Originate Report - July 2020

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

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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.

LinkedIn

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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L MAGAZINE

THE OFFICIA

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Industry Spotlight: Adam Child

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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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These live web-based seminars can connect you with person completes your webinar’s registration form Ask them to take an action, such as completing a task leads from all over the world. They encourage interacti they should be considered a new potential lead, or answering a question. This will increase audience by allowing the audience to ask questions orJust how whether it be for a sale or a potential partnership. participation and interest. Include guest speakers, beneficial can a webinar be to your business? Here Webinars adds a personal interaction that videos and such as industry leaders or affiliates, to speak during are 7 reasons why webinars are a fantastic marketing commercials don’t. Webinars put a face and name your webinar. These individuals should be familiar strategy. Webinars are a cost-effective way to extend with your product making you approachable, human, with your industry and value of your product. They your reach globally. Rather than pay for flights and and someone they can trust. Educating them on how will be able to educate the audience on the benefits hotels to meet with individual leads, you can engage your product can benefit their company is the first or impact, validating information you have or will with a larger group over their computer screens. step in opening the door to future discussions and be sharing. By inviting a guest speaker, you can also People from all over the world can attend, providing partnerships. It is essential to show both new and increase the webinar’s attendance by including your your brand or product with the potential to see huge established leads how your product or service can guest’s audience and following. This can grow the results. This global reach creates networking opporimprove or enhance their workplace. Depending on number of leads you may gain substantially. Results tunities for building relationships and partnerships. the prospect, the sales process can be slow. Businesscan be seen quickly from webinars. After hosting a our audience has invested time in registering and lises want to convert a lead into a cusWhile it’s cerwebinar you’ll have metrics to measure how well it tening to the information you plan to share. They’re tainly important to provide useful information and performed. These metrics include the number of at expecting valuable takeaways from the webinar, tips to your audience, it’s equally important to share tendees, number of those registered, and total views. even something they can put into place at their own how your brand or business can help them achieve The webinar can and should be recorded for you, the company. This positions you and your brand as an this. How can your product be a solution to their audience, and affiliates to share with others, grow industry leader, or expert. problems? Your webinar should show the audience ing the results even more. Each time a person com the value of your brand. Garnering interest in the pletes your webinar’s registration form they should Webinars can give your audience the chance to ask product and its potential impact is the first step in be considered a new potential lead, whether it be for questions and provide feedback. This is valuable becompleting a sale. a sale or a potential partnership. Webinars adds a cause you can address concerns, reservations, or any personal interaction that videos and commercials lingering questions they may have about your trainThere are numerous benefits to hosting a webinar. don’t. Webinars put a face and name with your prod ing or product in real-time.

Though this article only touches on a handful of uct making you approachable, human, and someone them, it should be clear that webinars are an effecthey can trust. Educating them on how your product You can customize your presentation to your auditive tool for engagement and growth. As you take can benefit their company is the first step in opening ence based on their questions and feedback to keep these benefits into account, you should begin to the door to future discussions and partnerships. It them engaged. Ask them to take an action, such as think how you can use a webinar for lead generation is essential to show both new and established leads completing a task or answering a question. This will and to increase traffic, which will yield great results how your product or service can improve or enhance increase audience participation and interest. for your business. Webinars have grown in populartheir workplace.Depending on the prospect, the ity in recent years and have become an important sales formation and tips to your audience, it’s equalInclude guest speakers, such as industry leaders or marketing tool. These live web-based seminars can ly important to share how your brand or business affiliates, to speak during your webinar. These inconnect you with leads from all over the world. They can help them achieve this. How can your product be dividuals should be familiar with your industry and encourage interaction by allowing the audience to a solution to their problems? Your webinar should value of your product. They will be able to educate ask questions or provide feedback in real-time. show the audience the value of your brand. Garnerthe audience on the benefits or impact, validating inJust how beneficial can a webinar be to your busiing interest in the product and its potential impact is formation you have or will be sharing. ness? Here are 7 reasons why webinars are a fantasthe first step in completing a sale.There are numertic marketing strategy. ous benefits to hosting a webinar. Though this article By inviting a guest speaker, you can also increase the only touches on a handful of them, it 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

CONTENT L E T U S H E L P YO U !

CURRENTLY ACCEPTING ARTICLES

Share your ideas! Email submissions@originate.report for more information.

July 2020 Originate Report 37

Redwood Mortgage Corp. www.redwoodmortgage.com RMC@redwoodmartgage.com (800) 659-6593 San Mateo, CA 94402

Direct Lender

Zinc Financial Inc. www.zincdinancial.com office@zinc.net Tom Valentino

Direct Lender

5M 7M500K 2M

150K 200K 50K

55/33

Direct Lender

75/30

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

10M

Direct Lender

100K Helvetica Group www.helveticagroup.com loans@helveticagroup.com (310) 575-3301

*AZ, CA, NV

*All 50 States

*CA

*65% For commercial and mixed-use and 70% for multi-family and residential investment. 5 years (custom terms are available)

*CA

AZ, CA, CO, IN, MI, NM, OH, TN, TX, WA

LET LENDERS KNOW YOU FOUND THEM IN ORIGINATE REPORT! 38

REV. 06.25.19 2019

Direct Lender

* = STATES LENDING IN

Fidelity Mortgage Lenders, Inc. www.fidelityca.com psteigleder@fidelityca.com Peter Steigleder (818) 422-8879

70/30

50K

LENDER

65-5*/70/5*

H O M E

TYPES OF PROPERTIES

90/2

L O A N

15M

2020

TYPES OF LOANS

MI NI MU M LO MA AN XIM $ UM Co LO mm AN er $ Co ns cial um Br e r idg Co e rp o A c rat i o qu ns i /T No sitio ru s ns te s a n ts/ L Pu eg dD rc h a ev e l o l Ent Re ased itie pm ha s en b ts Bla / Re mo nk S e e t Lo d e l e co d/ nd ans Re Jo no int Mor va tg 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

IT’S NOT JUST ABOUT IDEAS. IT’S ABOUT THE EXECUTION. WE PROVIDE PEACE OF MIND

Geraci LLP is a law firm, media, and consulting company that caters to the non-conventional lending space.

We are the “go-to” provider for all lending-related matters and are your resource to help you grow your business.

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