TNR - July 2009

Issue 025 July 2009 TheNicheReport.com

Cuomo's Crossing

An outsider's appraisal of the new HVCC - Page 16 Commercial 23 Seizing Control of 29 Center Stage with 46 Bringing up the 10 Small Hard Equity Entitle Direct REAR: Shiela Your Retirement Loans

Frequently asked questions.

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The Niche Report talks with CEO Tim Dwyer.

Destroying home value ... one neighborhood at a time.

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CONTENTS *

16

Issue 025

July 2009

NICHE REPORTS agency & FHA

pg 35

Cuomo's Crossing

PORTFOLIO & ALT–A

pg 36

MARTIN ANDELMAN An outsider's appraisal of the new HVCC.

REVERSE

pg 37

HARD MONEY & NON-PRIME

pg 37

JUMBO

pg 39

CONSTRUCTION/REHAB

pg 40

COMMERCIAL

pg 41

FOUNDER & PRESIDENT Robert Pegg robert@nichereportonline.com CO-FOUNDER & PRESIDENT David Pegg david@nichereportonline.com

10

MANAGING EDITOR Stewart Mednick stewart@nichereportonline.com

Small Commercial Hard Equity Loans

up the 46 Bringing REAR: Shiela Bair

Gary opper president approved financial corporation Frequently asked questions.

23

Seizing Control of Your Retirement Plan by Investing in Mortgages: Part I Bernie e. nAvarro founder and president benworth capital partners An IRA can prevent an IUO to the IRS.

29

Center Stage with Entitle Direct Group, Inc. The Niche Report Tim Dwyer, CEO of Entitle Direct Group, Inc.

6

July 2009

Martin Andelman Destroying home value ... one neighborhood at a time.

* This month's front cover and feature article sponsored by Home Rescue Programs - next page

DEPARTMENTS

09 26 32 43

NOTE FROM THE FOUNDER/ letters to the editor RULES & REGULATIONS HEADLINES TIP OF THE MONTH LENDER & RESOURCE DIRECTORY

EDITORIAL / CONTENT MANAGER Kristen Moser kristen@nichereportonline.com ACCOUNTING MANAGER Shawna Ingram shawna@nichereportonline.com Advertising Reps Jessica Grizzle Jessica@nichereportonline.com Mark Moulton mark@nichereportonline.com Production Manager Henry Suchman henry@nichereportonline.com Production Assistant Dawn Exner dawn@nichereportonline.com ADVISORY BOARD Aaron Krowne President and CEO, IEHI, Inc. COLUMNISTS Martin Andelman Martin@nichereportonline.com Stewart Mednick Stewart@nichereportonline.com CONTRIBUTING AUTHORS Bernie E. Navarro Gary Opper

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SUBSCRIPTIONS Anthony F. Geraci is a leading expert in the creation of mortgage pools and fractional loan securities offerings. Geraci Law Firm has created over $10 Billion in debt and equity financing.

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NOTE FROM THE FOUNDER

I am going to keep this short and just rant a little bit about a situation I have encountered recently as a loan originator with the assumption that many of you have experienced this same thing – and I’m curious how you feel about it. Here it goes.

So recently, I’ve caught myself “selling” a title company’s fees to various clients. This is a title company I have used for quite some time simply because they offer decent service. I explained to the various borrowers that these particular fees were NOT my fees and they should perform their due diligence and shop around for a title company if they believe they can find a better deal. However, what I quickly realized is that stating this to the borrower really does not matter – the fees were on the Good Faith Estimate I presented them and the bottom line number was the only number that mattered. As a result, I ended up losing a couple of deals due to the title fees on the GFEs. I quickly realized what a phenomenal strategy this title company (and I am sure many more with similar relationships with LO’s) had deployed. Title companies have an army of loan officers explaining and rationalizing – and more importantly – selling the title company’s fees to the client! This is precisely when I called one of the advertisers in The Niche Report – EnTitle Direct – to receive a quote for a borrower who wanted to shop for more competitive title fees/rates. My mouth dropped when I tripled checked and questioned the representative’s quote. Yes, like their advertisement stated, they beat my local company’s fees/rates by over 35% (I actually pulled out the calculator). I then started to see RED – I was fuming – I lost deals over THEIR fees (remember, I was going to bat for them and selling their fees). I quickly turned over my entire pipeline to EnTitle Direct. I will also add that to date, their service has been excellent. Please take this as an objective helpful tip. You may call this an endorsement of one of our advertisers, however, I call it a “call to arms” driven by pure disappointment. Again, I would use any company that advertises in TNR – and this episode just strengthened my belief in our advertisers.

Keep up the fight,

Robert Pegg

Letters to the Editor While the intent of the HVCC regulation was to keep an appraiser from being unduly influenced in determining fair market value of a given property; what has happened is the quality of appraisals have deteriorated, timeframes have become longer and frustration has ensued from buyers, borrowers, brokers, real estate professionals, lenders and the appraisers themselves.

The HVCC while perhaps well intended has seemingly added a crippling blow to a recovering yet struggling real estate marketplace. One final result with the advent of the HVCC, the cost of an appraisal has increased by about $150.00 as an additional expense to the buyer/ borrower, yet both service and quality have declined with the new process. Thus, nobody wins.

Michael Davenport, Licensed Mortgage Broker King Mortgage & Realty, LLC Michael – We ALL feel your pain, but unfortunately, as industry insiders, our opinions do not matter to the powers at play. This regulation was put into effect for the consumer, and fortunately, we have Martin Andelman, as a consumer, expressing his opinion on HVCC in this issue’s feature article titled “Cuomo’s Crossing”. Check it out, maybe someone will start to listen when a consumer’s point of view is presented.

First of all, I want to thank and congratulate you on a great magazine.

I read it cover to cover and always find some gems of mortgage wisdom. I'm enclosing a copy of the email I sent to Martin Andelman regarding his recent article in the May issue.

Dear Martin Andelman - I enjoyed reading your article in the May issue of The Niche Report about loan mods - factual, candid and very well said. I think the underlying reason why the Obama's Administration is trying to criminalize the legit loan modification firms and services is its unspoken disdain for the private sector in general (treating it as a necessary evil just to get the tax revenues, not as the great stuff our American economy is made of ). Our firm does modifications (mainly for past Clients and their friends and family) and I know exactly what you are talking about.

PS - I talk to a lot of borrowers, and so far, I know of only one (1) person who successfully modified his loan on his own (he is a CPA and an experienced real estate investor). I'm sad to say this, but the average homeowner has almost no chance. The government and the lenders advertise that their help costs nothing and it is true... people get what they pay for (nothing).

Robert W. Dudek, Chief Lending Officer Statewide Home Loan Corp.

TheNicheReport.com

9

Small commercial hard equity loans Frequently asked questions by gary opper

What Is The Definition Of "Small" Commercial Hard Equity Loans?

For the purposes of this article, small commercial Hard Equity loans are loans on commercial real estate valued between $100,000 and $1,000,000. Why pick such a narrowly defined range? First, the typical mortgage broker will see this range for most commercial loans. Second, properties valued between $100,000 and $1,000,000 tends to finance and/or sell quicker than lower or higher valued property. Third, every additional cost (attorney fees, carrying costs and real estate commission) is higher as a percentage of value on a lower valued property as compared to a higher valued property. Fourth, property valued over $1,000,000 has a smaller pool of buyers.

What Types Of Property Do Commercial Hard Equity Lenders Like To Lend?

Commercial Hard Equity Lenders like to lend on the following: • Apartment Buildings • Medical Buildings • Office Buildings • Retail Centers Some Commercial Hard Equity Lenders will lend on the following: • Mixed Use Properties • Industrial Properties • Hotels/Motels • Mobile Home Parks • Land • Restaurants • Adult Living Facilities Few Commercial Hard Equity Lenders will lend on the following: • Dumps • Gravel Pits • Properties with potential EPA issues (gas stations, auto repair shops, dry cleaners) • Religious Institutions 10

July 2009

What Are The Advantages Of A Commercial Hard Equity Loan?

Some of the advantages of a Commercial Hard Equity Loan are: FAST - Commercial Hard Equity Loans can close quickly. Very little, if any, information is verified. Little documentation is needed as compared to traditional financing.

LITTLE DOCUMENTATION OR EXPLANATIONS - Since the approval is based on the real estate, a Commercial Hard Equity borrower may not need to explain credit, financial, family or other problems.

NO VERIFICATIONS - Commercial Hard Equity Loans do not require verification of income, employment, social security benefits, gifts, down payments, cash to close or other matters that are required with traditional financing.

FLEXIBLE - Generally, Commercial Hard Equity Lenders do not have published interest rate sheets. Their rates, pricing and terms are matched to a borrower’s needs.

This is the opposite of a traditional loan when a borrower must fit into a traditional lender’s mortgage program.

CLIENT PROFILE - A Commercial Hard Equity Borrower is less demanding and easier to please.

Therefore, the loan is easier to close. A borrower wants the money from the loan immediately. Terms, interest rates, fees and points are secondary. Typically, a borrower does not rate shop.

What Are Some Ways To Find Mortgages?

Direct mail, yellow pages and newspaper advertisements are some of the more popular ways to attract business. The most productive and least expensive way is referrals from other professionals, your vendors and

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your “sphere of influence”.

Which Professionals Encounter Commercial Property Owners?

The following professionals interact with Commercial Property Owners: • Bankers • Mortgage Brokers • Commercial Real Estate Brokers • CPAs • Attorneys • Developers • Commercial Insurance Agents You may want to network with these professionals in their trade associations. Some of the associations include the builder's association, the chamber of commerce, business clubs, networking clubs, civic clubs, etc.

In What Cases Would A Borrower Need A Commercial Hard Equity Loan?

Clients need Commercial Hard Equity Loans in the following situations: • Bankruptcy • Business failure • Credit problems • Death of a borrower or partner • Family Events • Foreclosure • "Can't Wait" transactions • Repairs or renovations needed on a building • Negative cash flow on property • Tax liens • Unreported income • Turnaround situations • Work-out situations The above circumstances are the predominate reasons that a commercial Hard Equity Loan will solve a client’s current financial situation. Generally, a borrower in one or more of the above situations is a good candidate for a commercial Hard Equity Mortgage Loan. These areas and other situations are fertile areas for your marketing to generate commercial Hard Equity Loans.

What Are Some Market Categories That Have Substantial “Unreported Income”?

According to the IRS, the following are some other market categories that are prone to having substantial 12

July 2009

unreported income: • Auto body and repair industry • Bars and restaurants • Beauty and barber shops • Bed and breakfast inns • Construction industries (painter, carpenter, plumbers, electricians, landscapers, bricklayers, laborers, roofers, etc.)

• Entertainment industries (singers, dancers, comedies, actors, etc.)

• Gas retailers • Import/export businesses • Miscellaneous (home care nurses, tutors, housekeepers, baby-sitters, car washers, carpenters, plumbers, electricians, gardeners, etc.)

• Mobile food vendors • Music industry associates • Retail stores • Taxicabs • Trucking • Used-car dealers A list broker will be able to supply you with names of people in these occupations.

What About A Borrower Who Just Wants Money Quickly?

A Commercial Hard Equity Loan is appropriate for a borrower who just needs money quickly. If a borrower has an opportunity that cannot wait for an approval from a traditional lender then a Commercial Hard Equity Loan is appropriate.

Why Are Closing Costs And Interest Rates High?

Borrowers pay for the ability to close a loan quickly without much documentation. These loans are for borrowers who: • Need to close quickly • Don't have the time to go to a bank • Do not have the ability to borrow from a bank because of financial problems, • A lack of adequate financial data to satisfy a bank.

How Do I "Sell" Expensive Money?

First, emphasize your professionalism and the value of your service. Second, emphasize a quicker closing then traditional financing. Third, explain that a loan is cheaper than a partner or venture capitalist. Fourth, explain

the lender's streamlined due diligence compared to a traditional lender. Fifth, explain the negative impact of the current alternative - foreclosure, lost opportunity, etc.

What Do I Look For In A Commercial Hard Equity Lender?

Your Commercial Hard Equity lender must be: • Fast • Flexible • A direct funder First, a Commercial Hard Equity lender must be fast. As with all borrowers, a Commercial Hard Equity borrower wants his loan "closed yesterday.” A professional Commercial Hard Equity lender has the time and experience to quickly see a borrower's real property in order to quickly approve the loan.

Second, a Commercial Hard Equity mortgage lender must be flexible. A typical traditional mortgage lender's investment matrix or grid will not work. A Commercial Hard Equity lender must be flexible and adaptive to the uniqueness of each transaction.

