TNR - February 2013 Loan Officer Edition by The Niche Report

Issue 067 February 2013 TheNicheReport.com

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CONTENTS

Issue 67

February 2013

Crowd Funding Real Estate A new era of real estate financing.

19 20 22

Expect Run on 29 Bankers Mortgage Credit

Frank Sheehy

Steve Cook

The expanding duties of lenders translate to sellers.

2013 could be the year that Americans begin to embrace credit again.

Is Shadow Inventory an Idle Threat? Rick Roque

The New Bank Standards Corey Curwick Dutton

May tighten the screws on lending until 2015.

"Where are the Criminals?" Let Me Tell You ... Brian Mahany

Mortgage Industry to Contract in 2013

Trustee Sale 30 Lower Margins Push Investors to Short Sales Daniel Beer

Contracting 32 Specialty Services Get a Boost from Hurricane Sandy Tim Snyder

24 Realtor Marketing Secrets 速

Builders Trend 27 Home Toward Visual Social Media Adam Packard

A high-resolution image can make an enormous impact.

February 2013

Too Little Too Late Rick Roque

Mortgage Fraud 46 Potential Rose Ahead of QM Rule Steve Cook

Doren Aldana

mortgage marketing coach Secret #8: Getting the right Realtors速 to commit to you.

Accepting the reality of extreme weather.

The Fed's Reaction to the subprime crisis in 2007.

steve cook

Originators will continue to become more professional.

prime & FHA

pg 36

JUMBO

pg 36

HARD MONEY

pg 37

Commercial

pg 38

MULTIFAMILY

pg 38

Service Providers

pg 39

Publishers

Elizabeth Smith Kulik

Roles for 10 Changing Lending Professionals

CLASSIFIEDS

DEPARTMENTS

09 42

from the editor's desk advertiser DIRECTORY

Robert Pegg robert@thenichereport.com David Pegg david@thenichereport.com MANAGING EDITOR Stewart Mednick stewart@thenichereport.com Associate Editor Cathy Johnson info@thenichereport.com ACCOUNTING MANAGER Shawna Ingram shawna@thenichereport.com Advertising Director Jessica Grizzle jessica@thenichereport.com Advertising sales Hilary Bateman hilary@thenichereport.com Production Manager Henry Suchman henry@thenichereport.com Production Assistant Dawn Exner dawn@thenichereport.com Cartoonist Martin Bradford COLUMNISTS & Contributing Authors Doren Aldana Daniel Beer Steve Cook Corey Curwick Dutton Elizabeth Smith Kulik Brian Mahany Adam Packard Rick Roque Frank Sheehy Tim Snyder

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From the editor's desk

Remember the basics? Over the years, many people have benefited from the “guru’s” words of wisdom, whom ever that person may be at the time. Many Real Estate and Mortgage professionalsturn-guru make millions on DVDs, public tours and printed material to tell you how to be as successful as they are. Jack Davis was one of my favorites. I saw him present and I even picked up his cd on the “Loan Officer School” that gave templates for documents, scripts for customer situations and inspirational words of wisdom. I loved his sense of humor and his easy going attitude…. It never worked… not for me at least. The favor-of-the-month is always around the next corner. Some are dynamic and universally appealing and become very successful, like Stephen Covey. Others are simply a flash in the pan; no names mentioned. Robert Allen was the very first seminar I attended about 30 years ago. His real estate advice was good, but finding the properties that he preached to find for making a profit was another story. Few and far between, and geographically influenced. Anthony Robbins was another favorite because he was so dynamic in person. His pearls of wisdom captivated the audience. But when I walked away all inspired, I realized there was no action plan and substantive procedures to gain what goals I wanted to achieve. From the times of Aristotle and Socrates, philosophy has been a part of culture. Customizing philosophy to an industry is a phenomenon present in recent twentieth century society or even back to the Austrian Theory of the Capital Market in the mid 1850’s. If you look at all these theories, schools of thought and “guru’s pearls of wisdom,” it all boils down to a simple fact that has not changed in two thousand years. In the movie, “City Slickers” Billy Crystal played Mitch Robbins, an urban dweller searching for the meaning of life in the Western wilderness. During a cattle drive, the lead wrangler, Curly, played by Jack Palance, tells Crystal that the most important thing in life is one thing. Curly dies before Billy Crystal can gain that answer but figures out that the “one thing” is whatever is important to you. So going back to the two thousand years of the same simple facts just repackage for the society we live in today… Curly was on to something. But I feel there is some structure to figuring out that one thing. It is called asking the right questions. In all the professional pursuits I have endeavored, all the education I have completed, and all the great business leaders to whom I have listened and read, solid answers to all questions are rooted in the basic: Who, What, Where, When, Why and How. A resolution to a problem or to a situation will start with a question of some sort; how do I start my own business? How can I resolve this problem? Where will I become the most successful in my professional career? Who invented liquid soap and why? Ask the six questions, or as I call it, “go with the FWOH” (kind of an Elmer Fudd thing). Five ‘Ws” and One “H” forms the acronym FWOH. Who, what, where, when, why and how. Ask these questions, answer them honestly, thoroughly and with well researched facts, and you will be successful in anything you choose to pursue. I can write a book on the different techniques that can be used to analyze and philosophize over these questions. The important thing is to just be true to who you are and answer them authentically. Good Luck!

Stewart Mednick

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MEMBER

TheNicheReport.com

Changing roles for lending professionals

The expanding duties of lenders translate to sellers. by frank sheehy

he ever-shifting landscape in real estate means that lenders are doing more than ever to get transactions approved and funded. The amount of information that buyers and sellers have access to is greater than ever. Recently a woman called our office about a property that she wanted to sell to a tenant. Normally a Realtor速 would be involved. She did not have a Realtor速 but had a willing buyer, and asked if I would facilitate her transaction. This request entails assisting them in executing a contract, choosing a title company, arranging inspections and also qualifying the purchaser. In past days we might get a request like this once or twice a year. I currently have a handful of deals like this in process. The changing role of lender will continue. One 10

February 2013

of the reasons is that lenders have quietly shaken the reputation as dishonest swindlers trying to squeeze every last commission dollar out of borrowers. Multiple reasons exist for this changed perception. Federal licensing requirements, compensation limits and the weeding out of unqualified lenders too weak to survive the meltdown of 2008 have created a new paradigm. The remaining professionals in our industry are now regarded as experienced, honest and knowledgeable sources to facilitate transactions. In essence those that have survived the last four years are now regarded as the best sources for information and guidance. Property information is prevalent now on myriad Realtor速 websites, as well as Zillow and others. With the availability of this information the consumer is more empowered. One of the results is the reduced role of buyer representation in some transactions. This creates

a slippery slope that was addressed many years ago with the “co-broker” arrangements that lenders were trained to watch out for when a Realtor® represented both buyer and seller. This potential conflict of interest created the need for dual-agency contracts. Now that buyers consider themselves more savvy and armed with more technical information, they feel more comfortable contacting listing agents and sellers directly. As a result lenders are now more closely aligned with buyers than ever, and in many cases are serving as a surrogate as buyer representation is changing. The expanding duties of lenders translate to sellers. Property valuations have become more difficult. With the advent of appraisal management companies the visibility of appraisers has been reduced, and lenders now find themselves answering questions about property values for potential sellers and for those already in contract.

