TNR - March 2008

Issue 009 March 2008 TheNicheReport.com

13

Hard Money Made Easy Increase your bottom line with high margin loans.

or Die 16 Grow in 2008 Develop your game plan now.

Introduction 32 Center Stage 24 An to FHA with Credit Plus The basics you need to know.

A candid conversation with Allen Johnson, VP Sales and Marketing.

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CONTENTS

16

Issue 009

March 2008

NICHE REPORTS PRIME

pg 39

Grow or Die in 2008

ALT–A

pg 39

Develop your game plan now.

NONPRIME

pg 40

HERBERT H. THOMAS

HARD MONEY

pg 41

COMMERCIAL

pg 42

President of Thomas Law Firm, P.C.

CONSTRUCTION/REHAB pg 44

FOUNDER & PRESIDENT Robert Pegg robert@nichereportonline.com

13

Hard Money Made Easy glen weinberg chief operating officer of fairview commercial lending Increase your bottom line with high margin loans.

21

32

the niche report A candid conversation with Allen Johnson, VP Sales & Marketing.

36

Understanding the Short Sale Marcus white senior mortgage banker & manager at dynamic capital mortgage The new niche market.

24

Tip of the Month STEWART MEDNICK seasoned mortgage banker and published author If the Mortgage Industry has Gone Bad, are we all Bad?

DEPARTMENTS An Introduction to FHA leslie petersEn mortgage lending writer for www.mortgagecurrentcy.com The basics you need to know.

09

NOTE FROM THE FOUNDER

10

CALENDAR OF EVENTS

45 6

Center Stage with Credit Plus

March 2008

LENDER & RESOURCE DIRECTORY

CO-FOUNDER & PRESIDENT David Pegg david@nichereportonline.com EDITORIAL/CONTENT MANAGER Kristen Moser kristen@nichereportonline.com ACCOUNTING MANAGER Shawna Ingram shawna@nichereportonline.com SALES MANAGERS Jason T. Buff jason@nichereportonline.com Kim Campos kimcampos@nichereportonline.com DESIGN Plumbline Studios, Inc. Eric Ball PRINTER / CIRCULATION MANAGER The Ovid Bell Press, Inc. CONTRIBUTING AUTHORS Stewart Mednick Leslie Petersen Herbert H. Thomas Glen H. Weinberg Marcus White

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Published monthly by BODA Publishing, LLC 6016 Alderdale Place, Haymarket, VA 20169 Phone: 540.657.2632 Fax: 703.991.2362 Email: info@nichereportonline.com www.TheNicheReport.com

SUBSCRIPTIONS This publication is intended for real estate finance professionals. If you are a mortgage broker, lender, loan officer and you do not currently receive The Niche Report, please send your name, company name, and address to subscriptions@nichereportonline.com.

To opt-out of receiving The Niche Report, please send your request, including name, company name, and address to opt-out@nichereportonline.com.

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To inquire about advertising in The Niche Report, please call 540.657.2632, or send an email to ads@nichereportonline.com.

Visit our website, www.TheNicheReport.com to download a copy of our Media Kit.

EDITORIALS / ARTICLES To submit an article for consideration in The Niche Report, please send an email to kristen@nichereportonline.com or call 540.657.2632. We are interested in original writings relevant to mortgage brokers and other real estate finance professionals.

If you have a comment or question about an article or editorial published in The Niche Report, or if you have a suggestion for a topic you would like to see featured in a future issue, please send an email to kristen@nichereportonline.com.

THE NICHE REPORT POLICY The information and opinions expressed by contributing authors and advertisers within The Niche Report do not necessarily reflect those of BODA Publishing, LLC employees and should not be considered as endorsed or recommended by BODA Publishing, LLC.

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NOTE FROM THE FOUNDER

I generally like to use this space each month to talk about the latest news in the mortgage industry and about any current events that you may find interesting, but mainly my goal is to inform you about what we’re doing and where we’re headed as a magazine.

Beginning in June of this year, The Niche Report will be moving to a paidsubscription basis for all NEW subscription requests. For those of you that currently receive The Niche Report, you will continue to receive it as usual – there will be no change or charge for your subscription. However, if you are reading your broker’s copy or the coffee table’s copy right now, be sure to send in a request for your own subscription (include your mailing address) to info@nichereportonline.com before June of this year.

We also have some very exciting expansion plans coming up, so stay tuned to the next few issues for more info.

In this issue of The Niche Report I think we have some fantastic articles that will really hit home for many of you. Some great information on the basics of FHA loans, short sales, and hard money loans.

Our feature article continues our theme of staying afloat in these rough seas. Herbert Thomas blatantly tells us to either “Grow or Die in 2008”. And our Center Stage this month is with Credit Plus, Inc. who offers some extraordinary products for aiding your clients’ credit issues which allows you to maintain business and stay competitive.