Third, a Commercial Hard Equity lender must be a direct lender. A direct lender lends his own money. A lender acting as a mortgage broker must consult with the actual lender. A direct lender will have immediate access to the funds a mortgage broker needs to close Commercial Hard Equity transactions quickly.

What Terms Should I Expect?

Usually, loan-to-values ("LTV") between 50 to 65 percent are available on commercial real property. For vacant land, the maximum LTV varies from 30 percent to 50 percent. A Commercial Hard Equity land lender is relatively rare.

The interest rates vary from as high as the maximum interest rate allowed by the state where the real property is located to an interest rate as low as several points above the nonconforming rates.

Most loans are for terms of two or three years. The borrower's goal with a loan is to achieve the immediate benefit and then progress to less expensive financing either with debt or equity.

Our Real Estate Programs Pack a Punch Seeking a creative and competitive lender? One that understands the short- and long-term value of your real estate property? Then take a look at AgriCap’s knock-out real estate term loan programs: 1. Prime-Based Variable 2. 3, 5, or 10 Year Fixed/Prime-Based Variable Thereafter 3. 20 Year Fixed For complete details on all our loan programs, including our real estate programs for land, commercial, and investment properties – and our specialty business financing programs for the food, beverage, and agricultural industries – contact us today at 213.542.5232 or realestate@agricap.com.

What Do I Need To Submit To Receive A Quote?

For a simple project, a lender will need at a minimum, the address of the subject property, the current rent roll, an estimate of the property’s value and the loan amount request.

TM

agricap.com | 213.542.5232

For anything else, a loan summary should be submitted outlining the use of funds and telling the "story" of the project. The story should include the answers to "who, what, when, where, why and how" questions. The lender may have an application for you to complete.

You should suggest some reasonable terms to your Commercial Hard Equity Lender.

7. Contact Professionals who meet commercial property owners. (See the question, "Which Professionals Encounter Commercial Property Owners?")

Commercial Hard Equity Lending will increase your income. You must not leave money on the table. Also, as a professional mortgage broker, you must always try to meet the needs of all types of borrowers.

Can A Commercial Hard Equity Loan Be A First, Second or Third Mortgage?

Most Commercial Hard Equity Lenders make only first mortgages.

Gary Opper is President of Approved Financial Corporation, Weston, Florida. Approved Financial Corporation is a licensed mortgage lender. Mr. Opper has been a Mortgage Lender and Note Buyer since 1984. He is president of Levie-Opper, a mortgage fraud litigation support firm. Also, Opper performs mortgage consulting. Opper has a CPA and a CFP license. Opper is past President of the FAMB - Miami Chapter and the FICPA - Gold Coast Chapter.

Opper is a member of the NAMB, FAMB, AICPA and the FICPA. Mr. Opper has been the NAMB’s Writer of the Year and Featured Writer of the Year. Mr. Opper was the FAMB’s Broker of the Year. Mr. Opper is available to speak to your group. Please contact him to arrange a speech for your event.

He may be reached at (954) 384-4557, fax: (954) 3845483, or e mail: opper@approvedfinancial.com.

How Do I Increase My Commercial Hard Equity Brokerage Business?

1. Seek out professional direct Commercial Hard Equity mortgage lenders. Talk with them and determine their general underwriting criteria, general terms, conditions and rates.

2. Set up procedures today so that all your turned down loans are analyzed as potential Commercial Hard Equity Loans. This includes loans that are turned down immediately by your mortgage employees, loans that are turned down by your lenders and loans that go "bust" at the closing table.

3. Let your mortgage colleagues know that you are now doing Commercial Hard Equity Loans. Your mortgage associates may be able to introduce you to a Commercial Hard Equity Lender in your area.

4. Continue with your successful advertisements, whether it is the yellow pages, newspapers, community papers, radio, television or direct mail. In your future advertisements indicate that you do Commercial Hard Equity Lending. Each community addresses this differently, so study ads from your area to see how a Commercial Hard Equity Loan is addressed. Examples include, “Hard Equity Loans,” “bad credit – OK,” “bankruptcies – OK,” “no credit – OK,” and “no credit turndowns.”

5. Seek out potential types of clients who may need Commercial Hard Equity Loans. (See the question, "In What Cases Would A Borrower Need A Commercial Hard Equity Loan?")

6. Seek out property owners in industries that may be specifically interested in your Commercial Hard Equity Loan Programs. (See the question, "What Are Some Market Categories That Have Substantial 'Unreported Income'?")

14

July 2009

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Cuomo's Crossing

An outsider's appraisal of the new HVCC

by martin andelman

“

16

W

hat’s HVCC?” I believe those were the exact words I used in response to being asked by the editor of this magazine to write a July cover story on the Home Valuation Code of Conduct.

“But I don’t know anything about appraisals, much less the appraisal industry.” Those were my next words.

“All I know about appraisals is that my mortgage broker orders them, and then someone has to wait at home for the appraiser to arrive, a job that has historically fallen to my wife.” We’ve purchased three homes and the truth is that I’m not even sure I’ve ever actually met an appraiser.

“Perfect!” That was my editor’s response. He confuses me at times. “That’s exactly why we want you to write it.

You’re going to be outraged, and readers love it when you’re outraged.”

“What if I’m not outraged?” I thought to myself. I wasn’t at all sure that I cared enough about appraisals to be outraged by a new rule affecting them. I do, however, care about writing cover stories, so I said yes and within days went to work reading about appraisers and the appraisal industry… which was all kinds of boring at first, to be entirely candid.

“Uh oh,” I thought. “Where’s the outrage in this new rule, assuming you’re not an appraiser, of course?”

HVCC does put a real crimp in an appraiser’s future by reducing his or her compensation as a result of being forced to join an Appraisal Management Company, that much was immediately apparent. But that alone seemed like something less than what would naturally inspire me to become outraged. Maybe I could get by just being miffed, or possibly peeved.

Then I saw who was behind the new HVCC ruling, and July 2009

I started to feel apprehensive. To begin with, New York’s Attorney General Andrew Cuomo, who has said some of the most uninformed things I’ve ever tried to ignore in my entire adult life, is no stranger to the banking industry, or its exceedingly powerful lobbyists at the Mortgage Bankers Association, or MBA for short, who are known as the most influential real estate finance lobby in Washington. I may not know much about appraisals, but I’m no dummy and these days, if it lies like a bank, and it steals like a bank, and it lobbies like a bank… then it’s a bank.

In fact, Countrywide’s now infamous CEO, Angelo Mozilo, who was once the MBA’s president, was on the MBA’s executive board from 1997 to 2001, the whole time Mr. Cuomo was busy bungling things at HUD. And Mozillo, along with many of his questionable colleagues later became contributors to Cuomo’s campaigns.

Okay, I was becoming irritated.

The fact is, Andrew Cuomo had essentially no experience in finance or real estate when he assumed regulatory control over Fannie Mae and Freddie Mac, the titans of home finance that many would say are at the center of today’s foreclosure crisis, when he became the youngest HUD Secretary in history back in 1997. And here, I had always thought those jobs were traditionally reserved for people who knew something about… oh, I don’t know… mortgages perhaps. Had I known, I might have considered applying for the job. Live and learn, I suppose.

It might therefore come as little surprise that it was Cuomo’s decisions as HUD Secretary that drove Fannie and Freddie into the world of sub-prime lending. He also

decided that Fannie and Freddie didn’t need any reporting systems that would allow them to monitor the increased risk associated with sub-prime lending. We all know how well that worked out, so bang up job so far Andrew.

Also during Cuomo’s tenure at HUD, FHA kicked off its no money down programs, so it seems that Cuomo thought that it only made sense to simultaneously increase the amounts the agency was willing to loan with no money down. I mean, why bother doing zero down loans, if you’re not going to blow through the limits and loan out as much as possible, right? It’s scary, but I’m starting to understand how these people think.

Cuomo also made possible what a federal judge would later describe as being “kickbacks” to mortgage brokers that some say were a big motivator related to the proliferation of loans that were destined to default. Some, apparently, aren’t sure whether providing kickbacks for selling expensive and unsustainable loans tends to drive brokers to sell more of them, so perhaps the government should commission a study. I know a 6th grade class that would be happy to take the project on, and I’m confident that they’d reach a solid conclusion quickly, like before recess.

According to The Center for Responsible Lending, 2.4 million Americans may face foreclosure in 2009, and 8.1 million may fall into this tragic group over the next four years. To be diplomatic, there’s little doubt that New York’s Attorney General Andrew Cuomo is at least partially responsible for their plight. In somewhat less diplomatic terms, he’s the boob that left the door to the vault open at Fannie and Freddie.

I was fast becoming incensed.

Of course, today Attorney General Cuomo has crossed over to the other side and is looking to play a very different role in the foreclosure crisis. Today, he’s going after mortgage brokers, rating agencies, loan modification firms, Fannie, Freddie… and… drum roll please…

Appraisers, with his Home Valuation Code of Conduct (“HVCC”), which went live on May 1, 2009 over a cacophony of objections from the National Association of Mortgage Brokers (“NAMB”) among others.

If you read Andy’s press releases, he says he’s also going after banks, but what he means by “going after banks,” isn’t what I mean when I say someone’s going after something, so I left banks out of the sentence above.

When Mr. Cuomo says he’s going after banks, he mostly means he’s coddling them and giving them whatever they

want.

The latest egregious example of Cuomo’s Crossing is HVCC, a new rule governing how appraisals are to be handled in these United States, which was passed into law by the United States Congress and signed by the president on… no, no, no… now wait a minute… that’s not at all what happened here, now is it?

If you remember your eighth grade civics class… the one about how our government works and how bills become laws, you won’t remember anything like this: The new HVCC rule, which will affect millions of Americans, began with an investigation by Attorney General Cuomo into the GOEs, or Government Owned Enterprises. In case you’re not familiar with the acronym, a GOE is called a GSE, or Government Sponsored Enterprise, before Andrew Cuomo runs it.

With me so far? Good.

Okay, so then Attorney General Cuomo threatens to subpoena the personal records of the CEOs of the two GOEs, which causes the investigation to stop, at which point the GOEs agree to write a $24 million check to fund an Independent Valuation Protection Institute, a new organization to help implement and monitor the new rule. Of course, it’s all completely transparent, in a totally opaque sort of way.

I’m not going too fast for anyone I hope.

Then the Attorney General drafts the new rule with an undisclosed group of industry participants, which is another way of saying “the banks,” who get to influence the new rule’s language so that it favors banks at everyone else’s expense. Following in the rich tradition established

by Cuomo while he was still at HUD, whatever leads to the agreement is not made public, and the Attorney General is never required to provide any details of what occurred. I can’t seem to remember that Right in the Bill of Rights, but fair enough.

And that, boys and girls, is how our country makes important and costly rules these days. It’s so much more efficient than that whole checks-and-balances nonsense that held us back for so many years. Plus, the new way completely circumvents the public having any say in the new rule whatsoever, so that saves time right there.

You see, when I started to do the research for this article, I had no idea I’d also get a lesson in how new rules that affect enormous segments of our population can come to pass in this country. It was quite the shocker because I had thought previously that I had that process TheNicheReport.com

17

down pat. deleted Alright, that’s enough of that… I’m plenty outraged.

What the heck is going on around here? Since when do we have a process like the one that gave us HVCC? Are there any other rules that were developed in such a way? Why don’t we just cut the fat out of this process and just let the banks draw up whatever they’d like in the way of rules and we’ll just go with whatever they come up with? We don’t need all the investigative foreplay, do we?

HVCC is one of those codes that starts out talking about its purpose being to right wrongs and protect the people, before it proceeds to favor the financial institutions and cost everyone else an arm and a leg.

Think: bankruptcy or credit card reform without all the riveting media attention.

In February 2009, Marc Savitt, President of the National Association of Mortgage Brokers (NAMB) filed a lawsuit against the Federal Housing Finance Administration (FHFA) to block implementation of HVCC on the grounds that it would “inhibit competition among mortgage originators and increase the cost of mortgages to consumers”.

According to NAMB, “the HVCC constituted a "de facto" rulemaking that did not comply with the requirements of the Administrative Procedures Act (APA), which sets out the procedures a federal agency must follow when issuing a regulation.” NAMB’s press release said: “NAMB strongly opposes FHFA’s position that it does not need to comply with the APA and other laws.”

And isn’t that a relief? At least that says that the procedures used in formulating the new HVCC rules were not the norm. So, NAMB wins this one for sure, right? This one’s a lock. Article over. The end.