In most cases the lender has no additional information on sales data available to them and cannot reliably offer information on property values. A buffer exists now that the appraiser is immune to influence from any party in the transaction. Unfortunately this now creates strain for lenders as they continually have to defend a process that they had no input in creating, and are forced to be a mouthpiece for an appraiser that in most cases they don’t know or have never been in contact with. The finality of a low appraisal and the basic lack of an appeal process have put lenders in an awkward position. The lender is constantly explaining a process that sometimes leaves the consumer bewildered and the seller helpless. In many cases the lender bears the brunt of the frustration of both parties. We continually educate our Realtor® partners to properly explain the possibility of appraisal problems to sellers long

How we see it

February 2013

REAL ESTATE EDUCATION

before they accept an offer to purchase. The potential for an improving market, reduced inventory and the slowing foreclosure abundance will eventually mitigate these challenges, but they will continue to be an issue for the foreseeable future. What’s in store for mortgage bankers and lenders in the coming months? I know that as I attend local industry meetings and events, the average age of the attendees seems to climb with every year. We need more young people in our industry. The difficulty of the past years has taken its toll and the attrition has left only the strongest standing. Not all of us want to go through the last four years again. We know that compliance will continue to be the number one issue for us to be able to close and sell loans. One can assume that more compliance is going to be required. I think more products will become available through non-traditional sources. An impending shake-up of FNMA and FHLMC is coming. The FHA program, still the best product despite its limitations, will continue to change based on the MIP and down payment requirements. All of these point to the ever-increasing need for seasoned mortgage professionals. These lenders need to embrace their responsibilities and continue to serve others before a full recovery can take place in the industry. Frank Sheehy has been in the mortgage business since 1988. Sheehy graduated from the University of Colorado with a degree in real estate finance in 1988. He joined a local mortgage company, Waterfield Financial, at that time. After 19 years and nearly 5,000 individually funded loans with that company, the Waterfield family exited the business. He had two stops with national lenders, American Home and GMAC, but eventually started his own operation in 2011 called Integrity.

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Is Shadow Inventory an Idle Threat? by Rick Roque

he fledgling housing market recovery in the United States seems perpetually threatened by a number of factors. One of the most frequently mentioned dangers is the shadow inventory, the aggregate of all Real Estate Owned (REO) properties and other residential units that are in some stage of foreclosure with little hope of getting back on the right track. To some real estate analysts, the shadow inventory is essentially the sum of all fears for the housing recovery, but it does not seem to have had too much of an impact, at least not yet. In fact, a recent article in Time magazine indicated that this umbrageous inventory fell by as much as 12 percent on annual basis back in October of 2012. Real estate analytics firm CoreLogic calculated the shadow inventory to be a little over two million units, just larger than the current inventory of homes available for sale.

A Shadowy, Yet Active, Inventory According to an economist from CoreLogic who spoke to Time magazine, real estate investors have been helping themselves to the shadow inventory, but only seasoned investors with powerful means of acquisition have been able to do so. The shadow inventory has been a windfall for many real estate investment trust (REIT) managers who have taking advantage of red-hot rental markets. These investors swoop down on rock-bottom real estate deals like ravenous birds of prey, quickly putting 14

February 2013

their newly-acquired assets to work. They operate with the efficiency of a SEAL team, leaving nothing to chance and not allowing homes to sit unsold in the market. Average homeowners or would-be real estate flippers do not generally have the cash nor the tools and resources that REIT managers enjoy to turn a profit. If the subprime mortgage lending free-for-all of the early 21st century was still in effect these days, thousands of would-be rookie real estate investors motivated by latenight infomercials would be pecking away at the shadow inventory with borrowed money. This would in turn contribute to a bubble-like situation.

The Shadow Recedes The amount of properties in the shadow inventory could be significantly reduced in 2013 thanks to the mortgage principal write-down provisions of the National Foreclosure Settlement Agreement of 2012 and other initiatives to save borrowers from foreclosure and negative equity situations. Rising real estate prices will also help to reduce the shadow inventory. Even if most borrowers are not able to hold on to their homes, mortgage lenders and servicers know better now than to rush foreclosures, and thus the shadow would become is bound to become less ominous as days go by. Any questions or feedback on this article, email Rick Roque, Managing Editor of The NicheReport Real Estate Edition at rick@thenichereport.com or call him at 408.914.5895.

Crowd Funding Real Estate A new era of real estate financing By elizabeth smith kulik

eptember 14, 2010 marked the 50th anniversary of Real Estate Investment Trusts in the U.S. For the first time, REITs brought the benefits of commercial real estate to the average investor. Since then, investors have risen to the opportunity and today U.S. REITs constitute a more than $300 billion equity market, with an average daily trading volume of about $4 billion. Globally, REITs and listed property companies constitute more than a $700 billion industry, making listed REITs and the real estate investment universe collectively a more than $1 trillion market. However, with crowdfunding now on the scene, many are wondering if crowdfunding could actually be the new REIT. Some industry experts think it could be, as crowdfunding is a powerful means of accessing social capital for businesses, philanthropy and personal projects, and that can certainly involve real estate. Where REITs gave the average investor the opportunity to invest remotely in real estate as an amorphous asset class, crowdfunding brings the opportunity to invest in local assets and enterprises directly to the people who are most interested in their long-term success â&#x20AC;&#x201C; stakeholders in the surrounding community. Crowdfunding allows social and business entrepreneurs to access funding online directly from donors and investors. Currently, donations, rewards, and lending-based crowdfunding are legal in the U.S. for virtually any kind of project, with no upwards cap on what can be crowdfunded. The JOBS Act legalized equity-based crowdfunding, but the SEC is still currently defining rules. As of now, equity fundraisers will have raised ceilings of $1m-2m/year/entity, while investors can be accredited and non-accredited, according to their income and net worth over a prior 12-month period. Interestingly, crowdfunding is unique in that it gives a voice to a new set of stakeholders who desire more than just financial returns. With crowdfunding, investors and donors not only consider traditional return models of sale, refinancing and distribution, but they are also driven by the desire to be part of a greater cause. The feeling of participating in crowdfunding a community building, a new hospital for children, a local farmerâ&#x20AC;&#x2122;s market facility, or the satisfaction of just being involved in supporting local enterprises are some of the new reasons the crowd will invest in business ideas and innovative real estate projects. Moreover, crowdfunding is already taking hold as a means of financing startups in the real estate supply chain, including alternative and solar energy, green buildings,

materials and technology and service companies. While crowdfunding may not be for all real estate endeavors, it certainly seems to be a match for certain kinds of real estate, especially public, neighborhood and pre-institutional projects. Consider four primarily realestate-driven scenarios: a) community development, b) leasehold, c) development projects, and d) acquisitions.

For communities, crowdfunding is a serious win using donation-rewards. Non-profit organizations can crowdfund donationrewards with no upward cap for any kind of project. This is an amazing opportunity for people who live in a community to participate in making it come to life. Government projects that benefit the community are a match as well. Consider building a playground funded by the people who will use it, and their friends, and so on. Take crowdfunding a step further to include infrastructure. Donation-rewards is an opportunity to contribute to the development of important public spaces. For leasehold, crowdfunding is an enterprise financing tool that leads to real estate. Crowdfunding for businesses is an enterprise financing mechanism with funds being used for either specific initiatives or general operations. Consider a local bakery crowdfunding the next stage of its growth, including graduating from the home kitchen. As with every business, real estate will be an important decision in operating a fledgling business, along with deciding to fund it in part from a crowdfunded capital injection. Investing in and donating to enterprises where real estate plays an important part in the success of the business is an opportunity to help the businesses that are the backbone of sustainable communities get started and to prepare for future growth. For development and acquisitions, the JOBS Act may be the game changer. Financing specific development activities with donation-rewards-based crowdfunding could work as well as crowdfunding for any project. The question is, does the developer have a compelling project that has public interest and benefit? However, the JOBS Act brings in several new changes that are suited for complex transactions that could dramatically affect the real estate capital markets landscape. Title III of the JOBS Act opens equity crowdfunding for investable enterprises. This could be a very important stimulant for local real estate investment segments that are below the institutional radar. Entrepreneurs TheNicheReport.com

can crowdsource between $1m-$2m a year, making crowdfunding equity for real estate deals sized between $1m-20m a real possibility for capital formation on projects that deliver cash flow and returns from long-term holds. Another important JOBS Act benefit is the change under Title IV to Regulation A exemptions which raises the threshold for funds being raised with the exemption from $5m to $50m. Developers who own their properties will be able to go to the crowd to capitalize their projects through this little-used exemption. In addition, Title II of the JOBS Act could unlock significant capital for real estate fund investment. Title II – Access to Capital for Job Creators – lifts the 78-year old ban on "general solicitation" and "general advertising" by private equity funds, hedge funds and other entities tapping the private capital markets. This is all potentially game changing. No longer tied to the definition of pre-existing and substantive relationship with investors, alternative asset managers raising capital in the private markets will able to communicate with the general public – via websites,