Finally, for those of you that hold a license in Maryland, the Maryland Association of Mortgage Brokers is holding their annual Conference & Exposition on March 11th & 12th at the Baltimore Convention Center. The Niche Report will be there, so please stop by our booth and say hi. We look forward to meeting you.

Robert Pegg Founder & Publisher

TheNicheReport.com

9

CALENDAR OF EVENTS

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MARCH 6

APRIL 11

Maryland Association of Mortgage Brokers (MAMB) Conference & Exposition, Baltimore Convention Center. Visit www.mamb.org for details.

Reverse Mortgage Lending Conference at the Westin Horton Plaza, San Diego, CA. Visit www.mbaa.org for details.

Commercial Real Estate Market Forecast released by the NAR. Nonprime and Specialty Lending Conference at the Palmer House Hilton, Chicago, IL. Visit www.mbaa.org for details.

march 13 National Fraud Issues Conference at the Palmer House Hilton, Chicago, IL. Visit www.mbaa.org for details.

march 14

Housing Forecast / Pending Home Sales Index released by the NAR.

National Fraud Issues Conference at the Palmer House Hilton, Chicago, IL. Visit www.mbaa.org for details.

MARch 10

march 24

Nonprime and Specialty Lending Conference at the Palmer House Hilton, Chicago, IL. Visit www.mbaa.org for details.

February Existing – Home Sales released by the NAR.

MARch 11 Maryland Association of Mortgage Brokers (MAMB) Conference & Exposition, Baltimore Convention Center. Visit www.mamb.org for details.

Nonprime and Specialty Lending Conference at the Palmer House Hilton, Chicago, IL. Visit www.mbaa.org for details.

10

march 12

March 2008

APRIL 16 MBA’s National Policy Conference at the Washington Court Hotel, Washington DC. Visit www.mbaa.org for details.

APRIL 17 MBA’s National Policy Conference at the Washington Court Hotel, Washington DC. Visit www.mbaa.org for details.

APRIL 22 March Existing-Home Sales released by the NAR.

APRIL 8

WHAT'S YOUR NICHE?

Housing Forecast / Pending Home Sales Index released by the NAR.

Advertise it monthly in The Niche Report.

APRIL 10 Reverse Mortgage Lending Conference at the Westin Horton Plaza, San Diego, CA. Visit www.mbaa.org for details.

info@nichereportonline.com www.thenichereport.com 540.657.2632 703.991.2362

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HARD MONEY MADE EASY Increase your bottom line with high margin loans.

BY GLEN H. WEINBERG

M

any brokers seem perplexed about hard money and when it is most appropriate for their borrowers.

To fully understand and utilize a hard money loan, it is critical to know what hard money is, the difference between hard money and traditional lending, when a hard money loan is appropriate for clients, and understand common pitfalls associated with brokering a hard money loan.

much quicker. The final important differentiator between hard money and conventional financing is the interest rate. Since there is more risk in a true collateral based loan, the interest rates are higher than on a conventional mortgage.

What is hard money?

The definition of “hard money” in real estate financing is essentially a non-bankable loan. Lenders are essentially loaning on the borrower’s “hard assets”. The name hard money is frequently interchanged with “nodoc”, private loans, bridge loans, etc. Hard money loans close quickly with little documentation.

1. Borrowers with impaired credit 2. Tax liens/judgments/unpaid utility bills, etc.

3. Unable to fully document income 4. Partner buyout 5. Business turnaround/working capital 6. Owner-occupied properties 7. Time constrained borrowers 8. Foreclosure avoidance 9. Foreign Nationals 10. Complex loans with multiple pieces of collateral

Hard Money verses traditional lending Traditional loans from banking institutions rely heavily on the borrower’s income, credit, tax returns, etc. as opposed to hard money’s primary reliance on the hard real estate asset. Along with requiring substantially more documentation, conventional lenders have minimum credit scores (typically high 600 FICO and above) as opposed to hard money loans that are underwritten on the collateral as opposed to the borrower’s credit (Fairview Lending has closed loans with FICO scores in the low 400s).

Along with different underwriting standards, loans on conventional commercial loans can take months to close; whereas hard money commercial loans close

When is a hard money loan appropriate?

There are numerous circumstances where a hard money loan is the best option for a client. Many times hard money is the only option available to borrowers due to the circumstances outlined below.

Key tips for mortgage brokers Hard money commercial lending is very different than conventional commercial lending. The hard money commercial lending arena is lightly regulated and therefore the broker must be very careful in order to protect their client and themselves. Below are key tips for mortgage brokers to keep in mind prior to brokering a hard money / private money commercial loan.

1. Fully understand the deal and what the client is trying to accomplish (a hard money lender is going TheNicheReport.com

13

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to want to know the story behind the loan).