Well, no. Not exactly. Actually, not at all. NAMB had to drop its lawsuit, strategically, according to NAMB’s press release, in order to assess how to respond to FHFA’s claim, which was clearly pulled out of someone’s hindquarters, that “no court may review their decisions while the GSE's are in conservatorship”. See… and that’s why regular people don’t like lawyers, right there. NAMB withdrew the suit without prejudice, however, so you never know… they may be back.

Mr. Savitt explained that he’s had several meetings with Cuomo’s office where he’s pointed out that HVCC is costing American consumers $2.8 billion. “We’ve met with his staff, but Mr. Cuomo has never had the time to 18

July 2009

meet with us personally,” Savitt told me. “And his people say the $2.8 billion cost is acceptable.”

Oh, do they now? Well, that’s something. I happen to know quite a few American consumers. I’ll have to remember to ask them whether they find that $2.8 billion cost “acceptable,” because I had an entirely different word in mind.

NAMB’s president, Marc Savitt, didn’t say this specifically, but you know he’s got to be more than irked that NY’s AG never seems to have time to meet with him.

I mean, we’re talking the President of NAMB here… he represents hundreds of thousands of mortgage brokers in all 50 states, and while NAMB may not have the clout on Capitol Hill that the bankers do, they’re far from being without influence. Marc is a smart and classy guy, and I liked talking with him a lot. He did imply that he doesn’t exactly have a great deal of respect for the HVCC, or the process from whence it came. And it’s obvious that there’s no love lost between himself and Mr. Cuomo.

“HVCC doesn’t do anything to prevent fraud,” Savitt told me. “It’s a bit like catching someone robbing the bank and then making them a bank guard. Many of the same people who defrauded the system are now running the show.” He didn’t say who “defrauded the system,” or who has been made into a “bank guard,” so the reader shouldn’t read anything specific into that statement, but I think I have a rough idea who he was talking about.

Why do our government officials keep doing things like this? I’m convinced that had Enron’s Ken Lay not kicked the proverbial bucket, the government would have made him Energy Secretary.

My appraisal of Andrew Cuomo is that he’s had quite a few difficulties with appraisals over the years. According to the U.S. House of Representatives, Subcommittee on Oversight and Investigations, Committee on Financial Services, from September 10, 2001: Then-Secretary Cuomo knew this problem existed, yet allowed it to balloon into a $130 million defrauding of the American taxpayer. Because of this scam, dozens of coconspirators, crooked investors, phony non-profits, willing appraisers and greedy attorneys have already been arrested and there is more to come.

And after a paragraph like that one, it makes complete sense that there was only one job the State of New York wanted him for: Attorney General, which turned my Ken Lay joke above into a straight line.

So, Cuomo as New York’s Attorney General,

presumably as a result of having learned from past mistakes, starts investigating Fannie and Freddie, where he knows from personal experience that a problem exists, and when he threatens to subpoena the CEO’s records, the two giants of home finance give in and decide to settle. In the settlement agreement, the parties agree to address the issues of appraisal coercion and appraisal independence by adopting the HVCC as the standard of conduct in exchange for the Attorney General terminating his investigation. And that’s funny all by itself, but I’m not going to make another joke about it here.

The agreement also states that a newly formed Independent Valuation Protection Institute (“IVPI”) would oversee the HVCC and that Fannie and Freddie would fund the institute for a period of 28 months to the tune of $24 mil. All that, just because come AG threatened to subpoena their records?

Now, at this point I had to take a moment to ask the question: Who was attempting to improperly influence appraisals, and I asked both Marc Savitt and Steve Gillan, who has been a New York State Certified Appraiser for 27 years and has personally completed 17,000 appraisals.

Savitt told me of a study that was conducted a few years back that asked appraisers the question and the results were that everybody in the process had done so to one degree or another, so when Gillan confirmed this, it came as no surprise.

As a homeowner, that made me feel all warm and fuzzy inside, but it did explain why I hadn’t seen the problems with the HVCC right out of the box. The HVCC opens by talking about the need for accurate appraisals that are free from undue influence or coercion on the part of the lender or anyone else for that matter, and that sounds like solid thinking to me. But, as is so often the case with government documents, it’s the large print that giveth and the small print that taketh away.

In the case of HVCC, it seems that the small print has not only taken away roughly half of the income of essentially every appraiser in the country, but it has created a misleading, costly, and even hazardous situation for borrowers… or me, in other words.

Here’s how I see the HVCC: 1. To begin with, the HVCC essentially mandates that all appraisals must be done by an Appraisal Management Company, or AMC, which cuts the appraiser’s pay in half, while it increases my cost as the borrower by twofold. That means going forward there will only be a handful of AMCs,

which explains the efficiencies that cut pay in half while doubling cost. Fabulous so far, right?

The even bigger problem that I see here, however, is that this won’t do anything to curtail coercion; it will just change somewhat who will be allowed to coerce. Cuomo should know this too. His original suit was filed against an AMC by the name of eAppriasalIT, and in that suit he accused the company of inflating appraisals to satisfy demands made by Washington Mutual.

If you’d like to take a moment to stretch… breathe… or put your head through a plate glass window, I’d understand.

2. I readily admit that some of the HVCC provisions were hard for me to understand, but this one wasn’t. Appraisals under HVCC aren’t portable… they’re tied to the lender. This protects borrowers like me from shopping my loan at different banks where I might get a better deal, so thank you Mr. Attorney General… and please don’t protect me anymore. I’ve decided that I’d like a little more danger in my life.

3. HVCC says that banks can’t own more than 20% of an AMC, and what a surprise… many of the “big banks” (and when I use the term “big” I mean “insolvent-but-propped-up-by-Treasury”), have already bought up the maximum allowable interest in most, if not all AMCs. I’m sure that’s just a coincidence.

But it also says that lenders can own 100% of an AVM, BPO, or other TLA (“three-letter acronym”) for an alternative valuation provider. The language says that lenders are expressly allowed to "develop, deploy, and use internal automated valuation models," and there are no restrictions on who controls the ordering or modeling of an AVM, and no requirements for disclosure to borrowers that an AVM report is solely controlled by the lender.

Transparency like that brings a tear to my eye? God

bless this country. And that’s all I have to say about that.

4. The HVCC has a “don’t ask, don’t tell, don’t talk, don’t know, no laughing and no talking” type of provision that I found to read like something a 5th grade teacher might use to keep his or her class under control. It bars appraisers from interacting at all with agents, mortgage brokers, loan officers, and others. So, that means if your brother-in-law is an appraiser, and you’re a real estate agent, you won’t be seeing him at Thanksgiving anymore, and I think that’s sad. Families don’t get to see enough of each other these days and, well… it chokes me up just to think about it.

Besides that… it’s stupid. No other party to a real estate transaction has to follow this type of rule under RESPA, and in fact RESPA encourages competition and interaction among the other parties, as long as proper disclosures are made.

RESPA’s anti-coercion measures, assuming they are properly applied to all valuations, already protect homeowners. If all parties to a real estate transaction are licensed and governed, then the problem of coercion is much more efficiently addressed, and the independent appraiser is still allowed to operate in a competitive free market, while being protected from coercion, collusion, and whatever else we’ve seen on The Sopranos.

5. It seems to me that the HVCC, instead of strengthening appraisals, will have exactly the opposite effect. Why? Because experienced appraisers, like Steve Gillan, are already leaving the profession. Steve told me that he’s already left the business, not only because he can make more money asking people if they’d like to “see that in a pump or a loafer,” but also because HVCC has rendered his business relationships, which took decades to develop, worthless.

According to Gillan: “HVCC knocked experienced guys like me right out of the business, so now you’ve got inexperienced people doing appraisals. They don’t know the business, they don’t know the neighborhoods, they’re being forced to work twice as hard for half the pay, and why… appraisals weren’t responsible for the increase in home values… that’s ridiculous. There were many factors, but if you want to point at any one thing, it was the advent of seller’s concessions.”

That caused me to pause. Mostly because I had no idea what a “seller’s concession” was. Steve explained: First we had 80% financing, then 90%, then 100%, then

20

July 2009

with seller’s concessions we went to 106% financing. As an appraiser, you look at recent comparable sales in the area.

So, if a house that was appraised for $100,000 actually got recorded at $106,000, no one can tell that the $6,000 was a seller’s concession. So, do the math. The next time it sold, and during the bubble some houses sold three times in one year, and it was sold with the plus 6% seller’s concession again, the next appraiser had the same problem. Over a couple of years the seller’s concession factor could add 50% or more to the home’s appraised price.

For the record, I love it when 5th grade math is to blame for a national catastrophe. Someone should make Andy Cuomo stay after school, because he’s obviously a remedial learner. I’d be happy to tutor him, but I’m pretty sure there’d be a line from New York City to L.A. were that position to become available.

So, Where Do We Go From Here?

Unquestionably, HVCC has many other problems that have been identified by thousands of professional appraisers across the country, but frankly many of them are over my head. And Mr. Cuomo, while preaching transparency, has refused to disclose anything about the process through which the agreement between Fannie and Freddie and his office was reached, or even who was involved in drafting the final language of the new rules.

That, of course, stinks to high heaven, but hey… why quit on a winner, I suppose. It seems to me that Cuomo’s made an entire career out of saying things like “I don’t recall,” and in general, not disclosing much of anything, so who am I to say he should change now?

Actually, I’m a homeowner and a taxpayer and a voter… and an outraged American citizen, that’s who I am. And I can absolutely promise Mr. Andrew Cuomo that I’m going to be reading up on everything he touches for the remainder of my days. At 48 years old, let’s hope that’s quite some time.

There are two very positive developments that I learned about as this assignment came to a close.

One was finding the National Valuation Service, a national AMC, of sorts, that’s been formed as a cooperative. According to Randall Marquis, Senior Editor of ML-Implode, “It’s essentially the only 'not-for-profit' Appraisal Management Company out there. It’s governed by its appraiser members, and it's those members that decide what they get paid. It may just be the only way to find a happy appraiser these days, and I think it’s safe to assume that a happy appraiser does a better job.”

Already, the National Valuation Service has attracted something like 4,000 appraisers to its membership, so clearly, it’s an idea that’s got merit. (And by “merit” I mean that it can’t be owned by a bank.)

The other development occurred literally as this story was going to press and thankfully my publisher is beyond understanding. Apparently, Congress may step in just in the nick of time. According to NAMB, Representatives Childers (D-MS) and Miller (R-CA) have introduced legislation that calls for an 18-month moratorium on HVCC. And from the sounds of NAMB’s press release, they think it’s going to pass. Here’s what NAMB released on June 26th: The National Association of Mortgage Brokers (NAMB) applauds the introduction of H.R. 3044. NAMB would like to thank Representative Childers (D-MS) and Representative Miller (R-CA) for their continued efforts and leadership on this issue. The introduction of this legislation is a victory for consumers and members of the industry alike,” said NAMB President Marc Savitt, CRMS. “We thank Congress for recognizing the need to address the issue of appraiser coercion without causing undue harm to borrowers or diminishing competition in the marketplace.

NAMB has taken an active stance against the HVCC since its introduction in March of 2008. “We urge Congress to pass H.R. 3044 as soon as possible to ensure that more borrowers will not be negatively impacted by this de facto rule,” stated Savitt. “In the period of time since its implementation, the HVCC has increased costs to consumers and decreased the quality of appraisals and has provided a level of uncertainty in an ailing housing market. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule.

NAMB looks forward to working with Members of Congress as this legislation progresses.

I don’t know about the rest of you, but I’d say Marc Savitt may have been forced to drop NAMB’s lawsuit, but I could tell from talking with him that he was still intent on terminating HVCC… so it looks to me as if… “he’s back”.

Oh, and Mr. Cuomo… next time the president of a national association that represent hundreds of thousands of professionals travels to your office, perhaps you might consider taking a few moments out of your obviously very busy schedule to poke your head in to say hello.

Of course, that’s just my appraisal of the situation.

Just thinking out loud over here.

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Seizing control of your retirement plan by investing in mortgages: part I An IRA can prevent an IOU to the IRS Bernie E. Navarro

This will be the first in a six part series of articles on using your IRA to invest in non-traditional investments such as mortgages. ince their establishment in 1975, IRAs have become a vehicle of choice for long-term retirement savings. Several years later, the IRS included employer plans such as 401(k)s to permit pre-tax savings via payroll deduction. The success of these plans has been staggering, with over $4.5 trillion held in IRAs representing over 48 million households.