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press releases, interviews with the media, etc. – to raise awareness and funds. This new regulatory framework is a unique opportunity for alternative asset managers to approach accredited investors with a completely different value proposition, and more effectively position and market themselves to key external audiences. This is a regulatory environment that has the potential to foster formation of new funds with specific missions to invest in responsible community development. Another avenue opening more prominently with the JOBS Act not related to crowdfunding is EB-5 financing, where foreign investors invest between $500k-$1m and receive a green card. Projects must prove a threshold job-creation/EB-5 unit and be registered with Regional Centers as designated projects. Of course, while crowdfunding definitely adds an innovative and unique financing approach to the mix, it does not do away with traditional financing options for real estate projects – especially large-scale commercial projects. However, through social media technology and crowdfunding techniques, costs for key phases of large commercial real estate projects could be covered. For example, raising capital for a feasibility study, architecture plan, leasing and marketing plan, or even down payments and rent for a building, are all very doable in the crowdfunding space. However, construction loans and/or other investment sources may still be needed for covering large commercial projects in more traditional ways. In this case, crowdfunding should be viewed as part of your funding portfolio, but not necessarily your only resource. Obviously, the marriage between high-tech and traditional finance is presenting a paradigm shift in raising capital, while also ushering us into a new era of how to do business in the real estate world. Elizabeth Smith Kulik is the founder and CEO of ProHatch, a crowdfunding organization that specializes in promoting expertise and education to the emerging crowdfunding sector. The company’s executive team has extensive experience in creating large-scale real estate value for domestic and global entities. In addition, ProHatch has a unique Phase-to-Raise TM Crowdfunding process, which delivers a high level of social transparency and accountability between entrepreneurs and investors. ProHatch is working to partner with entrepreneurs, start-ups, SMBs and communities to optimize their financial and business goals.

New Bank Standards May tighten screws on lending until 2015

by Corey Curwick dutton

hat is Basel III and how will it affect U.S. bank lending in coming years? Named after its meeting place in Basel, Switzerland, the Basel Committee on Banking Supervision is the International oversight body for bank regulations. The Committee recently passed a new “accord” or regulation called Basel III, which could seriously affect the future of U.S. banks. Basel III is the third in a series of accords for banking supervision that has been passed in response to the banking meltdown of 2008 and 2009. Although many will strongly argue that banks should indeed have higher standards imposed for liquidity and leverage, opponents of Basel III have said that it will put many of the smaller, local banks out of business. Either way, this will certainly not stimulate U.S. banks to loosen up lending in the next several years, given that they must comply with much higher liquidity and leverage standards by as soon as 2015. However, the Basel III standards were recently softened a bit in response to bank lobbyists. The response to this news temporarily boosted bank stock prices at the start of 2013. Banks still must have a stock of easy-to-sell assets to meet sudden demands during a 30-day market crisis. But the Committee has recently changed what can be counted as an “easy to sell” asset, allowing mortgage-backed securities and other assets to be included in this mix. They’ve also loosened 19

February 2013

the liquidity requirements on big banks that lend primarily to big corporations. Although the Basel III standards have been softened this month, I believe that lending in the U.S. will continue to remain tight over the next several years. As banks make efforts to comply with Basel III by 2015, they will be looking to deleverage their balance sheets, not likely to renew existing loans to commercial borrowers. And in issuing new debt in coming years, banks will likely cherry-pick which loans to do, selecting only the best loans. But what should borrowers do in response to this potential threat to bank lending? Get a head start on your real estate financing needs for 2013 and be prepared to find multiple options for financing, including private money loans. Even if banks continue to lend more freely in coming years, many of them will likely raise their underwriting standards even higher to qualify only the best loans. Corey Curwick Dutton is a private money consultant for Private Money Utah, a real estate lender based in Salt Lake City, Utah. Corey is from Austin, Texas and is an MBA Graduate of the prestigious Thunderbird School of International Management. An authority in the private money lending industry, Corey provides educational resources for investors who use hard money loans in their real estate investing activities. Before she joined Private Money Utah, Corey was the President of an investment education company in Utah called Bray-Conn Investments LLC.

“Where Are The Criminals?” Let Me Tell You… by brian mahany

he lead editorial in Monday’s Wall Street Journal was titled, “Where Are the Criminals?” The editorial that followed suggested that the Obama Administration wasn’t successful in prosecuting those responsible for the financial crisis. With that much, we agree. Some four years later, almost no one has been successfully prosecuted for the untold trillions lost when the housing market crashed. The Journal believes that prosecutors have met with failure because they were “trying to find criminality among bankers who were doing what everyone was doing.” That’s where we disagree. Justice Department lawyers are some of the brightest and best in the business. Virtually everyone there could make at least twice the money in private practice, yet the government still is able to attract and retain great lawyers. So why can’t these great lawyers get convictions? Our answer is simple – because the political interests in Washington have become too intertwined with the banking industry. When investment banks become “too big to fail,” they also become too big to prosecute. With a few exceptions – our friends in Preet Bahara’s office come to mind – most United States Attorneys don’t have the stones to take on the Wall Street titans and their leaders. Instead, we have a pattern of SEC actions that result in consent orders, large fines and absolutely no admission of wrongdoing. With the exception of some inside traders, no one really has gone to jail for their personal role in bringing down the nation’s economy. If you fail to pay $50,000 in taxes, expect to spend

February 2013

some time in prison. But if your name is associated with the other banking elite, the worst that may happen is your bank having to pay a steep fine. Perhaps, as the WSJ editorial suggests, the banking elite have not done anything wrong. We have seen too much fraud to believe that, however. While Washington’s political elite does share some of the blame, we think all the guilty parties should be held accountable. Whether a regulator, Congressman or banker… if you break the law you should be held accountable. As long as the 94 U.S. Attorneys are essentially political appointees, don’t expect that to happen soon. We believe the only way to clean up Wall Street is through the courts where a jury can decide. And the best way to get cases before a jury isn’t waiting for the Justice Department, it’s through false claims actions (whistleblower cases) and shareholder class actions. It’s not a surprise that the largest pending civil cases against a lender (and most of the other big cases) were initiated by whistleblowers, ordinary workers that have had enough of the greed and corruption that plague Wall Street. Brian Mahany is a lawyer that specializes in representing whistleblowers in SEC and False Claims Act cases. The opinions expressed in this post are his. Brian welcomes comments and questions and can be reached through his firm, Mahany & Ertl, or through his blog, Due Diligence. He can also be reached at brian@mahanyertl.com or by telephone at (414) 704-6731.

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Mortgage Industry to Contract in 2013

Originators will continue to become more professional by Steve Cook

hanges in mortgage origination, including a changeover from refinancing transactions to purchases transactions and industry consolidation, will reduce the number of jobs but increase the opportunities for younger workers, according to Hammerhouse , a national recruiting firm for financial

services. “2013 will see the mortgage industry continue to evolve and the job of originators will continue to become more professional,” stated Drew Waterhouse, Managing Director of Hammerhouse. “The industry will continue to stabilize and the companies that are properly structured, with strong leaders, quality-focused, balanced production, technologically advanced, geographically oriented and financially strong, will find 2013 to be the year they excel versus their peers.” The advent of higher rates along with the move away from a refinance-transaction orientation to a purchase-transaction orientation, 2013 will see the pool of refinancing jobs will continue to grow smaller. There will be fewer people and companies needed in such an 22

February 2013

environment, the firm predicted. With less volume comes the need for less and more efficient resources to generate production. There will be a consolidation among independent mortgage producers. Some will simply find it too difficult to maintain their independence in the new market environment. Those that were too dependent on refinances will either merge or disappear, Hammerhouse said today. Originators with transferrable, balanced, referral-based books of business will be in high demand and will find that they have significant leverage with employers. Younger workers will be in demand. One of the consequences of the housing sector collapse was a loss of younger and mid-career originators. Now, with the market preparing to move to a purchase-orientation, the need for younger originators to provide the hustle needed to succeed with Realtors® and to target younger, first-time buyers is readily apparent. Steve Cook is a commununications consultant and journalist covering residential real estate. He writes and edits Real Estate Economy Watch and writes for UPI, BiggerPockets. com, Equifax and other outlets. Cook also helps leading real estate companies get news coverage. Previously he was VP for Public Affairs for the National Association of Realtors®.