• What led to the borrower’s current situation?

• How long does the borrower need the money?

• How quickly does the transaction need to be closed?

• What is their exit strategy?

• Are there issues with credit, bankruptcies, cash flow of the property, title, etc.?

• Are there liens that need to be taken care of?

2. Learn which lenders offer products that fit the deal you are trying to place.

3. Watch out for brokers masquerading as lenders.

Many times brokers claim that they are lenders when in fact they take your deal and shop it to lenders and sometimes other brokers.

4. Before submitting a loan, ensure that both you and the client understand how the loan process will work (inspections, closing, etc.).

5. Be wary of up-front fees. Many lenders in the industry charge very large upfront “due-diligence” fees prior to issuing a commitment ($10-100K depending on the deal). Make sure that the client fully understands that these fees are typically nonrefundable. Search out lenders that charge nominal up-front fees only after issuing a commitment. Do not provide any money prior to having a formal commitment in writing.

6. Ask for a formal commitment from the lender that

outlines all points, prepayment penalties, rates, and other fees. Ensure you fully understand all of the terms.

Since there is no “APR calculation” for this type of loan, it is critical that all the fees are factored in (exit fees, lockout, etc.).

7. Be wary of lenders that try to pull a bait and switch at or near closing. Many lenders will offer a deal too good to be true only to change the deal at closing.

Do not begin title work, etc. until you receive a final commitment in writing. Read through the entire document to ensure nothing has changed from the prior commitment.

By adhering to the tips outlined above, brokering a no-doc/hard money commercial loan results in very little incremental work on loans that have fallen out of the matrix programs. The broker should already have the key information required by most hard money lenders from their fallout deals. Brokers that understand when a hard money loan is appropriate for their clients, and place their clients in the appropriate products, can help more customers and ultimately increase their bottom line with a high margin loan.

Glen H. Weinberg is the Chief Operating Officer of Fairview Commercial Lending, a private, wholesale “nodoc” lender. He specializes in funding “alternative” loans, including “out of the box” deals to borrowers with less-thanperfect credit, tax or foreclosure issues, or other time-sensitive needs. He can be reached at (866) 634-1270 or glen@ fairviewlending.com.

How do you differentiate yourself from other brokers?

Call us to learn about alternative commercial financing Toll Free (866) 634.1270 • www.FairviewLending.com

TheNicheReport.com

15

GROW OR DIE IN 2008 Develop your game plan now.

BY HERBERT H. THOMAS

The information contained in this article is general business advice and should not be construed as legal advice or legal opinion.

T

he Sub-prime Meltdown has imploded more than 200 of the largest mortgage companies and there is no end in sight. As foreclosures mount, there have been the inevitable industry shake-ups and chaoses resulting in consolidations and layoffs as mortgage lenders are unable to fund repurchase demands by the secondary market. Liquidity has dried up as warehouse lenders and secondary market investors employ very restrictive underwriting criteria. Do you view this turmoil as a time for survival or opportunity?

My advice is to survive by viewing this turmoil as an opportunity to thrive. Fear of failure will become a self-fulfilling prophesy. Doing nothing is an action plan by default and results in downsizing. This is a formula for disaster and eventual death. Taking advantage of the new dynamics of the mortgage industry is the action plan that is needed for ultimately surviving and thriving. I call the action plan “Grow or Die in 2008”. Identify the growth opportunity segments of the mortgage industry and pursue one or more of them. We have the solutions: grow your territory, grow your profit margin and control, grow your market share, grow your product lines and grow your profit centers. He who hesitates is lost.

The Sub-prime Meltdown The sub-prime meltdown can be described as [1] over 200 major mortgage companies imploding–

mainly lenders who were required to repurchase faulty loans by investors and did not have the funds to repurchase them; [2] the secondary market stopped buying sub-prime loans so there was no liquidity; [3] warehouse lenders began pulling their lines of credit so lenders had no source of funding; [4] credit underwriting criteria tightened to eliminate the sub-prime market and severely restricted the Alt-A market; and [5] mortgage pool ratings and values dropped, inhibiting new mortgage pools to be securitized and sold as bonds on Wall Street.

The sub-prime meltdown cannot be blamed on any one group. It was caused by the “perfect storm”: while real estate prices increased rapidly and interest rates dropped to historic lows, borrowers made poor choices of loan programs in order to pay the least monthly rate with the least cash upfront to get the most house available. When inflated real estate values reached their limit, they started dropping which caused interest rates to rise when Adjustable Rate Mortgage indices reset to much higher interest rates. When foreclosures started occurring on Wall Street, secondary market and warehouse lenders withheld liquidity by halting new loan purchases and demanded repurchases of existing loans. The sub-prime meltdown eliminated the weak mortgage companies, yet the current mortgage industry offers tremendous opportunities for strong, well financed companies to grow and thrive.