IRA holders have felt trapped in traditional investments. We are all tired of the stock market fluctuations and investment advisors telling us that we have no other choice than to hold. Have you heard of a self directed IRA? A self-directed IRA allows you to investment in real-estate, mortgages, private companies and many other categories that have been possible since 1974. Curiously, IRS does not provide a list of “permissible” investments that can be held in an IRA. IRS Regulation Section 408 does indicate that certain collectables cannot be held, as well as life insurance.

The IRS does require that a custodial institution serve as the trustee to hold the assets of the IRA. While some banks provide those services for market-based investments such as stocks, bonds, CDs and mutual funds, most do not provide such services for real estate, mortgages, and other non-traditional investments. Through these custodians and the administrators and record-keepers that they appoint, a much broader array of investments are possible.

S

Where are the IRA Non-Traditionalists Investing?

Although real estate continues to be the main choice of self-directed IRA holders, many have discovered the power of lending. In essence, becoming the bank to rehabbers and

others seeking alternate financing. This debt can be secured by a first mortgage with many account holders issuing IRA loans from 10percent to 16percent, interest only, amortized, or other terms amenable to both parties.

IRA holders also can partner with investment companies. In other words, companies that use other people’s IRA money to invest in first mortgages. These clients have made an average return of 10 percent to12 percent. Mortgages can be tailored to the IRA holder.

This has proved to be a very successful approach for the individual IRA investors. Many clients are no longer working, and use the proceeds of the interest only loans as an IRA distribution for living expenses.

What are the issues?

As with all investments, there are inherent risks. Not because the choices may be non-traditional, but simply due to the nature of the investment chosen.

If mortgages are purchased in the IRA, the IRA holder should ensure that there will be sufficient cash balances to make the proper payments to the taxing authorities as well as HOA dues, insurance, maintenance and other anticipated and unanticipated expenses of the property. This is for the possible event that the loan may go into default. Although future IRA contributions may be possible, it shouldn’t be relied as an alternative for keeping a reserve fund in your IRA. Recent Retirement Plan Changes Provide Huge Benefits Three interesting events have transpired in the past couple of years worth noting. First, in October 2005 the US Supreme court ruled that IRAs receive Federal Creditor TheNicheReport.com

23

Protection. This protects IRA holders from asset seizure due to bankruptcy actions. Previous to this ruling, such protections were unevenly applied state by state, leading to a great deal of anxiety on the part of IRA holders.

Secondly, as of January 2006, 401(k)s now have a Roth provision. Why is that significant? It is the only way that an individual with a household income greater than $176,000 can contribute to a Roth, and he or she can now contribute up to $22,000 per year ($16,500 if under aged 50). Even if an individual’s adjusted gross income is less than $176,000, outside of this new 401(k) provision, the most they contribute is $5,000-$6,000 per year. This is great news for those individuals that wish to pay taxes before they invest.

In turn, they never pay taxes again on those contributions or earnings (must hold a Roth for at least 5 years and reach the age of 59.5 years old before withdrawal).

In December 2006, Bush signed into law the Tax Relief and Health Care Act which contained a provision that opened up the possibility for IRA holders or those wishing to roll-over 401(k) regardless of earnings to convert those funds to a Roth starting in the year 2010, regardless of their adjusted gross income ( AGI). You previously could not convert if your AGI was $100,000 or

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more. Included in the legislation was the ability to defer taxes owed on the conversion to tax years 2011 and 2012.

Bottom Line – You Choose Whether you, as an investor, uses an SEP, Simple, Roth or Traditional IRA, 401(k), or other tax-advantaged vehicle – you should be informed about the wide variety of choices available. You may also find yourself adding some new advisors to your circle of influencers, including CPAs, Attorneys, and Real Estate professionals. The IRS provides a great deal of latitude in your investment choices - use it to your greatest advantage. Strongly consider investing in mortgages through a self directed IRA. In the end, even if the mortgage goes into default you still have something tangible that can be rented.

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RULES & REGULATION HEADLINES

Rules & Regulation Headlines With all the rule and regulation changes that occur in our industry, it’s critical that you keep up to date--not only to insure that your pre-approvals don’t get rejected when your client’s find a home, but more importantly, how to structure transactions so they don’t get denied in underwriting.

Not all of the rule changes are mentioned in this article. We have chosen the ones issued in the last 30 days that affect loan originators, processors, underwriters and owners/managers.

Fannie Clarifies Guideline Changes: Underwriting, Eligibility & Property Related Updates (Announcement 09-19) Sweeping changes in the 9-page Announcement 09-19. There are so many minor little changes that can trip you up. Date of documents, the “highly recommended” (translation = you better do it or else!) 4506-T, Verbal VOE (seriously they label it Verbal VOE but then say you can get a written VOE within 10 day’s in lieu of a Verbal VOE, ugh!!), changes to how you calculate reserves, etc. At the end of the day, you better get to know all of these changes so you can head off problems with loans that could have been avoided. Space does not permit us to print ALL of the changes, but here are just a few: • Existing homes documentation reduced from 120 to 90 days • New construction documentation reduced from 180 to 120 days • Borrowers can use a credit card to pay up to two percent of fees (such as lock-in, origination, commitment, credit report and appraisal fees, etc.) outside of closing • Lender must document that borrower has sufficient liquid funds (reserves) to cover these cost (in addition to funds necessary for other costs and down payment).

• Recalculate credit card payment for debt ratio calculation • Borrowers are NOT required to pay credit card prior to closing if all of the above are met • “Highly recommended” that the 4506-T transcripts be received and reviewed prior to closing • Copy of the transcripts and explanation of any discrepancies must be kept in the loan file • Trailing Spouse Income No Longer Allowed • Required for all borrowers within 10 days of closing (note date) (verbal or written VOE) • Only 60 percent of retirement account balances can be used toward reserves (down from 70 percent) • Only 70 percent of stocks, bonds and mutual funds can be counted toward reserves (down from 100 percent)

26

July 2009

There is more, but expect lenders to start implementing these rules before updates to DU are made. You should assume these guidelines are effective immediately as lenders are highly encouraged to implement these changes immediately.

FHA: Using First Time Home Buyer Tax Credit (ML 2009-15) HUD originally issued this notice on May 15, 2009 only to pull it a few hours later. The original version was very different and did not specifically recognize the tax credit as an actual ‘asset’ of the borrower that could, in fact, be sold.

This triggered wagging tongues and lots of rumors, most of them claiming that FHA was going to let homebuyers “use” the tax credit as down payment. Nobody stopped to think from where the money was going to come. And now we are left with the painful truth that the entities that have the power to provide initial down payment assistance do not have any money.

Secondary Financing - Secondary financing can be provided by government agencies or instrumentalities of government (such as a state associated FHA approved non-profit agency). Conditions: • No cash back to borrower.

• Loan amount can’t exceed total needed for down payment, closing costs and prepaids.

• Secondary financing may be “soft” (silent) OR require monthly repayment.

• If payments are required, they must be included in ratios.

• If payments are deferred, the deferment must be at least 36 months in order to exclude the payment from qualifying ratios.

• If the tax credit advance loan has a short term for repayment and the borrower fails to repay by the designated deadline, principal and interest payments begin

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RULES & REGULATION HEADLINES automatically or the loan converts to a “soft” second.

• No balloon payments before 10 years • May be used for the initial 3.5 percent down payment requirement.

Purchase of Tax Credit - FHA approved lenders, FHA approved non-profits, government agencies and instrumentalities of government may purchase the credit.

It is possible that parties benefiting from the transaction may purchase the tax credit as well, i.e. the seller, etc.

Conditions are as follows: • Proceeds of the sale of the tax credit may not exceed the anticipated tax credit due.

• Borrower must sign certification that tax credit is not subject to offset of other debt.

• Copy of form IRS 5405 must be retained in the case binder.

• Costs associated with purchase cannot exceed 2.5 percent of anticipated credit.

• Only funds derived from the sale of the tax credit to government agencies and instrumentalities of government (such as a state associated FHA approved non-profit agency) are eligible for use towards the 3.5 percent down payment requirement.

• Sale proceeds derived from a FHA approved mortgagee, property seller, or any other party that directly or indirectly benefits financially from the transaction may not be used towards the 3.5 percent down payment requirement. Only for closing costs, additional down payment, or buy down of interest rate.

FHA Extends Property Flipping Waiver for Mortgagee Acquired and Foreclosed Homes (Effective 5-15-09) This amendment to HUD’s property flipping rules was originally announced June 09, 2008. It added the “mortgagee acquired” (typically through foreclosure or other means) property to its list of properties exempt from the 90 day holding period.

There is actually a long list of properties that are exempt from the 90 day holding period and I figured now was a good time to give you a friendly reminder along with a Mortgage Talking Points flyer FHA - "Full Speed Ahead" on Foreclosures to give to your Realtors. This is great deal-making info that many are not aware of.

Properties Exempt From 90 Day Holding Period • HUD REO’s • Owned by fed, state or local gov’t agencies • Owned by state or federally chartered financial institutions • Owned by Fannie Mae or Freddie Mac • Inherited properties

28

July 2009

• Employer owned from employee transfers • Non-profits on HUD’s approval list to purchase REO’s at a discount • Properties in designated federal disaster area • Builder selling newly built home • Foreclosed or mortgagee “acquired” properties

Review the title report carefully on these transactions to be sure that there has been no title change that has occurred in the 90 days previous to the contract that was in addition to the qualifying entity “acquiring” the property. If there is, make sure that the property still qualifies for the waiver.

VA Suspends Master Certificates of Reasonable Value MCRVs are issued by VA and establish a reasonable value for projects involving proposed construction of five or more similar properties.

A builder would send VA a request for an MCRV that includes all home models proposed to be constructed in a project or subdivision. The MCRV locked in the reasonable value for 6 months and there was no need for individual appraisals and NOV’s to be issued. While saving time and locking in a value for six months is a great thing for veteran buyers in a stable or appreciating market, it stinks for the buyer in a declining market. Since VA recognized that there was potential disservice to the veteran buyer, they have discontinued the practice of issuing MCRVs. USDA Updates No Swimming Pool Rule So, the “no swimming pool” rule for SFHGLP has been rescinded (May 28, 2009) but there is a catch—and it’s a big one: “…dwellings, which include in-ground swimming pools are now allowed, as long as any contributory value of the swimming pool is not financed in the loan amount.”

This value of the pool (yes, there are circumstances where a pool may have no value) will be deducted from the loan amount. So, let’s say the sale price is $100,000. The “contributory value” of the pool is $3000 (as stated in the appraisal), the base loan amount will be $97,000 plus the guarantee fee is added back (if financed).

So much for 100 percent financing! And your borrower will need to come to the table with $3000. But, it might not be a bad deal if they want an in-ground pool.

More detailed updates can be found at MortgageCurrentcy. com – Interpreting the rules and regulation changes for loan officers, processors, underwriters, and owners/managers.

Mortgage Talking Points®, charts and checklists included.

CENTER STAGE

CENTER STAGE WITH entitle direct The Niche Report talks with Tim Dwyer, CEO of Entitle Direct Group, Inc. brought to you BY THE NICHE REPORT

Over the last two years The Niche Report has highlighted many valuable industry companies to help you better serve your clients. This month is no exception. Entitle Direct is a national insurance company who, along with being a price leader, is working very hard to EARN our business. Tim Dwyer, CEO of Entitle Direct Group, Inc., talks about how thirty years in the insurance business has primed them to be a huge success in a turbulent market.

Tell me about ENTITLE DIRECT Let me start with EnTitle Insurance Company. We’ve been writing title insurance for over thirty years. It is the only title insurance company that markets and sells title insurance direct to consumers at savings of up to 35% or more. We cut out the middleman and their high commissions. It’s a revolutionary way to purchase title insurance and it saves consumers a significant amount of money at closing. ENTITLE DIRECT is the direct channel for EnTitle Insurance Company.

So how did ENTITLE DIRECT come to be?

Back in 2005, I went through the real estate closing process myself when I purchased a new home in Connecticut. I knew what title insurance was, but I wasn’t prepared for the high price. Through the traditional agent model, consumers have been paying more than they need to for title insurance. It’s one of the mysteries of the mortgage process. Consumers get to the closing table like I did and they see the line item for title insurance.

Many consumers probably don’t even know why they need it. Then they see the price and go into sticker shock.

After closing on my home, I decided that I needed to do something. I spent time researching the industry and decided to develop a new program where the insurance is offered direct the consumer at significant savings.

And how does ENTITLE DIRECT work?