Realtor® Marketing Secrets Secret #8: Getting the Right Realtors® to Commit to You by doren aldana

n last month's article, I gave you seven practical tips for conducting highly successful Realtor®® meetings. However, meetings in and of themselves won't buy you a coffee at Starbucks. The key to turning meetings into money is the close. In other words, the trajectory of every contact, including your face-to-face meetings, should ultimately culminate in a decision to partner or not to partner. Here's how you do it...

STEP 6 – Get a Commitment Obviously, you're not just meeting with Realtor®®s for the fun of it. What a sad life that would be. Your goal is to get the right commitment from the right Realtor®®. After all, who wants to be married to a nightmare Realtor®®? One of my favorite sayings is, "It's better to be alone than to wish you were." So, during this initial courting phase, your job is to weed out the weenies and keep the keenies. 24

February 2013

Or put another way, sift out the duds and keep the studs. You want to partner with someone who is an asset, not a liability. With that said, here are...

Four Tips for Getting the Right Commitment from the Right Realtor®®: Tip 1: Speak to their hot buttons. In last month's article, I talked about the importance of using a "Needs Assessment" during your initial meeting in order to identify your Realtors®' pain-points, challenges and goals. By using that approach, you're going to find out a lot about your Realtors®' hot buttons -- what they really care about. Once you have that information, you can line up a second meeting, which I call the "Show 'n' Tell" meeting. This is where you can present effective solutions to their biggest problems. Do this and they'll be hot for what you got! Tip 2: Use scarcity. Studies show that people tend to want things more when they're in short supply. No one wants Tickle Me Elmo unless it's on backorder. Strange,

but true. Now, here's how you can harness that law of nature to work in your favor: limit the number of Realtors® you work with. Yes, really! Keep in mind that if you're averaging $2,100 per transaction, all you need is four solid Realtors® to send you one measly referral per month to add an extra six figures to your bottom line. The point is, it's more about quality than quantity. It's better to go narrow, deep and rich with just a few Realtors® than it is to go wide, shallow and skimpy with a lot. That's why you want to limit the number of Realtors® you work with to a select few. If you position yourself properly, the way I teach you, Realtors® will start to see you in a totally different light. In fact, they'll even consider it a special privilege just to have the chance to work with you. How's that for a breath of fresh air! In this case, there are two primary ways to create scarcity. The first is to offer exclusive, high-level partnership benefits that are only available to one Realtor® per market area. For example, you would only allow one Realtor® per municipality, county, jurisdiction, etc. The second way to do it is to simply limit the number of partners you will work with at any given time. For example, you could say, "I'm only allowing six Realtors® at the 'VIP Partnership' level. Once those six VIP spots are taken, I'm not accepting any more at that level. It's going to be first-come, firstserved based on those who qualify. And once I hit my six VIP partners, I'm closing the doors." As you can see, both of the above strategies are strongly contingent upon your ability to provide extraordinary, unique value no one else is offering. If you're just another replaceable commodity hawking "great rates" and "great service," it won't take long for their B.S. detectors to sound the alarm and you'll be laughed right out the door! To make this work, you've got to position yourself as an irreplaceable, indispensible asset on their team. Period. Anything less is doomed to failure. One of the unique advantages of using the areaexclusive strategy is that when it comes to referring clients to your Realtors®, they will each get exclusive rights to your referrals based on their market area. So if the client resides in North Vancouver, they will be referred to the North Vancouver Realtor®. This keeps things clean and simple. Tip 3: Get Them to Sell Themselves. As a cautionary note, this takes some guts. Again, you can't assert this kind of posture unless you're the "only show in town." Once that prerequisite is fulfilled, it becomes a lot easier to do what I'm about to recommend with a straight face.

So, how exactly do you get your Realtors® to "sell themselves"? Well, it's actually quite simple. Just say something like, "Ralph, due to time constraints I can only offer this VIP partnership to six qualifying Realtors®. What would you say are the TOP three reasons why I should consider choosing you to be one of my six?" Then just shut up, listen and take notes. Now all of a sudden, instead of you trying to sell yourself to them, they're trying to sell themselves to you. What a world of difference! Tip 4: Start Small. Don't ask for marriage on the first date. Start small with an easy yes. Ask your Realtor® for one listing that you can help promote. You might say something like, "If I can't prove to you without a shadow of a doubt that my marketing systems can help you sell your listing faster and for top dollar, I won't bother you with this ever again. Fair enough?" Nine times out of ten they'll oblige. And once they see the improved results, they'll naturally want to hand over ALL their listings! Now, perhaps you're wondering why the heck you should be helping your Realtors® market their listings anyhow. I mean, isn't that the Realtors®' job? Well, yes. But what if you're able to turn your Realtors®' listings into a flood of red-hot mortgage leads? What if you could get your Realtors® to pay for your lead generation? That's exactly what I'll be sharing with you in next month's article. In the meantime, just trust the system. It works!

The VIP Partnership Agreement Remember, the "VIP Partnership" should only be presented to top-notch Realtors® who meet your specific criteria (hopefully more than just having a pulse and fogging a mirror). This exclusive opportunity should be reserved for those special "gems" you respect and admire -the kind of people worthy of your time, energy and money. Once you have someone who meets the above criteria, preferably at the end of your "Show 'n' Tell" meeting,

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you can present the VIP Partnership Agreement. This is a document that delineates what exactly each party in the partnership would be bringing to the table. It's not a legally binding contract; it's just a simple agreement of understanding that outlines the key benefits of the partnership. After you walk through the entire VIP Partnership Agreement and you can tell they understand how it works, the next logical step is to ask, “Would you like to be considered as a candidate to claim one of the last remaining VIP Partnership spots?" If they say "yes" then you follow up with the question I gave you earlier: "What are the top three reasons why I should consider you over all my other options?" That's how you get them to sell themselves. Now, the only thing left to do at this point is to close the deal. You can say something like, "You know what? I have a good feeling about you. How soon would you like to get started?" It's as simple as that! Then you just pull out the pen, sign the agreement and you're good to go. So there you have it. I've just given you a step-by-step game plan for taking Realtors® who don't know you from a hole in the wall, and turning them into highly committed, loyal, high-level referral partners. In next month's article, I'll teach you some of my best strategies for helping your Realtors® sell their listings FAST and for top dollar, and most importantly, generate a steady stream of motivated buyer leads for you. Stay tuned… Doren Aldana is considered by many to be the nation's leading Mortgage Marketing Coach. Since 2005, he has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free online workshop on "How to Turn Your Realtors®' Listings into a Flood of Red-Hot Mortgage Leads," visit: www. UltimateRealtor®MarketingSystem.com