Game Plan by Default If you have no game plan for handling this crisis, your plan by

default is: Forced Downsizing. It is both painful and disappointing as the business that you have built shrinks until it fails. Downsizing has not worked well in any industry market reduction or contraction; just ask real estate, banking, oil and gas and dotcom survivors.

5 Actions to Survive and Thrive: Either Grow or Die in 2008 Make a game plan and TAKE ACTION NOW! You can survive if you develop and implement a strategy now. To survive, you must expand (or grow) in one or all of 5 areas that have unlimited upside: 1. Mortgage Licenses: Grow the Number of States so you can market nationally or regionally.

Survival is a numbers game.

You must increase your opportunity to expand mortgage loan leads without expanding costs. The best, most cost effective way to increase your opportunities is to become licensed as a mortgage broker or lender in additional states. You must have a valid mortgage license in an additional state in order to receive compensation from closed loans in that state. Your expansion should target high-growth, highpopulation states, especially the Sunbelt. With a central call center in one location, you can close loans in 30-40 states at local title company’s offices without a physical office in those states. That makes the cost to expand into additional states extremely affordable. By outsourcing the expansion into additional states to licensing professionals, the licensing process can take as little as 2-4 months, so begin your expansion project today.

TheNicheReport.com

17

2. Broker to Banker: Grow Your Profit Margin and Control over Each Loan.

If you are a mortgage broker, upgrade your operations and become a retail lender (banker). As a mortgage banker with a warehouse line of credit, you can [1] guarantee that your loans will close in an expedited manner (as a broker, your loan closings can be delayed or denied for lack of available warehouse credit by your wholesale lenders); [2] obtain larger profits on original closings with additional profit upon the sale of loans on secondary market (you have greater risks but greater rewards); [3] avoid the prejudice against brokers via predatory lending laws and disclosure of Yield Spread Premium; and [4] you will have dual capacity and flexibility to act either as a broker or a mortgage banker as the case merits. As a mortgage banker, you will increase your control and profitability on each loan funded. It is advisable to analyze your current licenses because many of them may already grant lender capability to you and you don’t realize it.

3. Mergers & Acquisitions: Grow Your Market Share by acquiring distressed mortgage companies at discount bargain prices.

There are many distressed mortgage companies that are cash poor and close to shutting down their operations. These failing mortgage companies need a “white knight” to purchase them at discount bargain prices before shutting their doors and losing their entire investment. An asset purchase is preferable to a stock purchase because it avoids acquiring the

18

March 2008

liabilities and hidden problems and the costs of the mortgage licenses.

In an asset purchase, mortgage licenses are not transferable so do not allocate any part of the purchase price to mortgage licenses. Prior to executing your asset purchases of distressed mortgage companies, expand your mortgage licenses nationally so you will not need to acquire these companies’ licenses.

In a stock purchase, the mortgage licenses can be preserved only if the change of control or ownership is approved by each state prior to the purchase. A stock purchase requires proper structuring and timing to prevent license terminations and loan pipeline shutdowns.

5. Mortgage Servicing: Grow New Profit Centers.

Mortgage lenders can add an additional profit center by retaining its servicing rights when it sells its loans and obtain cash revenue from servicing loans [i.e., collection of mortgage payments]. In addition to servicing your own loans, you can service third party loans in a mortgage pool or portfolio as the master servicer, primary servicer, sub servicer or special servicer and engage in foreclosure, short sales, loss mitigation through loan modification and refinancing. Of course, to engage in servicing of your own or third party loans, you must have mortgage servicer and collection agency licenses.

4. FHA Loans and Reverse Mortgages: Grow Your Product Lines by adding the hot products to replace sub-prime loans and 2nd mortgage loans.

Diversify, diversify, diversify.

Consider expanding your product lines to include FHA loans to replace your sub-prime loans and reverse mortgages to replace your 2nd mortgage loans. FHA loans are a very popular replacement for subprime loans. Both FHA loans and reverse mortgages are both popular viable products because their purchases are both supported by a secondary market which provides the liquidity that subprime loans no longer have.

Investment in the costs of audited financials or a surety bond [if approved by Congress] would be wise in order to qualify for FHA lender approval. These areas can provide the added volume you will need as the subprime loans and second mortgage loans disappear.

Conclusion It is not too late, but time is running out. Develop and start your game plan now. To survive the sub-prime meltdown, you must expand (or grow) in one or all of the following five areas above. The best prepared generally survive industry shake-outs.

Herbert H. Thomas is President of Thomas Law Firm, P.C., Dallas, Texas, a company providing automated online mortgage licensing technology and services for mortgage brokers and lenders in all 50 states. For more information see http:// www.thomas-law.com. Mr. Thomas is a Juris Doctor and member of the State Bar of Texas. He has over 17 years of state and federal mortgage licensing experience as well as 35 years of tax, corporate and real estate law experience. He may be reached by telephone at 214-692-7611 and by email at hthomas@thomaslaw.com.