Our Specialist Center is located in Pittsburgh, PA. That’s where we work with mortgage and real estate professionals, attorneys and consumers, throughout the process. Our Specialists order the title search, get the title commitment, coordinate the closing with the all parties, obtain payoffs, prepare HUDs, remind everyone of important dates, schedule the closing with both the consumer and our closing agent, and ensure the closing and funding of the loan. Mortgage professionals place their orders with us and generally get their ENTITLE DIRECT title insurance commitment within 72 hours.

Through our national network of closing agents – notaries and attorneys – consumers can close where and when they deem most appropriate.

Our underwriting team is located just outside of Cleveland, OH. EnTitle Insurance Company was founded there in 1978 as Guardian National Title Insurance Company. It was originally an Ohio title insurance underwriter, but we expanded its footprint to offer an alternative to the large insurance underwriters across the country. EnTitle is currently licensed and offering policies in 32 states (as of June 2009) and is expanding to the remaining states. All the title insurance policies are underwritten and issued here.

TheNicheReport.com

29

CENTER STAGE Given the state of today’s economy and the recent history of title insurance companies folding, what assurances can you give the mortgage community about EnTitle Insurance Company?

We are rated A Prime (Unsurpassed) by Demotech, the leading rating source for title insurance companies.

Demotech’s Financial Stability Ratings® are accepted

by Fannie Mae, Freddie Mac, HUD and the secondary markets. All major lenders accept our title policies. We are the largest independent title insurance company in the U.S., measured by geographic coverage.

Also, we are fortunate to have Michael Waiwood as the President and CEO of EnTitle Insurance Company.

He’s been in the business for over 30 years and was instrumental in setting up the Ohio Title Insurance Rating Bureau. He then served as its first President. He’s a veteran of the industry.

Ok, so why do mortgage professionals really benefit from working with you?

I think saving their borrowers hundreds, even thousands of dollars in closing costs is a huge benefit of working with ENTITLE DIRECT. Every mortgage broker and lender wants to be able to offer their borrowers the best mortgage rate, an outstanding borrower experience along with the lowest possible costs. By providing borrowers with a lower cost alternative to tradition title insurance premiums, brokers and lenders give their borrowers the added satisfaction of saving money on their closing costs. That leads to more referrals and more closed loans.

And, if they provide a "no closing cost” product to their borrowers, they’ll increase their profit margin by sourcing the title insurance from ENTITLE DIRECT.

Loan officerS

We originate commercial loans in all 50 states as well as FHA and Residential Loans in CA, NV, OR and AZ. Sign-on bonuS based on experience/licensed.

For Qualified Candidates: • Benefits Package • XLNT Commission Structure Fax resúme (888) 450-7907 or call John Miller (800) 530-2489 ext. 301 or email to hr@citylightsfinancial.com

Why are your rates so much lower than other title insurance providers?

Traditional title insurance companies work though title insurance agents. Most of the price consumers pay for the insurance goes to the agent as commission.

Because we sell direct, we pass the savings along to the consumer in the form of lower premiums, which are generally 35% less than through traditional channels.

And how does ENTITLE DIRECT demystify the closing process?

Well, these days everyone is talking about transparency. ENTITLE DIRECT certainly moves the home buying and refinancing process ahead in that endeavor. We offer a patent pending “Control Panel” – an on line dashboard of sorts, where consumer can log into a secure environment and view their HUD and other loan documents prior to the time of the closing.

The Control Panel also allows for consumers to create checklists and contact list related to the transaction and to share certain information with their broker/lender, real estate agent or attorney. This not only leads to a less stressful closing for consumers where they feel more in control. It also helps catch mistakes, leading to a smoother closing and funding. Let me tell you about a consumer’s experience this past May. The consumer accessed the Control Panel to review their HUD and noticed a mistake. The lender and consumer were able to resolve the discrepancy before the closing actually happened.

Have you had issues with lenders not approving you as a title insurance provider?

Even though the name EnTitle Insurance Company is new, we are veterans of the title insurance industry.

There’s probably not a larger lender we haven’t worked with. We close a lot of loans with AmTrust, Bank of America/Countrywide, Chase, CitiMortgage, Provident, Taylor Bean & Whitaker, Wachovia and Wells Fargo just to name a few. We’ve worked with plenty of small lenders, community banks and credit unions as well.

What does the future hold for ENTITLE DIRECT? We’re very excited about the future. We love educating both consumers and the mortgage community about title insurance and lower closing costs. We are working on obtaining the necessary licensing so we can

CENTER STAGE

expand our offering in additional states across the country.

We want to make ENTITLE DIRECT as recognized for title insurance savings as GEICO is for auto insurance.

Tim Dwyer is CEO of Entitle Direct Group, Inc., parent company of EnTitle Insurance Company and ENTITLE DIRECT, the leading provider of title insurance and closing services sold directly to consumers at savings of up to 35% or more compared to the competition in 32 states. EnTitle Insurance Company is regulated by the Ohio Department of Insurance and is approved to issue title insurance by the Departments of Insurance in every state where its policies are offered. EnTitle Insurance Company is a member of the American Land Title Association, and only issues policy forms approved by the American Land Title Association and other state associations, where applicable. Reach Dwyer at tdwyer@EntitleDirect.com or 203-724-1150, or visit www.

EntitleDirect.com/mortgage

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TIP OF THE MONTH

TIP OF THE MONTH The Mortgage Grand Prix Continued: Manageability

BY STEWART MEDNICK

D

efinition of manageability: that which can be managed; governable; tractable; contrivable Three time 500cc Grand Prix Motorcycle Racing World Champion Wayne Rainey improved his overall performance in part by creating an incremental method of improving performance. Part of that formula was to make his motorcycle handle better.

In the business world, this equates to manageability.

Before attempting to quantify manageability, it is worth deciding specifically what manageability is. The ISO-9000 standard for the evaluation of quality defines maintainability—a "close cousin" of manageability—as a set of attributes that bear on the effort needed to make specified modifications: stability, analyzability, changeability, and testability. These "abilities" aim to capture the ease with which a system or component can be modified to adapt to a changed environment, correct faults, or improve performance. Within the framework of this definition, I consider a system's manageability to be determined by the level of human effort required to keep that system operating at a satisfactory level.

“Something-Ability” seems to be a common thread for all these attributes of manageability. Let me also define “Ability” - competence in an activity or occupation because of one's skill, training, or other qualification: the ability to race well.

Ability is a general word for power. Manageability

32

July 2009

can then be defined by myself as the level of power created or importancy in an action to direct an activity. I will expand this notion of activity and the three elements of measure a bit further on.

I have thrown a mind-boggling amount of information in a small area of this column. How this applies to your business may be more conceptual than the previous two other topics of efficiency and durability.

Manageability is less substantive than efficiency and durability, which both can have a concrete metric. This is more subjective and therefore more debatable or open to interpretation on what level of quality or how laborintensive each metric may become. Rainey’s definition applied to his motorcycle through its handling. His idea of ‘handles well’ can be much lower to mine. Experience and expectation play a huge part in this area. If I jump on a super-bike for the first time, my experience can be amazing, yet I would have ridden on a sub par bike according to Rainey’s standards. Then, how much effort will be needed to maintain or improve the handling of that motorcycle to be world champion material? How many people will be needed to perform the task and how long will it take?

The time a task takes, the level of importance of that task and the amount of steps necessary to complete the task are three aspects to be considered when developing a metric for manageability. Again, this topic is expansive and I am touching on basic concepts in this column, but more research may be warranted if further information is desired.

TIP OF THE MONTH Stability, analyzability, changeability, and testability aim to capture the ease with which a system or component can be modified to adapt to a changed environment, correct faults, or improve performance as mentioned earlier. The time, amount of steps and importance of each are the metric used to measure. A very detailed analysis can be created for how well an action or project can be managed.

Applying this concept to your business, I will use marketing as an example. I want to create and manage a mass mailing campaign. How stable or sustainable will mass mailing be to my target market? How much time and how much manpower will be need? How well can I analyze or measure its success? Will I be able to change or alter the mailing material or the area to where I choose to mail? How much manpower, effort or steps will it take to do so? How do I know the success of the mailing or test the process? Beta testing was developed for this very issue. You want to know that a profitable return of some kind is possible before a major investment in marketing is undertaken. In general, imagine that marketing campaign as if it were a motorcycle and think to yourself, “how is the ride?”

All of the aspects I discussed in the marketing example are dovetailed with durability and efficiency which both were covered in previous month’s columns. None of these three elements of success can be improved or developed without some how touching upon one another. I have stated many times how developing and running a business is a marathon and not a sprint.

To make your race go faster (efficiency) last longer (durability) and handle better ( manageability) you need to develop a standard, improve it, do not break under the stress of a changing environment, rather change with it, and improve the skills necessary to implement and measure all that is done in your business. See you at the finish line!

Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, personal empowerment, customer satisfaction, marketing and sales techniques. Stewart is available for marketing consulting, personal coaching and training sessions.

If you have a comment or a question for Stewart, contact him at 651-895-5122 or smednick1@netzero.net

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Top twenty national lenders, January-April 2009 Copyright 2009 by CBMI (703) 8468230 - Information is deemed to be accurate but CBMI does not guarantee the accuracy or completeness of the data.

www.MortgageDataWeb.com

Mortgage Maret hare Report ational ummary: Conentional Mortgage Actiity (This report includes Both Purchase-Money and Refinanced mortgages)

Report Date: 6/19/2009

Period: January 2009 through April 2009

Rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Number Mortgages (Total)

Company Name

WELLS FARGO MORTGAGE INC, DES MOINES, IA COUNTRYWIDE HOME LOANS INC, CALABASAS, CA BANK OF AMERICA ,CHARLOTTE, NC JP MORGAN CHASE BANK, EDISON, NJ PROVIDENT FUNDING ASSOCIATES, BURLINGAME, CA SUNTRUST BANK, RICHMOND, VA METLIFE BANK NA, BRIDGEWATER, NJ CITICORP MORTGAGE, LIC, NY WACHOVIA MORTGAGE CO, WINSTON-SALEM, NC OHIO SAVINGS BANK, CLEVELAND, OH US BANK NA, MINNEAPOLIS, MN NATIONAL CITY (FOA), MIAMISBURG, OH ROCK FINANCIAL / QUICKEN LOANS, LIVONIA, MI FIFTH THIRD BANCORP, CINCINNATI, OH BRANCH BANKING & TRUST CO, WILSON, NC TAYLOR BEAN & WHITTAKER MTG, OCALA, FL FLAGSTAR BANK FSB, BLOOMFIELD HILLS, MI USAA FSB, SAN ANTONIO, TX SIERRA PACIFIC MORTGAGE CO, FOLSOM, CA REGIONS FINANCIAL CORP., BIRMINGHAM, AL **--OTHER--** Grand Total

Total $ Amount ($000)

159,052 73,057 56,436 48,961 39,139 31,691 23,949 20,611 21,513 14,920 24,638 18,980 14,033 16,205 14,416 10,496 7,357 11,391 6,210 8,563

39,053,106 17,080,859 14,047,345 10,551,252 10,111,075 7,519,713 6,521,047 4,597,678 4,499,515 4,220,115 4,023,378 3,680,345 3,422,322 3,160,686 2,639,001 2,363,578 2,183,368 2,011,726 1,606,278 1,527,505

876,386 1,498,004

173,720,223 318,540,115

Market Share %

Number Fixed

% % % % % % % % % % % % % % % % % % % %

245,537 233,802 248,908 215,503 258,338 237,282 272,289 223,069 209,153 282,850 163,300 193,906 243,877 195,044 183,061 225,188 296,774 176,607 258,660 178,384

158,017 71,763 52,901 46,305 38,989 28,067 23,906 18,495 21,222 14,919 23,918 18,677 14,022 16,004 14,289 10,355 7,330 11,379 6,207 6,824

1,035 1,294 3,535 2,656 150 3,624 43 2,116 291 1 720 303 11 201 127 141 27 12 3 1,739

6,172 3,063 2,824 1,591 1,165 1,354 801 563 731 399 654 566 306 406 805 426 147 489 188 276

54.54 % 100.00 %

198,223 212,643

806,295 1,409,884

70,091 88,120

39,480 62,406

12.26 5.36 4.41 3.31 3.17 2.36 2.05 1.44 1.41 1.32 1.26 1.16 1.07 0.99 0.83 0.74 0.69 0.63 0.50 0.48

Number ARMs

Number Construction

Average Mortgage

Copyright 2009 by CBMI (703) 8468230 - Information is deemed to be accurate but CBMI does not guarantee the accuracy or completeness of the data.