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Home Builders Trend toward Visual Social Media A high-resolution image can make an enormous impact by adam packard

he world of the real estate listing has certainly come a long way. Text-only advertisements have been relegated to the classifieds, and the grainy blackand-white handouts of recent history are already less and less relevant. Online services and high-speed connections are paving the way to a new kind of real estate listing â&#x20AC;&#x201C; a listing where the pictures do all the talking. In an industry where so much hinges on visuals, where a first impression of a home can make or break a deal, there is no better tool than the rapidly expanding world of visual social media. Social media, by its very nature, has always empowered visual engagement by allowing people to connect and share pictures, links, and information. Over the past year especially, those types of media have been morphing and changing, with older sites incorporating more space for images and new image-only media coming into the spotlight. Images are vital to the world of social media, driving engagement and interest worth beyond 1,000 words. Coupled with the reach-generating potential of social media services, a high-resolution image can make

an enormous impact for a home builder or real estate professional. That means to really make an impact on these sites, industry professionals need to begin creating stories with photos and videos that potential homeowners can relate to. Here are some of the networks where those stories can really thrive: Twitter is a social media site that centers on short and TheNicheReport.com

sweet content, perfect for the instant impact of a visual. Couple images of new home types, distinct home features or builds, or community events to provide some visual punch to your usual updates. With the latest format of Twitter’s tweets, called ‘Cards’, you can include more visual content than ever right in the Twitter universe. Pinterest combines effortless discovery and bookmarking with community curating. A thoughtfully composed image can spread across the network like wildfire, and drive potentially interested parties right back to your site or listing. Heartland Homes puts a lot of time and effort into photographs that really capture the look and feel of our home designs. Those that we’re especially proud of, we share on our Pinterest boards. Those photos then serve as an inspiration for members of the Pinterest community, an aspiration for members of our community who might someday hope to own a Heartland Home, or motivation for potential homebuyers who see the images we’ve pinned to find out more. The visual nature of Pinterest makes for a fertile fantasy land for homeowners to project themselves into. Facebook, although not a new player on the scene, is also a great place to make a difference with pictures and images. Their change to the Timeline format earlier this year and upsizing of available image real estate has spelled success for home builders and real estate professionals looking to share information about their homes and listings with a visual hook. At Heartland Homes, we’ve received a great response from sharing images of our home designs and new communities with our Facebook following. We also try and incorporate a visual cue to everyday posts on our page as well, to make that extra impact and keep the Heartland brand fresh in the minds of our fans. Simply attaching an image to an otherwise uninspired link can make a world of difference. And this should come as no surprise to seasoned

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industry professionals – real estate and homebuilding professionals have already seen this impact on sites like Trulia and Zillow, both young giants in the online real estate world. Anyone with experience on these sites knows the difference a few photos can make. And studies have shown that listings with more visuals stay on the market for about a 20% shorter period of time and sell around 2% above expected value. Home buying and building is about liking what you see and creating a sense of comfort for the new buyer. By having a means to get such information through social media, home buyers are able to determine the features they like and what they are ultimately looking for. Better still, the exponential nature of social media helps grow a real estate professional’s or home builder’s credibility and visibility. And, after all, what’s visibility without being a little visual? Adam Packard is the Marketing Manager at Heartland Homes in Pittsburgh, PA. Be sure to visit the builder on Pinterest and check out its new homes blog. Also, share your social media plans for 2013!

How we see it

Bankers Expect Run on Mortgage Credit 2013 could be the year that Americans begin to embrace credit again by steve cook

n stark contrast to the significant household deleveraging that has taken place over the past five years, a large majority of bankers believe the numbers of consumers applying for refinancing and new mortgage credit will increase over the next six months. FICO’s latest quarterly survey of U.S. bank risk professionals, found that bankers expect the supply of consumer credit to satisfy the growing demand. A majority of respondents believe the supply of financing for auto loans, credit cards, new mortgages, small business loans, student loans and mortgage refinancing will meet or exceed consumer demand over the next six months. The FICO survey found that 61 percent of bankers expect an increase in the number of requests for credit line increases over the next six months. The same percentage of respondents expects the amount of new credit requested by consumers to increase during that time. Both those results are the highest FICO has seen during the 11 quarters it has been conducting this survey. “These results indicate that 2013 could be the year that Americans begin to embrace credit again, after the considerable deleveraging we’ve seen since 2008,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “With both the job market and real estate sector showing signs of life, American consumers may again

be willing to fund their lifestyles by taking on more debt. And it appears that banks are willing to oblige.” Some 61 percent of bankers participating in the survey said that they expect the credit supply will meet or exceed demand for mortgage refinancing but only 51 percent said the credit supply will be able to handle requests for new mortgages. Nearly believe demand for mortgages will surpass supply. Despite the survey results pointing towards an end of household deleveraging, the survey found that most bankers would like to see consumers remain cautious with their finances. Over 70 percent of bankers polled believe consumers should either save their money or pay off debts. Specifically, respondents were asked what advice they would give to typical consumers heading into 2013. The survey included responses from 251 risk managers at banks throughout the U.S. in December 2012. FICO and PRMIA extend a special thanks to Columbia Business School’s Center for Decision Sciences for its assistance in analyzing the survey results. Steve Cook is a commununications consultant and journalist covering residential real estate. He writes and edits Real Estate Economy Watch and writes for UPI, BiggerPockets. com, Equifax and other outlets. Cook also helps leading real estate companies get news coverage. Previously he was VP for Public Affairs for the National Association of Realtors®. TheNicheReport.com

Lower Trustee Sale Margins Push Investors to Short Sales by daniel beer

s the auction market at the courthouse steps for trustee sales has gotten more and more crowded, many investors are starting to turn their attention to the short-sale market. The increased competition is causing prices to be bid up to levels where reward no longer makes as much sense as it once did for auction buyers. Here is why. When you buy a home through traditional channels, including most short sales, you are able to view the property inside and out before purchasing it. You are able to inspect the property, you receive title insurance, and you get the benefit of working with an active San Diego real estate agent. However, when purchasing through a trustee sale, you do not get any of those benefits. You normally do not even see the home’s interior until after you own it. This could mean that there are major issues that you will not know about until you own the home and you assume full responsibility for them. This could include things like foundation issues, roof leaks, mold, and other material facts that would affect the property’s value. So why would investors subject themselves to this much risk? Because traditionally the reward was just as big. 30

February 2013

You can normally expect a larger return for the increased risk of a trustee sale vs the market exposure of a short sale. Unfortunately for investors, the trustee sale market is now so crowded that the risk just doesn’t make as much sense as it used to. According to David Tal of Short Sale Agent Finder, “Investors are looking to short sales more than ever before.” I recently experienced this in San Diego when I listed a short sale in a below-middle-class sub-market of the city and I was bombarded with offers from the guys most well known for their auction investments. One of them explained to me that the margins have been squeezed so much by the level of demand that they now prefer the increased control of a short sale vs an auction. The tough thing for ordinary real estate buyers, most notably first-time buyers, FHA buyers, and VA buyers, is that as investors turn their attention more and more to the general market and away from the trustee sales, it makes it much harder for them to buy anything at all, regardless of how qualified they are. Most sellers will work with a cash offer closing in 10 days far before considering an FHA loan buyer that needs to close in 45 days or more because of how backed up the banks are.

There is tremendous frustration in the market right now from buyers who have made dozens of offers and can’t get them accepted. At this point we are working with multiple buyers who are making blind offers at full price or greater anytime a home comes on the market that roughly matches what they are looking for, because they know that viewing the property could easily turn into a waste of time for them. They have been through it many times before, and by the time they get to offer number six, ten, even fifteen, buyer fatigue tends to set in. That is a nightmare for any real estate agent who has just spent months showing a client property and is at risk of losing them due to the market conditions. Funny how only a short time ago we were praying that buyers would get off the fence and inventory was growing out of control. Now we can’t get to the property or write the offer soon enough. The other disadvantage that non-investor short-sale buyers have is that they are only buying one home, which means that if a seller chooses to get in bed with them over the course of a two-, four-, or possibly six-month waiting period while the bank approves the short sale, the buyer

could easily find another home and jump ship, leaving the seller out to dry and with no recourse. That is why we have always seen short sales come back to the market multiple times before finally finding a final buyer that closes escrow. On the flip side, when a strong investment group makes an offer on a short sale, they can typically afford to wait it out and also buy others along the way without affecting the one they had previously tied up. They are also better able to deal with repair issues since they often intend to gut the place anyway. A region that will be interesting to track will be the Long Island NY real estate market as it digs itself out of Sandy’s destruction and back to a functional state. We can probably expect to see a spike in distressed assets there, and it may very well be investors that help accelerate its recovery. Daniel Beer is a San Diego MLS agent and the head of the San Diego Home Finder team focusing on Carmel Valley homes for sale in San Diego. He is also an active real estate writer around the internet with a focus on providing transparency to the market.