Thomas Law Firm, P.C. is the premier mortgage licensing firm on state mortgage licensing.

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UNDERSTANDING THE SHORT SALE The new niche market.

BY MARCUS WHITE

What is the short sale?

Today’s real estate market has experienced a plethora of foreclosures and bankruptcies due to several instabilities within the US real estate market. As home values continue to fall and real estate sales slow down, many homeowners are finding themselves owing more than their homes are worth in the declining market. This is often referred to in the mortgage industry as being “upside down.”

Typically, this would not be a detrimental issue, but coupled with the rising interest rate increases of adjustable rate mortgages (ARMs), the market has fostered a short sale environment. The sub-prime market, in particular, has suffered the worse fall out throughout the country as many loans have gone into default, foreclosure rates have risen and lending institutions have folded. When consumers find themselves “upside down” in property value, unable to afford their adjusted mortgage payments and delinquent on their home loans, they are often forced to financially weather the storm, foreclose on the property or engage in a short sale of the home.

A short sale occurs when a bank opts to work with the homeowners to sell the property in lieu of foreclosure. In most investment scenarios a short sale occurs when stocks are borrowed from a stockbroker’s inventory and then sold at a particular price with the hopes of that stock’s price declining within a given period. If the stocks fall as hoped, the investor will purchase the stocks at the new, lower price and return the borrowed shares to the inventory from which the stocks were borrowed and possess a handsome profit.

However, in the real estate market, the term “short sale” is a far cry from an investment strategy. Since the home’s value is less than what’s owed on it, a sale of the property for the lower fair market value as opposed to the higher amount owed on the mortgage would leave a shortage in the sale proceeds…hence the term “short sale.” This type of sale creates a profit loss for both the homeowner and the bank, but has become prevalent enough that you should be familiar with the particulars of such a transaction.

Why would someone want to engage in a short sale?

According to the National Association of Realtors, existing home prices have fallen on average more than 6% over the last year. However, many markets have seen their home values drop as much as 25% over the last two years. This drop in housing values equates to an extreme loss in equity for many. Experts profess that it was inevitable as the housing “bubble” was bound to correct itself after the rapid rise of home prices from 2002 - 2005. Although local housing markets generally experience periodic peaks and valleys in home equity appreciation, the onslaught of short term Adjustable Rate Mortgages left many homeowners faced with adjusting mortgage payments that are well out of the realm of affordability. Furthermore, borrowers are unable to refinance their existing loans because they owe more than the appraised value of the property.

As the US real estate market deals with a projected 2.4 million foreclosure incidence for 2007, homeowners are scrambling to find solutions. Currently, existinghome inventories in the US are listing “For Sale” for over eight months and newly constructed homes for

TheNicheReport.com

21

six months. A recent report by Merrill Lynch states that over 60% of homes currently on the market are listed for selling prices well above what the current market will bear.

Banks have begun to react to these statistics by allowing delinquent homeowners to sell their homes for a market supported price that is under the balance of the mortgage lien, thus creating a short sale. However, banks are reluctant to accept any losses on loans and the homeowner must be able to demonstrate an undeniable inability to pay the monthly mortgage or be prepared to payoff all or part of the balance on the note.

Why is a short sale a good option?

Short sales offer a great option for homeowners to relinquish their home without having a foreclosure entry placed on their credit profile or facing a slew of lawsuits and judgments after the foreclosure auction has occurred.

Additionally, once the mortgage debt is satisfied, many

22

March 2008

homeowners can escape filing for bankruptcy, which may have been prompted due to any balance left over from a foreclosure auction or voluntary abandonment.

Often times the bank will even set up interest free payment plans for the short sale balance. However, do not plan any course of action expecting the lender to offer debt forgiveness or payment plan options. First and foremost, banks are concerned with getting the loan repaid. In a short sale transaction, the bank is also able to waive the costs of collections, auctions, advertising legal notices, attorney fees and other expenses usually incurred when foreclosing on a property. Additionally, the bank can report the debt as “closed” and/or “paid” and not as a foreclosure to their shareholders. Although the homeowner is still obligated to move out of the property, they are able to maintain some ground on their credit profile, putting them in a better position to buy again sooner rather than later.

What are some things to consider in a short sale?