www.MortgageDataWeb.com

Mortgage Maret Share Report ational Summary: Government-Insured Mortgage Activity (This report includes All Government-Insured (FHA and VA) mortgages) (Select funders and correspondents: Home Purchase and Refinance report) Report Date: 6/19/2009

Period: January 2009 through April 2009

Rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Company Name

WELLS FARGO MORTGAGE INC, DES MOINES, IA COUNTRYWIDE BANK, FSB, ALEXANDRIA, VA BANK OF AMERICA MORTGAGE, CHARLOTTE, NC JP MORGAN CHASE MORTGAGE, EDISON, NJ METLIFE BANK NA, BRIDGEWATER, NJ QUICKEN LOANS, LIVONIA, MI NATIONAL CITY BANK, INDIANAPOLIS, IN USAA FEDERAL SB, SAN ANTONIO, TX FLAGSTAR BANK FSB, TROY, MI SUNTRUST MORTGAGE, ATLANTA, GA TAYLOR BEAN & WHITAKER MTG, OCALA, FL METROCITI MORTGAGE, SHERMAN OAKS, CA GMAC MORTGAGE CORP, HORSHAM, PA US BANK NA, MINNEAPOLIS, MN NATIONAL CITY MORTGAGE, MIAMISBURG, OH PRIMARY RESIDENTIAL MTG, SALT LAKE, UT COUNTRYWIDE BANK FSB, ST PAUL, MN PRIMELENDING PLAINS CAPITAL, DALLAS, TX ALLIED HOME MORTGAGE CAPITAL, HOUSTON, TX MORTGAGE INVESTORS CORP, ST PETERSBG FL **--OTHER--** Grand Total

Number Mortgages (Total)

Total $ Amount ($000)

Market Share %

Average Mortgage

Number Mortgages (Purchase)

Purchase $ Amount ($000)

Number Refinance$ Page 1 of 1 Mortgages Amount (Refinance) ($000)

33,881 29,804 11,615 10,264 8,610 9,131 8,822 7,371 6,735 5,931 5,341 4,948 6,092 5,213 3,759 3,481 3,138 3,792 3,527 3,421

6,470,883 5,365,437 2,088,273 1,807,355 1,653,437 1,633,191 1,632,088 1,542,160 1,176,685 1,086,098 1,067,006 1,044,881 989,021 849,634 828,207 666,559 653,590 647,243 603,220 535,999

5.41 % 4.49 % 1.75 % 1.51 % 1.38 % 1.37 % 1.37 % 1.29 % 0.98 % 0.91 % 0.89 % 0.87 % 0.83 % 0.71 % 0.69 % 0.56 % 0.55 % 0.54 % 0.50 % 0.45 %

190,989 180,024 179,791 176,087 192,037 178,862 185,002 209,220 174,712 183,122 199,776 211,172 162,348 162,984 220,326 191,485 208,282 170,686 171,029 156,679

20,743 13,663 8,740 3,670 4,853 1,229 3,283 4,739 2,231 3,672 1,770 3,688 2,082 2,480 847 1,311 1,555 1,877 1,254 2

3,914,265 2,418,015 1,552,531 669,856 903,920 182,514 535,001 945,288 362,192 648,973 297,291 750,084 376,683 378,624 192,957 234,503 322,284 306,426 174,477 178

13,138 16,141 2,875 6,594 3,757 7,902 5,539 2,632 4,504 2,259 3,571 1,260 4,010 2,733 2,912 2,170 1,583 1,915 2,273 3,419

2,556,618 2,947,422 535,742 1,137,499 749,517 1,450,677 1,097,087 596,872 814,493 437,125 769,715 294,797 612,338 471,010 635,250 432,056 331,306 340,817 428,743 535,821

468,851 643,727

87,175,956 119,516,923

72.94 % 100.00 %

185,935 185,664

216,132 299,821

37,614,993 52,781,055

252,719 343,906

49,560,963 66,735,868

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Commercial Capital Funding Corp

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Commercial Hard Capital, LLC

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Commercial Lending Capital

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Commercial Loan Capital

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Commercial Mortgage City

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Commercial Mortgages 101

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Community Commerce Bank

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Cushman Rexrode Capital Corporation 925-988-7200 Eastern Savings Bank

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Pacific Mortgage Funding Corporation 562-864-4006

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Pacific National Bank

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PFA Capital, LLC.

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PNC ARCS

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Presidential Bank

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Pribank

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Prudential Mortgage Capital Co.

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REM Capital

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SF Partners Mortgage

305-774-0456

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Small Business Loan Source, LLC.

512-215-2727

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St. Cloud Mortgage

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STA Capital Group & Advisors

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800-333-9893

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Excelsion Mortgage

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Strongtower Financial

Griffin Capital Funding

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TCRM Commercial Corp.

212-371-3933

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Hawkins Capital

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Terrace Capital

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Integrity Financial Group

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Trilogy Commercial Lending, LLC.

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Interbay Funding, LLC

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Union Bank of California

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Kennedy Funding

201-342-8500

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West One Mortgage Corporation

818-921-7602

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Lib Properties, LTD.

404-256-8600

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WholesaleLending.com

866-303-6301

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Lighthouse Commercial

614-340-3894

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World Capital Bancorp, Inc.

888-922-3003

www.worldcapitalbanc.com

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

35

NICHE REPORTS

portfolio & ALT–A Premium Listings

All Credit Considered Mortgage

Private Money

Tim 240-314-0399 ext.19 Private portfolio lender specializing in foreclosure and bankruptcy bailout loans. No credit score requirement, No pre-payment penalty. Up to 70% LTV. No seasoning requirements. Lates ok. Lending territory: AZ, CA, CO, ID, NV, OR

Gregory Funding LLC 888-324-3578

Manaseh, Epharim and Associates 770-840-0112

Asset lending specialists. Your source for international and domestic funding

portfolio & ALT-A Lender Listings Powered by TheLoanPost.com Amtrust Bank

888-321-6446

www.amtrustgemstone.com

Hayhurst Wholesale

813-425-7011

www.hayhurstwholesale.com

Astoria

301-537-9047

www.astoriamortgage.com

Home Savings of America

972-235-7366

www.myhsoa.com

Banker West

800-518-1172

www.bankerswest.com

ING Mortgage

877-464-0555

www.ingloans.com/wholesale/index.

Capital Alliance

415-288-9575

www.calliance.com/index.php

html

CNB National Lending

815-412-9305

www.cnbnationallending.com

Liberty Savings Bank

941-735-7890

www.libertysavingsbank.com

Eastern Savings Bank

800-787-8187

www.easternsavingsbank.com

LuxMac, Covino, and Company

800-762-2274 x 312 luxmac.com

Emigrant Mortgage www.emigrantmortgage.com

800-Emigrant x mid atlantic

Global Lending Group

727-530-0110

GSF Funding

262-373-0790

Washington Federal

971-645-9140

Luxury Mortgage

203-569-4249

Residential Lending Network

800-749-5363 x 5276 www.reslend.com

www.luxurymortgagewholesale.com

www.glgiwholesale.net

United Midwest Savings Bank

614-255-3499

www.umwsb.com

www.gsfsales.com

US Bank

702-630-0770

www.usbank.com

www.washingtonfederal.com/wholesale

West One Mortgage Corp

818-921-7602

www.westonemortgagecorp.com

ADVERTISE YOUR NICHES HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

LENDERLAB SEARCH POWER

MORE Lenders, MORE Programs, & MORE Ways to Search

LENDERLAB.COM (800) 339-1863

Niche . Alt-A . Non-Prime . Commercial . DPA . High LTV . Hard Money . Commercial

NICHE REPORTS

REVERSE Premium Listings

NEW

Guaranteed Home Mortgage Co., Inc.

Specialized Retail Platform for Experienced Loan Officers

888-572-3602

Reverse It! A division of Urban Financial Group, Inc

Reverse Mortgages, fastest turn times in the industry. Training and lead support available.

888.777.3311 REVERSE MORTGAGES Lender Listings Powered by TheLoanPost.com American BancShares

305-817-2165

www.americanbancshares.com

MetLife Home Loans

www.wholesale.metlifehomeloans.com

Arlington Capital Mortgage Corp

800-814-9432

www.acmcwholesale.com

NetMore America

509-526-4007

www.netmoreamerica.com

Circle Mortgage Corporation (Fl only)

800-576-1338

www.circlemortgage.com

Pacific Banc Mortgage

571-340-5593

www.pacificbanc.com

Continental Home Loans

631-393-3800 x 114 www.chlmortgagebankers.com

Quality Life Reverse Mortgage

800-955-7919

qualityliferm.com

Essex Mortgage

702-893-9200

www.essexwholesale.com

Quik Fund Inc.

813-671-0712

www.quikfund.com

Financial Freedom

800-500-5150

www.financialfreedom.com

Silvergate Bank (cml)

858-362-6300

www.silvergatebank.com

Financial Heritage

800-895-2209

www.financialheritage.com

SouthPoint Financial Services

800-433-1467

www.spfs.com

Generation Mortgage

866-733-6089

www.generationmortgage.com

Sunwest

800-453-7884

www.swmc.com

GotMortgage.com

760-802-9630

www.gotmortgage.com

Wells Fargo Reverse Mortgage

800-336-7359

www.wellsfargo.com

Liberty Reverse Mortgage

866-871-1353

libertyreversebroker.com

World Alliance Financial Corp.

800-562-6755

www.worldalliancefinancial.com

HARD MONEY & NON-PRIME Premium Listings

All Credit Considered Mortgage 240-314-0399 X 19

AFG LLC (Asset Funding Group) 720-889-1175

AgriCap Financial Corporation 213-542-5232

Ambit Funding 800-823-7101

Private money Direct lender - up to 70% LTV: Bridge loans, purchase & rehab, construction financing, raw land, no minimum credit score requirments.

Nationwide lending from $300k to $3 million, 24 hour commitment as fast as 5 days to close. HARD MONEY- MADE EASY Agriculture including facilities and part-time farms, commercial, special purpose properties Short-term commercial bridge lenders; Most property types including RAW LAND; All 50 states, and Canada; Max LTV 70%, 50% on Land

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

37

NICHE REPORTS

HARD MONEY & NON-PRIME premium niches continued…

BRT Realty Trust 516-466-3100 or 800-450-5816

Fairview Commercial Lending 866-634-1270

Financial Resources Mortgage 800-950-6913 or ddexter@frmortgageinc.com

NEW

First Capital Commercial Fiance 713-267-4040

First Mount Vernon (866) 908-FMV1 (3681)

First Mount Vernon (866) 908-FMV1 (3681)

NEW

KENNEDY FUNDING, INC. 800-342-8500

Manaseh, Epharim & Associates 770-840-0112

Metro Funding Corp 866-302-6360

Miner Capital Funding, LLC 702-466-8952

Stonecrest Financial 888.884.6518

TrustCapital Investments LLC 301-503-2231

A Public Mortgage REIT Traded on the NYSE (NYSE: BRT) Fast response on loans from $2 million to $50 million on income producing commercial properties nationwide. No prepayment penalties, lock out or exit fees No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours Real Estate based private money lender. Commercial & Residential Investment. Refi cash out allowed. Retail,office,multi-family, raw land, development & modular construction are our specialties. Common sense underwriting. No upfront fees! Email or call today.

Land, land acquisition & development plus construction loans for clients needing fast, interim financing.

No seasoning requirements, No upfront commitment or processing fees, Minimum credit score 400 - DE, MD, VA, DC, NC, SC, GA, FL Minimal documentation required, Combined Loan-to-Values to 105% - DE, MD, VA, DC, NC, SC, GA, FL Mortgages/loans secured by real estate, all commercial property types and other fixed assets nationwide; Any property type, even raw land.

Specializes in development loans that need to close quickly, loans from $1 million & up. 2-days for commitment.

Direct Lender with fast closings. Your source for international and domestic funding.

Direct lender specializing in short term bridge financing. Interest only.

No prepayment penalty. No points upfront. Commitments within 24 hours.

Brokers welcomed and protected.

Specializing in collateral-based real estate loans nationwide. We get deals done!! As fast as 4 days! Loan amounts 1 million to 20 million We are a direct lender specializing in churches, mixed-use, apartments & commercial lines of credit Local direct lender (DC, MD and VA) specializing in bridge, construction, rehab and business loans. Loans are based on “subject to value”, 50% LTV, minimal documentation, EQUITY DRIVEN not FICO sensitive. Brokers are protected.