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Specialty contracting services get a boost from hurricane Sandy Accepting the reality of extreme weather by Tim Snyder

rowth remains slow for home builders and home remodeling contractors. But the major devastation caused by hurricane Sandy has proved to be a game changer for contractors who install generators, solar panels, sump pump systems and other features that help houses face extreme weather with more resiliency. Even as politicians and pundits continue to debate the role that human activity plays in climate change, homeowners in storm-prone areas are investing in improvements that make their houses storm ready. It’s interesting that some of these improvements are also considered “green” because they help houses reduce energy consumption or utilize renewable energy. Check out some of the more popular improvements, which are explained below. Backup power systems. The gasoline shortages caused by flooding and power outages educated many homeowners 32

February 2013

about the limitations of portable, gas-powered generators. A homeowner who installs a permanent generator powered by propane or natural gas enjoys two important benefits: higher kilowatt capability to power more household devices, and freedom from gasoline shortages. Other backup power systems are also drawing interest and generating revenue for enterprising contractors. Bruce Angeloszek, owner of CT Electrical Services, has installed backup battery systems for homeowners who can afford the luxury of an “indoor generator” that operates in complete silence. “We install a bank of specially designed, deep-cycle batteries that can be recharged by grid-supplied electricity, by a fuel-driven generator or by solar panels,” he explains. “It’s silent, there are no moving parts and you don’t have to worry about fuel,” Angeloszek continues. “Condo owners love this option.” Improved energy efficiency. To get the most from a backup power system, it helps to reduce power demands

throughout the house. The best way to identify major and minor energy-saving opportunities is to have an energy audit done on your house. This basement-to-attic assessment typically alerts homeowners about air leaks and low insulation levels that force the HVAC system to work harder and longer than necessary (wasting energy). It will also call out an inefficient water heater, leaky ductwork and a fuel-hungry furnace. The energy audit itself doesn’t save

energy; it simply provides homeowners with a game plan that can often cut energy consumption in half. Making some or all of the recommended improvements not only enables you to downsize your backup power system; it also cuts your monthly utility expenses throughout the year. Here is more information on common home energy problems. Upgrading HVAC equipment. Hurricane Sandy made many people realize that flooding and fallen trees can make fuel deliveries impossible. One way around this problem is to switch fuels. Another is to replace inefficient HVAC equipment with a new ENERGY STAR® furnace, boiler or heat pump. Replacing a 20-year-old boiler that’s 65% efficient with a new condensing boiler that’s 92% efficient will make a limited fuel supply last a lot longer. Solar energy systems. The price of photovoltaic (PV) panels that generate electricity from sunlight continues to drop, thanks to a combination of intense competition and technological breakthroughs. When you factor in rebates and other financial incentives, this super-green renewable energy system becomes pretty attractive. (Visit the Database of State Incentives for Renewables and Efficiency www.dsireusa.org to learn what incentives apply in your area.) A PV system

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provides you with site-generated electricity whenever the sun is shining. “For storm survivability, we can install a battery backup system that’s charged by solar panels,” says Angeloszek. “Customers with this type of system don’t need to worry about powerlines going down in a storm. The batteries power the house at night, and the PV system provides power during the day, while also recharging the batteries.” Of course, you don’t need a power outage to appreciate a PV system. The electricity your system generates is free, and in states with net metering regulations, the power company must purchase any excess power that you generate. Basement waterproofing. It’s unfortunate that the same storms that cause basement flooding also tend to knock out electrical service, rendering most sump pumps useless. All is not lost, however. What you need is a sump pump system that can operate on a backup battery when standard 120volt current isn’t available. Larry Janesky, owner of Basement Systems in Seymour, CT, takes it one step further with his TripleSafe® sump pump system that includes three separate sump pumps. “The first pump handles day-to-day pumping requirements,” he says. “The second pump actually has higher

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capacity and will come on automatically when the first pump can’t handle the water volume or isn’t operating for some reason.” Working together, pumps 1 and 2 in the TripleSafe system can move up to 6200 gallons per hour, a water volume that would easily overwhelm most standard sump pumps. The third sump pump operates on battery power, so it takes over during a power outage, moving up to 11,000 gallons before the battery needs recharging (extra batteries can be added to extend run time). The Romano family of Long Island, NY had two TripleSafe sump pumps installed when they had a basement waterproofing system installed in 2011, following hurricane Irene. When hurricane Sandy hit, their basement stayed dry in a neighborhood where most basements filled with several feet of water from the storm surge. “My neighbor and I walked outside the day after the storm,” recalls Anthony Romano. “We couldn’t believe the amount of water that was being pumped out of our basement. It’s amazing that it stayed dry.” Not just storm readiness, but improved resale value as well No real estate professional would read this article without asking what effect these improvements might have on resale value. The news is pretty good here too. According to a study by the National Association of Homebuilders, over 60% of builders and remodelers report that home buyers are willing to pay more for “green” homes with features like improved insulation levels, solar panels and energy-efficient HVAC systems. Programs are underway to educate home appraisers so that they can better recognize and value features that conserve energy or utilize renewable energy. Tim Snyder is a journalist specializing in sustainability, energy efficiency and home building topics.

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Too Little Too Late The Fedâ&#x20AC;&#x2122;s Reaction to the Subprime Crisis in 2007

by Rick Roque

indsight may always be 20/20, but at a Federal Open Market Committee (FOMC) meeting in August of 2007, Federal Reserve Bank officials could have moved proactively to avoid the worst of the subprime mortgage meltdown of 2008. According to recently released transcripts, Fed Chairman Ben Bernanke talked about the resilience of the United States economy to withstand what the looming crisis, but even by late 2007 he was not keen on intervening with rescue measures such as the bailouts that were later implemented anyway. According to the Wall Street Journal, Vice Chairwoman Janet Yellen showed more concern and alarm than her Fed peers with regard to the growing turmoil in the secondary mortgage markets. She wanted the Fed to make a move at that time, despite intervention being an unpopular opinion at the time. Even Treasury Secretary Timothy Geithner was not convinced that the situation would turn into an economic emergency for the U.S. Ms. Yellen is now one of the top candidates to assume Mr. Bernankeâ&#x20AC;&#x2122;s position. That August 2007 FOMC meeting can now be seen as missed opportunity. The Fed could have moved to cut interest rates at that moment, but failed to do so. The financial markets reacted in panic days later, and by the following week even the European Central Bank was

considering making cash available to commercial banks as an emergency measure. In retrospect, the Fed was looking at various reports that could have signaled the impending disasters, although the signals were unconventional. One such report came from a Wal-Mart executive who remarked on his observation of sharply decreased remittances from Mexican workers in the U.S. to their families back home. Years later, many of those migrant workers would leave the U.S. altogether. Ms. Yellen actually used the terms credit crunch and recession at the December 2007 FOMC meeting. A review of the 2007 transcripts by an analyst from the Cato Institute indicates that Fed officials were far too complacent with regard to what should have appeared as writing on the wall to them; namely the performance of funds comprised of subprime mortgage-backed securities managed by major Wall Street investment banking firms Bear Stearns and Lehman Brothers. Both firms eventually collapsed and created a domino effect that rippled across global economies. By Rick Roque. Any questions or feedback on this article, email Rick Roque, Managing Editor of The NicheReport Real Estate Edition at rick@thenichereport.com or call him at 408.914.5895. TheNicheReport.com

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Specializing in fix and flips, rehabs, income producing and rental investment properties throughout Southern CA. We lend on SFR residential and COMM property. Simple application process with generous broker commissions. Professional service with funding in 7 days. Call us today for a free quote or visit us online www. windvestcorp.com

ZINC Financial

Investment Rehab Lender. We are a direct lender for Fix and Flip loans in CA, AZ and NV. Funding in as little as 7 days. Easy online submission @ www.zincfinancial.net

Windvest Corporation

559-326-2509

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Commercial FundingEdge 830-331-4030 & 210-249-2111

Commercial Real Estate Finance, Business Finance and Oil & Gas Royalty Loans.