Short sales seem like a great way to sell a home that would otherwise sit on the market because of an inflated mortgage balances in a sagging market. However, they do come with their consequences to the buyer. Financing of a short sale property is not too different from any other purchase transaction. However, the banks are very concerned that the absolute best price is being paid to cover as much of the underpaid mortgage balance as possible. Often time short sales can take 45 – 60 days to close. Therefore, it is important to involve a good title/ settlement company that will be able to facilitate all public records, assessments and any additional lender requests in a timely manner. Moreover, it’s not uncommon for the seller’s lender to disallow closing cost contributions to the buyer as in traditional purchases. Buyers should be prepared to pay their own closing costs. Buyers should also insist on a home inspection as often times maintenance of the subject property is neglected due to previous financial restraints of the seller. Keep in mind also, that any major defects reported by an appraiser can raise a red flag to an underwriter, who in turn, may require that the defect be repaired before the new loan can be cleared to close. Also be prepared to negotiate the terms for curing any damages or structural issues as they often times arise.

A seller, on the other hand, needs to be cognizant of a potential tax liability in a short sale transaction.

Banks will typically send a 1099 income statement at the end of the tax year in which the short sale occurred.

Any unpaid balance is reported as income to the seller.

In effect, a seller may be left facing additional income taxes on the unpaid balance of their home. So if a home with a $500,000 mortgage balance sold at a short sale for $400,000, then the seller would receive a $100,000 1099 income statement and be responsible for paying taxes on that $100,000 income.

Closing The Mortgage Bankers Association reported that the percentage of mortgages entering foreclosure in the US, which is about one in 172 loans in the first quarter of 2007, was the highest in more than a half century, with sub-prime borrowers suffering the worst. Thousands of recipients of adjustable-rate mortgage loans are seeing rates adjust beyond their means. Teaser interest rates have expired and many borrowers find themselves in negative

amortization. These loan scenarios, combined with already declining property values, increased credit challenges and few to no options for stabilization, require a thorough understanding of short sale transactions and how they should or should not be utilized in today’s real estate market. Know the facts and make informed decisions…as it will have a ripple effect on every other financial aspect in your life.

Marcus M. White is a Sr. Mortgage Banker & Manager at Dynamic Capital Mortgage (formerly Pinnacle Financial Corp.), a national residential and commercial lender in Vienna, Va. He is a published author and featured speaker in various media outlets and classrooms. He also is a Certified Mortgage Planning Specialist (TM), financial counselor and former institutional investor, representing clients in complex financial matters. He has significant expertise in sophisticated financing transactions, retirement and investment planning.

Contact him at mwhite@dyncap.com or (202) 210-0089.

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0308_lender_that_fits_qtr_page_niche_report.indd 1

2/8/2008 2:51:49 PM

TheNicheReport.com

23

AN INTRODUCTION TO FHA The basics you need to know.

BY LESLIE PETERSEN

I

’m going to take a wild, yet educated guess that 25 to 35 percent of the homeowners who are currently in a sub-prime or option-ARM type of product and are experiencing difficulties due to pending or recent payment increases, could have qualified for a fixed-rate, low-interest, no-pre-payment-penalty, fully assumable (subject to qualifying) FHA mortgage.

I admit that the percentage is an EWAG, but I don’t think I’m too far off base. FHA is one of the most misunderstood and underutilized mortgage programs out there. While mortgage options have shrunk and underwriting guidelines continue to tighten up, FHA has essentially stayed the same. It may be the only program that still works for many of your first-time and often marginal, a-minus type of homebuyers. It also has a killer refinance program.

FHA PRICING FHA rates are good for the borrower and good for the originator. It is one of the few products that hasn’t moved to risk-based pricing. Sure, some FHA lenders charge a fee for low credit scores, and there may be a hit for low loan amounts - but that’s about it. To top it off, originators typically make 1 to 2 times the YSP on FHA loans as compared to conventional. Sweet.

It’s also true that ALL FHA loans have mortgage insurance (MI). Still, after combining P&I and MI whether private or government MI - the net yield of an FHA loan is comparable to or better than conventional conforming. Recent talk of risk-based pricing for FHA mortgage insurance will not impact interest rates, and it’s 24

March 2008

how private mortgage insurance has worked for years.

AUTOMATED UNDERWRITING Most FHA loans are run through an automated underwriting system (AUS), letting the lender off the hook for the qualifying ratios and credit. It’s nice, because the maximum published ratios are 31/43, yet AUS approvals come in with substantially higher numbers. Because underwriting always depends on a combination of risk factors, it’s impossible to give the highest numbers allowed by the system; however, DTI ratios over 50% are fairly common.

Likewise, with credit scores, it depends on the other risk factors. If pressed for a number, I’d say that scores below the high-500 range will probably be “referred” by the AU system.

MANUAL UNDERWRITING & CREDIT Some lenders won’t touch FHA loans that can’t be approved through the AU system, and some have recently imposed minimum credit score requirements, but there are still quite a few who will manually underwrite. FHA underwriters must follow published guidelines, and very few will approve a borrower if either ratio exceeds 31 or 43 by more than a few points.

