermined
Receiving Forbearance Requests
As the mortgage lender, there are
length of time but are required to pay
The forbearance process is inherently
a number of potential approaches
back the entire outstanding balance
complex—as
forbearance
that can be used to provide viable
immediately when their payments
agreement is unique relative to
solutions to suit the borrower’s
become due again. Lenders should
the given financial situation of the
specific needs. The following is a
borrower and how their respective
brief overview of some forbearance
lender
accommodate
options to consider implementing
their reduced ability to make timely
when receiving forbearance requests:
each
chooses
to
payments. Factors that can influence the specific details of forbearance
Option #1: Deferred Payments—
plans include the type of mortgage,
Repaid During Existing Mortgage:
the applicable owner or investor
• In
this
type
of
forbearance
be cognizant that borrowers will be facing a substantial bill that will be due all at once. To illustrate, if a lender permits a debtor to pause mortgage payments for six months, at the end of that window, the debtor will owe all six of the missed Understanding Forbearances: Cont. on pg. 36
July 2020 Originate Report 35
Understanding Forbearances: Cont. from pg. 35
monthly payments in the one month when payments restart. Additionally, interest on the deferred payments will continue to accrue until they are eventually repaid.
Option #3: Reduced Payments:
$500 monthly payment by 50% for
• This form of forbearance structure
three months, starting in the fourth
permits borrowers to reduce their
month they would be required to
monthly mortgage installment by
pay $562 ($500 + $750/12) every
a
predetermined
Repaid at Mortgage End: • This forbearance structure allows the borrower to defer payments for an agreed upon forbearance period and then the total deferred amount is repaid by either tacking it on to
for
a given period of time. Following this
Option #2: Deferred Payments—
percentage
initial
forbearance
window,
borrowers are afforded one year to repay the aggregated reduction amount. Mortgage providers should note that the reduction will be evenly distributed over the course of an entire year and paid proportionally in addition to the regular monthly amount.
That
means
that
the
month for the following 12 months. Furthermore,
interest
on
any
lowered payments will continue to accrue until they are repaid. These are just a few examples of forbearance options a lender has when
a
borrower
is
struggling
to make the payment obligations under a loan. Lenders have the ability to be extremely creative when they draw up forbearances with their borrowers, and case base
“A forbearance is a tool implemented to assist borrowers
that
are
experiencing
financial
repayment plans on the borrower’s new
(or
temporary)
financial
condition. Lenders should take care to evaluate the borrower anew
hardship due to circumstances such as natural
when underwriting the forbearance
disasters, unemployment, or unexpected injury.
reasonable based on the conditions
This form of assistance will not eliminate the
great middle ground option when
amount owed on the affiliated mortgage, as the
lender does not want to foreclose or
borrower will sign an agreement obligating them to repay the loan in a specific time frame.”
terms so that the agreement is of the parties. A forbearance is a borrowers are in default but the otherwise accelerate the loan. If you have questions about whether to offer a forbearance or how to structure its terms, Geraci Law Firm is here to help. Our team of experts
the end of the mortgage loan or by the borrower taking out another separate loan. Lenders should bear in mind that loan extensions will either result in the borrower having an additional period of time after the expiration of the existing mortgage to repay the deferred amount or having a balloon payment in the form of a separate loan due at the end of the current loan. Interest on the deferred amounts will continue to accrue until they are repaid.
36
borrower’s total monthly mortgage
is able to walk you through various
installment
significantly
options to make sure the terms of
higher for a one-year period. For
your agreement work for you and
example, if a borrower reduced their
your borrowers.
will
be
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.geracilawfirm.com
THE IMPORTANCE OF
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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 should be clear Business Development • Fintech/Newest Loan Programs • Automation in Today’s Evolving Society • Upcoming 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 flights and hotels Trends & Changes • Marketing & Outreach • Essential Tools & Technologies • New Legal Issues and Regulations and growth. As you take these benefits 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
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Pacific Private Money www.pacificprivatemoney.com loans@pacificprivatemoney.com (415) 883-2150
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70/30
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LENDER
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TYPES OF PROPERTIES
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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 te d ag F o Ve n t e 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 AX les to m e / / TE C S o ot RM Re mm yn ag t a i i ve (YR e og l( r c S) ial Sh En ue / o s te r p L s o t ai / t ) Ga S nm tri sS en pM all Le t at i o t isu s) 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
AAPL has a long history of firsts, and we’re adding to it by hosting the first fully hybrid private lending event for both in-person and virtual attendees. We will launch our AAPL Annual Conference app for desktop, IOS, and Android July 15. The app enables attendees who have purchased a virtual ticket to watch and participate in live-streamed sessions, network in virtual meeting rooms with both in-person and virtual attendees, and connect with sponsors.
App features for both in-person and virtual attendees include: • Visit virtual exhibitor booths designed for an online experience. • Live stream sessions with real time Q/A participation. • Build your own schedule with reminders so you never miss a session. • Watch session recordings so you don’t have to make difficult decisions on what to attend. • Create a profile to connect with both in-person and virtual attendees. • Network through virtual meeting rooms and one-on-one chat capability. • Navigate the Vegas event with interactive maps. • Stay up-to-date with non-invasive notifications. • Win prizes by interacting. • And more!
AAPLONLINE.COM • (913) 888-1250 July 2020 Originate Report 39
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