GreenLake Real Estate Fund, LLC 310-462-4637

Private direct commercial loans in CA and NV. All property types except raw land. Our latest fund was raised specifically for loans in this tough economy. We're eager to lend, so please call today!

Windvest Corporation

877-285-0777

MULTIFAMILY Apartment Bank 877-442-4003

Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. Apartment Bankâ&#x20AC;&#x2122;s flexible approach is key to freeing borrowers and brokers from the typical headaches and hassles of small loan transactions. Loan amounts from $250,000 to $10,000,000. Visit http://www.apartmentbank.com

February 2013

CLASSIFIEDS

Service Provider Classifieds Branch Opportunities American Pacific Mortgage Corportation

Established Retail Mortgage Bank, providing Managers and Originators cutting edge tools and resources to make their business a success.

866-486-8159

Guaranteed Home Mortgage Company, Inc. 888-572-3602

Hometown Lenders 888-606-8066

Mountain West Financial 888-845-4530

Residential Finance Corporation 800-785-6277

NEW

Residential Home Funding Corp. 866-319-4442

Sierra Pacific Mortgage 800-447-3386

We're expanding our nationwide branch network . Join a lender who invests in YOU! 20+ years, well-capitalized, wide range of products, licensed in 28 states, immediate marketing investment in your branch, Next Day Pay(TM) to transitioning branches, on Inc. 500 list of fastest growing companies We help you grow your branch and skyrocket your income! Our recruiters put producers in your branch, and our proven marketing maps are guaranteed to help you double your income. Get connected with other branch managers who are crushing it. Call us today to find out why our branches aren’t going anywhere. Ask us about our sign-on bonus program! Consistent. Reliable. Competitive. With over 20 years of experience in Retail Branching, Mountain West Financial opens doors to limitless opportunities.

At RFC we believe the status quo simply isn’t good enough. We’re doing retail branching a little bit differently. We start out with an award winning culture and take care of our customers, both internal and external, like family. With that basic premise met, everything else falls right into place. Partner with us! We have a reputation of providing ongoing support and communication to every branch, every day - that is our #1 priority. Our branch offices enjoy the security of being associated with a natioanlly recognized mortgage banker. We are East Coast Experts.

Retail Branches and Wholesale Lending Nationwide. Privately owned specializing in residential conforming, FHA, VA and Jumbo. Wholesale: www.spm1.com Retail: www.spmloans.com.

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Technology NEW

Applied Business Software 562-426-2188

The Mortgage OfficeTM is powerful and flexible Loan Servicing and Pool Software that automates your portfolio management by streamlining your collection process, printing of checks, and sending statements to both borrowers and investors. With our many Add-On Modules you can customize and grow TMO to suit the needs of your business.

Byte Software 800-695-1008

Byte Software offers a complete mortgage solution from lead generation to selling loans on the secondary market enabling lenders to close more loans in less time with a SQL database, customization, enterprise scalability, compliance and security.

Calyx 800-362-2599

Affordable software that streamlines and optimizes all phases of the loan process â&#x20AC;&#x201C; from loan marketing through closing.

DocMagic 800-649-1362

The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges.

International Document Services, Inc. (IDS) 800-554-1872

IDS is your mortgage document preparation vendor. With 20+ years experience IDS provides customers with fully compliant closing docs, initial disclosures & fulfillment. With superior customer service, in-house compliance & LOS interfaces, IDS far exceeds our competition.

title work & insurance CRES Insurance Services, LLC 800-880-2747

As one of the largest providers of Errors & Omissions Insurance and Risk Management Services, CRES Insurance has protected more than 75,000 real estate professionals nationwide, since 1996.

Linear Title & Closing 401-841-9991

Linear Title & Closing, Ltd., is a recognized leader and national provider of Closing, REO, Title Insurance and Settlement Services. Our streamlined RESPA compliant process utilizes flexible software tools that are easily integrated with your system.

Scott Bond Services 800-365-0101

A leader in providing surety license bonds, fidelity, and E&O to the mortgage industry nationwide including investor required Special Mortgage Bankers Bonds. Offering a combination of expertise, service, value, and underwriting flexibility thatâ&#x20AC;&#x2122;s second to none.

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February 2013

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marketing & lead Gen Best Rate Referrals 800-811-1402

Mailer Leads 866-783-4053 ext 14

One Direct Response 800-483-5129

Right Side Marketing 800-456-4395

Stoneybrook Publishing Inc 800-736-3632

Your mortgage marketing leader with many services available from Direct Mail & List Services, Telemarketing, Internet Leads, Mobile Marketing, and more.

Leader in FICO based lead generation, will help you increase your lead volume 150%. We've taken our highly responsive Mailer Programs and incorporated Personal Websites (PURLs) and QR Codes.

As a full service marketing company with over 20 years experience, we can help in all areas of your marketing needs.

Providing exceptional marketing materials for Real Estate and Mortgage professionals since 1985.

Monthly client newsletters proven to generate new loans from referrals and repeat business.

Appraisal & AMC StreetLinks Lender Solutions 800-778-4920

Providing lenders with a comprehensive suite of valuation solutions, including full AMC services, self-managed appraisal software, appraisal review tools and robust servicing products.

United States Appraisals 866-562-0123

World-Class Service. Nationwide Coverage. Discover Confidence in Your Appraisal Partner!

Training & education Kaplan Real Estate Education 877-792-4473

MortgageCurrentcy.com 800-231-4787

Kaplan is the nationâ&#x20AC;&#x2122;s leading provider of licensing and exam prep courses. We offer the SAFE Licensing Course in the classroom and live online. To help you pass the SAFE Exam, we also offer exam prep courses in the classroom and OnDemand online. Interpreting the complicated mortgage rules in plain language (Fannie, Freddie, FHA, VA, Compliance, Credit) that ONLY affect the loan origination side of the business. Help Desk. Rule Change Calendar. Automatic Face Book posts & Mortgage Talking Pointsâ&#x201E;˘ for your real estate agents. Online e-zine published 2X month. Try for $1.

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Advertiser DIRECTORY

Alpha Funding Solultions We are a direct lender. 100K to 2MM. NJ, NY & PA. All property types and deals considered www.Alphafundingsolutions.com info@alphafundingsolutions.com

American Pacific Mortgage Corporation The Mortgage Bank of choice for Top Producing Originators. Established. Strategic. Strong. www.apmortgage.com 800-846-8159 Recruiting@apmortgage.com

Apartment Bank Apartment Bank, a division of BofI Federal Bank (NASDAQ:BOFI), is a Nationwide Direct Portfolio Lender that has solidified its standing as a premier multifamily lender in the small balance lending space. www.apartmentbank.com 877-442-4003 apartmentcustomerservice@apartmentbank.com 42

February 2013

Applied Business Software, Inc The Mortgage Office is powerful Loan Servicing / Mortgage Pool software designed for private lenders www.TheMortgageOffice.com AJ Poulin 562-426-2188 aj@absnetwork.com

BofI Federal Bank www.bofifederalbank.com 888-883-9672 LendingPartners@bofifederalbank. com

Best Rate Referrals Mortgage Marketing Professionals. www.bestratereferrals.com Raymond Bartreau 800-811-1402 raymond@bestratereferrals.com

Byte Software End-to-end Mortgage Loan Origination Software. www.bytesoftware.com 800-695-1008 sales@bytesoftware.com

CRES Insurance Services, LLC Provider of Real Estate & Mortgage E&O coverage www.cresinsurance.com Tony Schacherbauer 800-880-2747 tonys@cresinsurance.com