On the other hand, some of the published credit guidelines are amazingly liberal, and include the following: • No credit: “Neither the lack of credit nor the borrower’s decision not to use credit may be used as a basis for r rejecting the loan application.” [4155.1 REV-5, 2-3] • Alternative Credit: Non traditional credit sources such as rents, utilities, insurance, etc., must be obtained for borrowers without established credit.

• Bankruptcies & Foreclosures: FHA requires only two years after discharge of a Chapter 7 bankruptcy, and three after a foreclosure. For either, the waiting period can be as little as one year with documented extenuating circumstances.

• Chapter 13 Bankruptcy: If approved by the courts, a borrower in the middle of a Chapter 13 bankruptcy with an acceptable 12 month payment history is eligible. It is not necessary to buy out the bankruptcy.

Any one of these factors can be used to develop a niche clientele. For instance, notice that it’s not necessary for your borrower to have established credit, which means no credit score! Do you know of other loan types that will allow the borrower to remain in the middle of a Chapter 13? And the BK and foreclosure guidelines are amazingly liberal. I've known many loan officers who have done extremely well specializing in this type of "credit challenged" FHA borrower.

LTV & CASH to CLOSE FHA’s legislated authority does not permit100% financing. I’m being a little simplistic, but the maximum

LTV for most FHA loans is 97%. On a purchase transaction, it’s a hard rule for the borrower to come up with a 3% down payment from resources other than the seller, Realtor®, builder, or lender. Additionally, there are associated closing costs and prepaids. This is all from a clientele that we all know has little or no money!?

It’s not as much of a problem as you might think.

With FHA, the borrower is never required to use her own funds (i.e., the 3% can be gifted), and it is not necessary to have reserves after closing. FHA’s allowable sources of funds include: • Builders/sellers can pay costs to 6% (not the 3% down payment) • Gifts from family, employers, and sometimes a close friend, for any or all of the funds • Loans from immediate family, unrecorded or recorded, potentially resulting in a TLTV exceeding 100% • Soft seconds from FHA-approved non-profits and government agencies • Grants

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• “Mattress”, or “cookie jar” money, if typical for the borrower • Sweat equity on new construction homes for any or all of the monies • The piece-de-resistance: “gifts” for the 3% down- payment from non-profit down payment assistance programs (DPA) such as Nehemiah or AmeriDream; whereas monies funding the DPA are from the seller Bear in mind that this is a government program, and ALL of the above sources have limitations, restrictions, rules, and serious documentation requirements.

REFINANCES FHA has a true 95%, fully qualifying, cash-out refinance for borrowers who have lived in their home for 12 months and always paid the house payment on time.

This program IS as good as it sounds, and it blows me away every time I think about it!

A friend of mine recently closed her loan using this product. She had a credit score in the low 600 range, a 3 year old BK, and ratios of 41/43 (note the 10 point high housing ratio) using grossed up income. And those were only a few of the complications. She paid off a conventional first, a private second, seventeen grand in credit cards, and walked out with a bit of spending money.

Her new FHA fixed rate is 5.5%, plus .05% MIP. She needed this loan, and FHA was her only viable solution.

This example demonstrates a borrower paying underlying loans that were not FHA. There is a misnomer in the industry that FHA refinances can only be used to refinance existing FHA loans. This is not true.

Except for the FHA streamlined refinance.

There are several other FHA refinance products not covered here, but I want to specifically mention the streamlined refinance. It IS only for loans that are currently FHA. There is literally no qualifying and no appraisal.

When rates are going down, there is no loan that compares.

KIDDIE CONDOS “Kiddie condos” is not literal, it refers to FHA’s regulation that allows non-occupant family members to act as co-mortgagors. It’s very common to add parents, for instance, when the occupying borrower doesn’t qualify on his own. Income and debts from all parties are combined

for qualifying. Unlike other programs, the occupant borrower is not required to have any income or assets of his own. And of note, a non-occupant co-borrower will never compensate for a borrower with unacceptable credit.

BE AWARE OF THE LIMITATIONS “You will never understand bureaucracies until you understand that for bureaucrats, procedure is everything and outcomes are nothing.” – Thomas Sowell, American writer and economist You knew I’d get here sooner or later. FHA’s procedure can be cumbersome and sometimes regressive.

As a division of the Department of Housing and Urban Development (HUD), FHA exudes “government” with its myriad rules, idiosyncrasies, exceptions to the rules, exceptions to the exceptions, then limitations on the exceptions. Documentation is always full-doc, and the paperwork for FHA loans is atrocious!

Of extreme importance, there is one HUGE rule that might prevent you from doing FHA loans altogether: The company/brokerage that you work for must be FHA approved before you can make a dime on an FHA transaction. In fact, HUD considers it a RESPA violation if you are paid anything for an FHA origination without an FHA ID number. I know it happens a lot, but I swear, it’s not worth it.