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

38

July 2009

NICHE REPORTS

HARD MONEY & NON-PRIME Lender Listings Powered by TheLoanPost.com Advantage Capital Equity Solutions

800-223-3019

HARDDMONEYLOANS.COM

813-516-5210

www.HARDDMONEYLOANS.COM

AFC Hardmoney

813-387-3800 x 311 www.afchardmoney.com

www.adcapequity.com

Hawkins Capital

801-936-5100

www.hawkinscap.com

AgriCap Financial Corporation

213-542-5232

Investor Funding

864-213-3951

www.4investorfunding.com

J & J Financial

866-296-8246

www.10dayloan.com

Lakeside Financial Inc.

949-297-4180

www.nofico.net

Lib Properties, LTD.

404-256-8600

www.libloans.com

LNB Commercial Capital

321-214-0585

www.lnbcapital.com

Magnolia Financial Consultants

601-428-1005

www.hardmoneymortgages.com www.meridiangroupinc.com

www.agricap.com

All California Home Loans 877-462-3422 www.aboutcaliforniahomeloans.com/hard-money.html Alliance Financial, Inc.

866-603-5999

www.afiloans.com

Ameribank Mortgage

516-833-8834

www.ameribanksolutions.com

American Acceptance (cml)

800-452-9287

www.aamonline.com

Assurity Financial

866-841-7863

www.assuritywholesale.com

Avant Capital Partners, LLC. (cml)

212-219-9419

www.avcapital.net

Meridian Group

800-901-9301 818-342-2477

Bay Equity

800-229-3703

www.bayeq.com

Overland Financial

BlueWater Funding, LLC

866-551-2583

www.bluewaterfundingllc.com

Pacific Mortgage Funding Corporation (cml) 562-864-4006

www.overlandfinancial.com

Brookview Financial

877-734-2211 x 316 www.brookviewfinancial.com

PB Financial Group Corp.

310-289-0900

www.pbfinancialgrp.com

California Equity Lenders

818-584-2320

www.calequitylenders.com

Piedmont Capital Lending, LLC.

678-292-6984

www.piedmontcapitallending.com

www.pacificmortgage.com

Capital Alliance

415-288-9575

www.calliance.com/index.php

Porter Bridge Loan Company (cml)

866-725-1777

www.porterbridgeloan.com

CFA Capital Partners (cml)

914-967-5780

www.cfacap.com

Portfolio Mortgage Company

480-227-2857

www.portmort.com

Crawford Park Financial

626-796-7979

www.crawfordparkfinancial.

PFA Capital, LLC

800-531-4589

www.pfacapital.com

Rehab Funding

610-645-9939 x 310 rehabfunding.com

com Cushman Rexrode Capital Corp (cml)

925-988-7200

www.cushrex.com

Remington Financial Group

480-905-3239

www.remingtonfg.com

Diamond Bay Investments, Inc.

702-254-9303

www.diamondbayinvestments.

Right Start Mortgage

800-520-5626

www.rightstartmortgage.com

SBB Financial

866-358-7238

www.sbbfinancial.com

SDI Funding

864-233-3337 x 3220 www.sdifunding.com

SmartServ Solutions

888-633-4778

Swift Funding

727-521-6633

swiftfundingcorp.com

TCRM Commercial Corp. (cml)

212-371-3933

www.tcrmcommercial.com

com Eastern Savings Bank (cml)

800-787-8187

www.easternsavingsbank.com

Emerald Financial

714-965-6688

www.eprivatemoney.com

Emigrant Mortgage www.emigrantmortgage.com

800-Emigrant x mid atlantic

Exeter Holding Ltd.

516-338-7500

exeterholding.com

www.bronxhardmoney.com

First Credit Commercial Capital Corp.(cml) 407-843-6262

www.fchardmoney.com

The Loan Doctors, Inc. (cml)

954-647-7679

www.regd506.com

First Mount Vernon Industrial Loan Assn

703-823-6800

www.fmv1.com

Titan Hard Money

323-377-0979

www.titanhardmoney.com

First Select Capital

888-376-5373

www.firstselectloans.com

Trust Deed Investments, Inc

415-760-2338

www.hardmoney.ning.com

Global Lending Group

727-530-0110

www.glgiwholesale.net

West One Mortgage Corporation

818-921-7602

www.westonemortgagecorp.com

GMC Mortgage Capital

954-332-3567

www.gmcmortgagecapital.com

WholesaleLending.com (cml)

866-303-6301

www.wholesalelending.com

Jumbo Premium Listings

NEW

Flagstar Wholesale Lending (866) 945-9872

Fannie Mae High Balance and Freddie Mac Super Conforming products available up to $729,750 loan amounts

NEW

Guaranteed Home Mortgage Co., Inc.

Specialized Retail Platform for Experienced Loan Officers

888-572-3602 Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

39

NICHE REPORTS

Jumbo Lender Listings Powered by TheLoanPost.com American Southwest Mortgage American Home Equity Direct Mortgage Wholesale Emigrant Mortgage www.emigrantmortgage.com EverBank Wholesale Lending Fifth Third Mortgage Flagstar Bank Florida Capital Bank Mtg Franklin American Gateway Funding Greystone Financial Home Savings of America

888-593-1003 www.amswmtg.com 714-661-5836 www.ahedirect.com 801-924-2300 www.solutioncenter.biz 800-Emigrant x mid atlantic 415-595-3968 866-492-0072 800-897-7222 866-295-0014 606-519-4165 800-355-5626 602-574-0100 972-235-7366

www.everbankwholesale.com www.53.com/wholesalemortgage wholesale.flagstar.com www.flcb.com www.franklinamerican.com wholesale.gateway-funding.com www.greystonefinancialonline.com www.myhsoa.com

ICON Residential Capital Liberty Mortgage MBS Mortgage Company Presidents First Reunion Mortgage Inc. Security National Mortgage Sierra Pacific Taylor, Bean & Whitaker US Bank Home Mortgage Walker Jackson Mortgage Wells Fargo WestAmerica Mortgage Co.

888-639-5641 800-986-2499 866-799-3696 877-773-7178 559.476.0937 801-264-1060 800-447-3386 888-678-8547 702-630-0770 703-653-8183 310-283-8411 303-771-2800

www.iconwholesale.com www.bbt.com/libertymortgage mbs-mortgage.com www.presidentsfirst.com www.reunionmortgage.com www.securitynational.com www.spm1.com www.taylorbeandirect.com www.usbank.com www.wjmcwholesale.com www.brokersfirst.com www.wamco.us

CONSTRUCTION/REHAB Premium Listings

Financial Resources Mortgage, Inc. 800-950-6913 or ddexter@frmortgageinc.com

NEW

Real Estate based private money lender. Commercial & Residential Investment. Refi-Cash Out allowed. Retail, office, multi-family, raw land, development & modular construction are our specialties. Common sense underwriting. No upfront fees! Email or call today.

1-800-342-8500

Mortgages/loans secured by real estate, all commercial property types and other fixed assets nationwide; Any property type, even raw land.

Specializes in development loans that need to close quickly, loans from $1 million & up. 2-days for commitment.

Manaseh, Epharim & Associates

New construction and rehab loans for all types of commercial properties.

Your source for international and domestic funding.

Kennedy Funding, Inc.

770-840-0112

Direct lender specializing in short term bridge financing. Interest only.

No prepayment penalty. No points upfront. Commitments within 24 hours.

Brokers welcomed and protected.

Metro Funding Corp 866-302-6360

CONSTRUCTION / REHAB Lender Listings Powered by TheLoanPost.com Ameribank Mortgage

516-833-8834

www.ameribanksolutions.com

Kennedy Funding

201-342-8500

www.kennedyfunding.com

Assurity Financial

866-841-7863

www.assuritywholesale.com

M&T Bank Mortgage

804-380-7465

wholesalemortgage.mtb.com

Broker Capital Funding

408-438-6939

www.brokercap.com

Mango Bay Mortgage

561-347-9811

www.mangobayinc.com

Everbank

415-595-3968

www.everbankwholesale.com

Mission Oaks National Bank

805-889-0301

www.missionoaksbank.com

Excelsion Mortgage

888-578-5441 x 1

www.ExcelsionBrokers.com

Portfolio Mortgage Company

480-775-5150

www.portmort.com

Federal Trust Mortgage

407-323-1833 x 153

www.federaltrust.com/brokers

United Midwest Savings Bank

614-255-3534

www.umwsb.com

First Mutual Bank

971-645-9140

www.washingtonfederal.com/wholesale

Unity Bank

904-727-7535

www.unitybank.com

Hawkins Capital

208-908-5596

www.hawkinscap.com

West One Mortgage Corporation

818-921-7602

www.westonemortgagecorp.com

Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

40

July 2009

NICHE REPORTS

COMMERCIAL Premium Listings

All Credit Considered Mortgage

Private Money

240-314-0399 X 19

AgriCap Financial Corporation 213-542-5232

Fairview Commercial Lending

Agriculture -- Farms, Ranches, Facilities. Agricultural Operating/Crop Input Loans.

No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours

866-634-1270

Financial Resources Mortgage, Inc. 800-950-6913 or ddexter@frmortgageinc.com

NEW

First Capital Commercial Fiance 713-267-4040

Gregory Funding 888.324.3578

NEW

KENNEDY FUNDING, INC. 800-342-8500

Manaseh, Epharim & Associates 770-840-0112

Metro Funding Corp 866-302-6360

Real Estate based private money lender. Commercial & Residential Investment. Refi-Cash Out allowed. Retail, office, multi-family, raw land, development & modular construction are our specialties. Common sense underwriting. No upfront fees! Email or call today.

Hard money, Bridge Loans and Permanent Mortgages with a focus on properties in Texas, the Southwest and the Mountain West Private portfolio lender funding small balance commerical loans up to $1MM. No credit score requirement. No pre-payment penalty. Up to 70% LTV. Foreclosure ok. Bankruptcy ok. Lending territory: AZ, CA, CO, ID, NV, OR Mortgages/loans secured by real estate, all commercial property types and other fixed assets nationwide; Any property type, even raw land.

Specializes in development loans that need to close quickly, loans from $1 million & up. 2-days for commitment.

Acquisition, Refi’s, and Development Commercial Loans. Your source for international and domestic funding.

Direct lender specializing in short term bridge financing. Interest only.

No prepayment penalty. No points upfront. Commitments within 24 hours.

Brokers welcomed and protected.

ADVERTISE YOUR NICHES HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

TheNicheReport.com

41

NICHE REPORTS

COMMERCIAL Lender Listings Powered by TheLoanPost.com Affinity Bank

877- 862-7245

www.affinitybank.com

LNB Commercial Capital

321-214-0585

www.lnbcapital.com

AgriCap Financial Corporation

213-542-5232

www.agricap.com

Magnolia Financial Consultants

601-428-1005

www.hardmoneymortgages.com

American Acceptance

800-452-9287

www.aamonline.com

Mango Bay Mortgage

561-347-9811

www.mangobayinc.com

Arlington Richfield

248-613-7423

www.arlingtonrichfield.com

Midwest Financial Capital

317-844-7776

www.midwestfinancialcapital.com

Apartment Lending

303-771-1031

www.aptlending.com

Minvest Financial

877-317-0260

www.minvestfinancial.com

Avant Capital Partners, LLC.

212-219-9419

www.avcapital.net

Mission Oaks National Bank

951-719-1200

www.missionoaksbank.com

Berkshire Capital Financial, Ltd.

212-986-9890

www.berkshirecapital.net

MJM Capital Group

480-628-1943

www.mjmcapitalgroup.com

Blue Sky Commercial Funding

888-500-2583

www.bscfloans.com

Nationwide Commercial Lenders

800-830-5940 x 1 www.NationwideCommercialLenders.com

Brownstone Mortgage Capital

800-547-1285

www.brownstoneloans.com

New World Commercial Lender

561-628-2069

www.nwclender.com

Capital Alliance

415-288-9575

www.calliance.com/index.php

Overland Financial

818-342-2477

www.overlandfinancial.com

CapitalSource Finance

212-321-7215

www.capitalsource.com

CFA Capital Partners

914-967-5780

www.cfacap.com

CIT Small Business Lending Corp.