DocMagic The largest dedicated loan document production company in the country, delivers a fusion of solutions guaranteed to meet today's complex loan document challenges. www.docmagic.com 800-649-1362

FundingEdge Commercial Real Estate Finance, Business Finance and Oil & Gas Royalty Loans. 830-331-4030 & 210-249-2111 cs@fundingedge.com

GreenLake Real Estate Fund Private Commercial Lender in CA & NV Kamau Coleman 310-462-4637 kcoleman@greenlakefund.com

Advertiser DIRECTORY

HomeBridge HomeBridge is a national wholesale lender offering both conventional and government products. homebridgewholesale.com

Hometown Lenders WE HELP YOU GROW YOUR BRANCH AND SKYROCKET YOUR INCOME! Our recruiters put producers in your branch www.hometownbranch.com Scott Smith 888-606-8066 scott@htlenders.com

International Document Services, Inc. (IDS) Your mortgage document preparation vendors. Providing you with compliant documents and services www.idsdoc.com 800-554-1872

Kaplan Professional Kaplan helps busy professionals obtain in-demand certifications and designations that enable them to advance and succeed in their careers. Through live and online instruction, we help our customers gain an edge in the mortgage industry. www.kapmortgage.com 877â&#x20AC;?792â&#x20AC;?4473

Mailer Leads Lenders and Brokers who use our mailers are not only surviving -- they are thriving. www.MailerLeads.com 866-783-4053 ext 14

MortgageCurrentcy.com Interpreting the complicated mortgage rules in plain language. 800-231-4787

Kennedy Funding Nationwide. Fast creative short-term bridge loans. $1 million-$50 million +. Commitments in 24 hrs. www.kennedyfunding.com Edwin Urrego 800-342-8500 edwin@kennedyfunding.com

Linear Title & Closing Title Insurance & Settlement Services www.lineartitle.com Nick Liuzza 401-841-9991 nliuzza@lineartitle.com

Mission Hills Mortgage (a division of PacTrust Bank) Mission Hills Mortgage, now part of PacTrust Bank, is one of the West Coast's preeminent lenders. www.missionhillsmortgage.com John Connelly, Regional Manager 925.849.1806

One Direct Response As a full service marketing company with over 20 years experience, we can help in all areas of your marketing needs 1drmm.com 800-483-5129 TheNicheReport.com

Advertiser DIRECTORY

RateLink Providing mortgage professionals with timely and accurate data as a means to a competitive advantage. www.ratelink.com 800-938-5193

Residential Finance Corporation Producing at least $3mm a month? Partner with Us! Expanding Now with Successful Branch Managers. www.myprobranch.com Rick Pallo 800-785-6277 Rick.pallo@myrfc.com

Right Side Marketing Marketing Materials for Mortgage Professionals. www.rightsidemarketing.com Jill Fleischman 800-456-4395 x10 jill@rightsidemarketing.com

Scott Bond Services A leader in providing surety license bonds, fidelity, and E&O to the mortgage industry nationwide. scottbondservices.com 800-365-0101 Cary McFadden cmcfadden.scottins.com

Sierra Pacific Mortgage Retail Branches and Wholesale Lending Nationwide. 800-447-3386 info@spm1.com

Residential Home Funding Corp Full Service Mortgage Banker, FHA Direct Endorsed Lender, Fannie Mae Seller Servicer, 203k Experts www.RHFbranch.com Frank Kuri 866-319-4442 fkuri@rhfunding.com 44

February 2013

StreetLinks Lender Solutions StreetLinks offers leading valuation and servicing solutions driven by quality and service. www.streetlinks.com 800-778-4920 sales@streetlinks.com

United States Appraisals World-Class Service. Nationwide Coverage. Discover Confidence in Your Appraisal Partner! www.unitedstatesappraisals.com 866-562-0123 brads@unitedstatesappraisals.com

United Wholesale Mortgage Discover Lending Made Easy! Conventional, FHA, USDA, VA, Jumbo, HARP 2.0, and Correspondent Lines. www.UWM.com Allen Beydoun 800-981-8898 signup@uwm.com

Windvest Corporation Hard money lender, specializing in Rehab Loans. NMLS # 394407. www.windvestcorp.com Andre Jimenez John Ermin 877-285-0777 andre@windvestcorp.com john@windvestcorp.com

Zinc Financial, Inc. Investment Rehab Lender. www.zincfinancial.net Todd Pigott 559-326-2509 tpigott@zincfinancial.net

- continued from page 46

every area of the country highlights the continued need for lenders to remain vigilant against fraud. In addition, the new CFPB restrictions—whose ultimate goal is to ensure a borrower can repay a mortgage over its entire term—raise the stakes for lenders to catch fraud or inadvertent errors that might compromise lending decisions or risk buy-back requests.” Kroll Factual Data examined MSAs with at least 1,000 applications per quarter and isolated certain files that may contain indicators of potential mortgage origination fraud. Flint, Mich., posted the largest quarter-over-quarter increase of potential fraud found within submitted loan applications, with a 50.32 percent increase over last quarter. The following MSAs comprised the top 10 for increases in potential fraud (Q3 compared with Q2): 1. Flint, Mich. . . . . . . . . . . . . . . . . . . . . . . . . . . 50.32% 2. Columbia, Mo. . . . . . . . . . . . . . . . . . . . . . . . 29.77% 3. Lancaster, Pa. . . . . . . . . . . . . . . . . . . . . . . . . . 28.83%

4. Tacoma, Wash. . . . . . . . . . . . . . . . . . . . . . . . . 25.68% 5. Santa Fe, N.M. . . . . . . . . . . . . . . . . . . . . . . . . 24.24% 6. Des Moines, Iowa . . . . . . . . . . . . . . . . . . . . . . 23.95% 7. Omaha, Neb.-Iowa . . . . . . . . . . . . . . . . . . . . . 22.43% 8. Fort Worth, Texas . . . . . . . . . . . . . . . . . . . . . . 20.41% 9. Providence-Fall River-Warwick, R.I.-Mass. . . 18.04% 10. Appleton-Oshkosh-Neenah, Wis. . . . . . . . . . 17.10% The MSAs with the largest decreases in potential fraud were Champaign-Urbana, Ill. (-19.55%); BridgeportMilford, Conn. (-18.59%); and San Francisco-Oakland, Calif. (-18.37%). Steve Cook is a commununications consultant and journalist covering residential real estate. He writes and edits Real Estate Economy Watch and writes for UPI, BiggerPockets. com, Equifax and other outlets. Cook also helps leading real estate companies get news coverage. Previously he was VP for Public Affairs for the National Association of Realtors®.

How we see it

TheNicheReport.com

Potential Mortgage Fraud Rose Ahead of QM Rule by steve cook

ossible fraudulent lending activity increased last year just as the Consumer Financial Protection Bureau prepared to issue new regulations requiring lenders to verify borrowers’ financial records and ability to repay mortgages. Kroll Factual Data, a provider of risk mitigation and verification services to mortgage lenders, banks and credit unions, reported a 1.1 percent average increase in possible fraudulent activity associated with the loan applications processed by the company in certain metropolitan statistical areas (MSAs). Kroll said that the increase rose from the second to third quarter by more than 50 percent. On January 10, the Consumer Financial Protection Bureau unveiled new regulations known as the QM rule

that requires lenders to review employment status; income and assets; current debt obligations; credit history; monthly payments on the mortgage; monthly payments on any other mortgages on the same property; and monthly payments for mortgage-related obligations. Borrowers also have to have sufficient assets or income to pay back the loan, and lenders must review the borrower’s debt-to-income ratio to determine whether that applicant actually has the ability to take on — and repay — the additional debt of a mortgage loan. The regulations will take effect January 14, 2014. “While fraud alerts declined in some MSAs,” said Rod Bazzani, President, Kroll Factual Data, “these declines were offset by significant increases in others. This spike in potential fraud is troubling, coming at the same time the mortgage industry is beginning to turn the corner. More importantly, the fact that red flags are rising in - continued on page 45

February 2013

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