404-244-4592

www.smallbizlending.com

Coast Investors Capital

305-446-9125

www.coastinvestors.com

Commercial Capital Funding Corp

866-790-6925

www.ccflender.com

Commercial Hard Capital, LLC

832-607-6778

www.commercialhardcapital.com

Commercial Lending Capital

714-656-3943

www.clcnationwide.com

Commercial Loan Capital

877-473-6984

www.clcllc.net

Commercial Mortgage City

954-854-6853

www.commercialmortgagecity.com

Commercial Mortgages 101

800-763-3036

www.commercialmortgages101.com

Community Commerce Bank

916-648-2680

www.ccombank.com

Pacific Mortgage Funding Corporation 562-864-4006

www.pacificmortgage.com

Pacific National Bank

305-539-7675

www.pnb.com

PFA Capital, LLC.

800-531-4589

www.picconefinancial.com

PNC ARCS

800-275-2727

www.askARCS.com

Presidential Bank

301-652-1616

www.presidential.com

Pribank

866-811-9217

www.pribank.com

Prudential Mortgage Capital Co.

888-263-6800

www.prumortgagecapital.com

REM Capital

877-774-4240

www.remcapitalgroup.com

SF Partners Mortgage

305-774-0456

sfmortgagelenders.com

Small Business Loan Source, LLC.

512-215-2727

www.adelinerem.com

St. Cloud Mortgage

877- 653-3276

www.farmerloan.com

Cushman Rexrode Capital Corp

925-988-7200

www.cushrex.com

Eastern Savings Bank

800-787-8187

www.easternsavingsbank.com

STA Capital Group & Advisors

866-610-4141

www.c-loandivision.com

Excelsion Mortgage

888-578-5441

www.excelsionbrokers.com

Strongtower Financial

800-333-9893

www.strongtowerfinancial.com

Griffin Capital Funding

800-710-6762

www.ysploans.com

TCRM Commercial Corp.

212-371-3933

www.tcrmcommercial.com

www.hawkinscap.com

Terrace Capital

212-671-1031

www.terracecapital.com

www.ifgloans.com

Trilogy Commercial Lending, LLC.

877-726-9433

www.trilogycl.com

877-945-2265

www.uboc.com

Hawkins Capital Integrity Financial Group

208-908-5596 916-343-7559

Interbay Funding, LLC

877-207-6099

www.interbay.com

Union Bank of California

Kennedy Funding

201-342-8500

www.kennedyfunding.com

West One Mortgage Corporation

818-921-7602

www.westonemortgagecorp.com

Lib Properties, LTD.

404-256-8600

www.libloans.com

WholesaleLending.com

866-303-6301

www.wholesalelending.com

Lighthouse Commercial

614-340-3894

www.Lighthouse-Commercial.com

World Capital Bancorp, Inc.

888-922-3003

www.worldcapitalbanc.com

ADVERTISE YOUR NICHES HERE WITHIN Financing may not be available in all states. The above summaries are intended for Mortgage Professionals only, and not intended for distribution to consumers, as defined by Section 226.2 of Regulation Z, which implements the Truth-In-Lending Act. Information is subject to change without notice. Refer to each lender’s information on products, program, procedures, representations, and warranties for details.

42

July 2009

LENDER & RESOURCE DIRECTORY

All Credit Considered Mortgage www.weapproveloans.com Contact: Tim Boord Phone: 240-314-0399 X 19 Email: Tim.Boord@accmortgage.com

AFG LLC (Asset Funding Group) www.assetfundinggroup.com Contact: Jaye Kuchman Phone: 720-889-1175 Email: Loans@assetfundinggroup.com

AgriCap Financial Corporation www.agricap.com Contact: Business Development Phone: 213-542-5232 Email: sales@agricap.com

a la mode, inc. www.alamode.com

Ambit Funding www.ambitfunding.com Contact: Chris Bednar Phone: (570)-829-2101 (800)-823-7101 Email: loans@ambitfunding.com

Applied Business Software www.TheMortgageOffice.com Contact: A.J. Poulin Phone: 800-833-3343 Email: aj@absnetwork.com

ATTENTION LENDERS!!

Buyers of Distressed Debt Email: DistressedBuyers@gmail.com

Best Rate Referrals www.bestratereferrals.com Phone: 800-811-1402

BRT Realty Trust www.brtrealty.com Contact: Mitch Gould Phone: 516.773.2712 Email: mitch@brtrealty.com

CityLights Financial Express, Inc www.citylightsfinancial.com 800-530-2489 ext 301 info@citylightsfinancial.com

Cruise4Two - Cruise Incentives www.Cruise4Two.com Shawn Sarnecki Shawn@Cruise4Two.com Toll Free 866-541-8077

www.creditcrm.com Phone: (877) 256-8162

DocMagic www.docmagic.com Phone: 800.649.1362

EnTitle Direct Insurance www.entitledirect.com Phone: 877-936-8485

FAMB www.famb.com 800-289-9983 famb@famb.org

Fairview Commercial Lending www.FairviewLending.com Phone: 866-634-1270 Fax: 404-634-0319

Financial Resources Mortgage, Inc. www.commercialloanresources.com Contact: David Dexter Phone: 800-950-6913 Email: ddexter@frmortgageinc.com

First Capital Commercial Finance www.dealsdone.net Contact: Mark Anthony McCray or Lauren Fritsch Phone: 713-267-4040 or 832-566-2001 Email: loans@dealsdone.net

TheNicheReport.com

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LENDER & RESOURCE DIRECTORY

First Mount Vernon I.L.A. www.FMV1.com Phone: 703-823-6800 Fax: 703-997-2499

Flagstar Whoelsale Lending www.wholesale.flagstar.com 866-945-9872 wisc@flagstar.com

Cogent Road Inc. www.fundingsuite.com/demos Phone: 800-848-3162

Geraci Law Firm www.geracilawfirm.com (949) 379-2600

Gregory Funding LLC www.gregoryfunding.com Phone: 888.324.3578 Email: info@gregoryfunding.com

Groupe 369 Corp. www.groupe369.com www.groupe369pr.com Phone: 630-396-6400 Email: info@groupe369.com

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July 2009

Guaranteed Home Mortgage Company, Inc. www.ghmc.com and www.joinguaranteed.com Contact: Louis Tesoriero Phone: 914-696-3400 Email: ltesoriero@ghmc.com

Home rescue programs www.homerescueprograms.com Phone: 866-832-7000

KENNEDY FUNDING, INC. www.kennedyfunding.com Contact: Jonathan Weiner, Chief Loan Officer Phone: 1-800-342-8500 Email: info@kennedyfunding.com

The Loan Post www.TheloanPost.com Phone: (877) 812-4327 Email: sales@TheLoanPost.com

Loansifter www.Loansifter.com Phone: 920-687-1222 Email: Sales@loansifter.com

Manaseh, Epharim & Associates www.meandassociates.com Contact: R.D. Walker Email: info@meandassociates.com Phone: 770-840-0112

Metro Funding Corp www.metrofundingcorp.com Contact: Jennifer Bernabeo Email: jennifer@metrofundingcorp.com Phone: 866-302-6360

New Jersey Association of Mortgage Brokers/MBA of New Jersey www.njamb.org 973.379.7447

quick qualifer software www.quickqualifier.com Contact: Thor Skonnord thor@mortgagesofteare.com Direct: 925-754-7444

RateLink Phone: 800-938-5193 Contact: Tom Champion Email: tom.champion@ratelink.com

Stonecrest Financial Contact: Bill Phone: 888.884.6518 Email: Bill@stonecrest.net

TrustCapital Investments LLC Contact: Craig Severson Phone: 301-503-2231 Email: trustcapital@frontiernet.net

- continued from page 46

last fall, and now is doing as a matter of course.

In the prime loan neighborhoods, prices haven’t fallen as far, and people have more equity, so now when the banks conduct their net present value analysis, can you guess what’s going to happen? While in the sub-prime neighborhood, the cost of modification was often less than the cost of foreclosure, in the prime neighborhoods the relatively higher values and greater amounts of equity will cause the reverse to be true. So, in nicer neighborhoods, modification will cost more than foreclosure, and the banks will be free to foreclose.

And what will happen next, boys and girls? Come on… didn’t anyone do the reading assignment?

Christopher… Barney, keep your hands to yourself and pay attention. Nancy… put away that make-up and spit out that gum. What happens to housing prices when homes in a given neighborhood start being lost to foreclosure? No, you don’t get to raise taxes, Mr. President, but thank you for playing. Anyone? Anyone?

Well, the values of homes in that neighborhood start to drop, remember class? Foreclosures place downward pressure on housing prices, right? Very good, boys and girls, and then what happens? That’s right class… it leads to a downward spiral and more people lose their homes to foreclosures… bravo! Very well done, assuming your goal was to destroy the last remaining neighborhoods with equity, and without vacant homes lining the streets… you’ve done a very nice job indeed.

When I realized how this teensy-weensy design flaw would soon affect our neighborhoods, I struggled to find the right analogy, and then it came to me: It’s a bit like closing the barn door after the horses have run out, and then reopening it and shooting the horses that remained inside.

I used to think quite highly of FDIC Chair Sheila Bair, I really did. But then I used to think a lot of things that I no longer think today, so I suppose I’ll just have to get used to a whole new way of thinking. In a press release issued by the FDIC last September Sheila Bair stated, “On the whole, the commercial banking system in the United States remains well capitalized.” See what I mean… this isn’t going to be easy.

Just promise me one thing. Let’s make a pact: Nobody tell Obama what comes after a trillion, okay? I just don’t think I could Bair it.

Martin Andelman is a staff writer for The Niche Report.

He also writes an almost daily column on ML-Implode.com called Mandelman Matters.

TheNicheReport.com

45

FDIC CHAIR SHIELA BAIR Destroying Home Value… One Neighborhood at a Time

BY MARTIN ANDELMAN

F

or the record, I waited for 18 months for some sort of housing rescue plan from someone in the White House. I watched President Bush threaten to veto the housing bill for 10 months before signing it into law on July 30, 2008, if memory serves. That plan had a $300+ billion price tag, which might have bothered some people, but soon everyone saw that there was no possibility of that money being spent, as the plan could only help a dozen or so homeowners tops. So, I went back to waiting.

Back then I read the comments made by FDIC Chair Sheila Bair about how we needed to modify mortgages and I’d think... “Wow… a Bush appointee with a brain.

Who would have ever thought? Go figure.” So, when I saw that my gal Sheila was sticking around for the Obama administration, I have to admit my hopes were high that something would finally be done about the free fall in housing values that was sapping prosperity from every corner of our economy.

So, I continued to wait. I watched the celebrations on election night. I listened to how the transition team was handling the transition, and I watched the presidentelect vacation in Hawaii. Then I waited while we argued over whether re-seeding the grass on the National Mall constituted economic stimulus. It was sheer torture, but I hung in there.

Finally, Obama’s Making Home Affordable plan was ready. I was excited. Surely, Sheila had her hand in this. Surely, this plan would be more effective than Bush’s insipid attempt. I watched the speech with rapt attention.

When it was over, I placed my fingers in my dresser drawer and slammed it shut just to take my mind off the pain that Obama’s speech had caused.

The plan, according to the president, was going to save nine million homeowners, or some such drivel, and I thought to myself… “Damn… maybe I was too quick to

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judge Sarah Palin.”

So, the meltdown in the housing market would continue unabated… the banks would continue to bleed cash they didn’t really have… and homeowners would continue to be blamed for breaking the financial markets.

Crackerjack work, Barack. Bang-up job so far.

Of course, that’s all in the past now. Water under the shovel-ready bridge project, as it were. And as expected, the foreclosure crisis has spread from the sub-prime to the prime, and is now fueled by unemployment as opposed to nonexistent underwriting standards and triple ‘A’ rated junk bonds. If you haven’t seen the foreclosure crisis up close, stay tuned because it’s coming to a theater near you.

So, I took a look at the Making Home Affordable plan one more time. It must have some redeeming qualities. It was modifying some mortgages, after all. I needed good news and I was willing to find it anywhere.

And that’s when I realized, thanks to Sheila Bair’s Net Present Value analysis, put in place to protect the banks, what the Making Home Affordable plan was about to do. Protecting banks is what the Chair of the FDIC is supposed to do, we might all remember.

You see, the Making Home Affordable plan tells the banks to conduct a Net Present Value analysis, a fancy phrase that means comparing the cost of foreclosure with the cost of modification. If it costs less to modify than it does to foreclose, the banks are supposed to modify the loan instead of foreclosing, and thus save another home from foreclosure. So, yay!

When the foreclosure crisis was primarily affecting subprime loans, that seemed like a good idea… modification costs less than foreclosure, because no one had any equity and no one was buying homes in these, for the most part, overbuilt neighborhoods. But it’s a very different story when the crisis spreads to prime loans, as it started doing

- continued on page 45

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