Approved brokers are called “correspondent lenders”. Requirements include annually audited financials, $63,000 net worth, a store front, and paying loan officers with W-2 wages. If you are interested in becoming approved, I suggest approaching one of your current lenders who does FHA loans. Most of them are more than happy to help you through the approval process. You can also find a checklist online at http:// www.hud.gov/offices/hsg/sfh/lender/20020902.pdf.

Another huge hang-up that you may already be aware of is FHA’s maximum loan amounts limitations.

At the time of this writing, a bill was passed that temporarily increases the limits across the country. As of this writing, details are being finalized, but the limits have been dramatically increased through the end of the year -- opening areas where FHA has never before been viable! (You can find more details about the limit increase at my website.). Loan limits are accessible at https://entp.hud.gov/idapp/html/hicostlook.cfm.

Next up and of critical importance is that ALL FHA loans are owner-occupied primary residences only. This TheNicheReport.com

27

includes 1- to 4-unit properties, owner occupied. (Of note, 2- to 4-unit owner occupied primary residences qualify for 97% FHA financing.)

Another factor that influences viability is that many Realtors® don’t want to deal with FHA because of potential repair requirements on the homes they list or sell. It’s a fairly recent happening, but most of these guidelines are changed. FHA still requires any home built before 1978 to have entirely intact paint as a lead paint preventative. Otherwise, they instruct the underwriters and appraisers to look for health and safety issues, and most properties now pass FHA without repairs.

As I tie this up, recognize that I’ve barely provided the tip of the iceberg. I’ve given you what I see as the most critical highlights and low-lights, and hopefully educated you a little as to what the program is really about. If you

are involved with FHA or want to know more, I have an FHA Lending Manual at my website that literally leads you through everything FHA, from A to Z. With FHA, there is an unquestionably large learning curve…but it can open so many doors! And once you learn it, it’s the same across the nation. There’s just no arguing, FHA’s good for you AND it’s a fantastic loan for the borrower.

Leslie Petersen with over 30 years experience in mortgage lending, writes www.MortgageCurrentcy.com, an online newsletter on the changes in Fannie/Freddie, FHA, VA and other regulatory agencies-but with a twist. For Originators, Underwriters and Managers, she also interprets them in plain English and shows them how to make the rules and changes work for them--and get more of their loans approved. Find her at leslie@MortgageCurrentcy.com.

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March 2008

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CENTER STAGE

CENTER STAGE WITH CREDIT PLUS A candid conversation with Allen Johnson, Vice President of Sales and Marketing.

BY THE NICHE REPORT

T

his month I would like to introduce to you a company that will help you close loans.

Credit Plus is an all-in-one credit services company that has many exciting features to help you do your job and make you shine in your client's eyes.

In this difficult market where your ALLEN JOHNSON borrower's credit scores could make or break your deal, even by one point, there is no better time than to team up with a company such as Credit Plus, if you haven’t already.

Allen Johnson, Vice President of Sales and Marketing at Credit Plus Inc., has graciously sat down with The Niche Report to educate us about all that they offer.

Tell us some history and background information on Credit Plus.

How are your products and services helping mortgage professionals in today’s market?

Describe your key Credit Plus products.

In today’s sluggish mortgage market, mortgage professionals are facing many challenges in the quest to maintain business and stay competitive. Many of our clients are searching for ways to provide better service and added value for their customers. At Credit Plus, Inc. we have always made a commitment to offering the products, services and technology that can help accomplish this. That includes a one-stop shop approach that offers mortgage professionals some of the most reliable, robust credit reporting platforms on the market. In addition, we recently introduced Ariston, a Credit Plus, Inc. company that provides comprehensive title and settlement/closing solutions nationwide.

32

March 2008

Credit Plus has been a leader in providing cuttingedge credit information services for 80 years. Our company has always been dedicated to helping mortgage professionals achieve their business goals through technology-based mortgage information solutions. In fact, we helped pioneer web-based credit reporting in the mortgage industry and continue to look for new technology and products that can help our clients achieve success.

Credit Plus is privately held, with headquarters in Salisbury, Maryland. Our philosophy of liberal staffing to handle rapidly increasing and changing business has helped us maintain extremely high client-retention rates.

Credit Plus offers a wide variety of credit-related products, including merged credit bureau reports, supplemental and business credit reports, and non-traditional credit reports that provide an alternative score for borrowers with little or no credit history.

The Credit Plus ScoreWizard is a web-based credit advisory tool that allows mortgage professionals to help borrowers reach their target credit scores. It gives mortgage brokers, bankers and lenders the ability to guide clients in improving their score and overall financial health.

ScoreWizard consists of several key components: • Analyzer looks at the positive and negative factors influencing the borrower’s credit score.

• Advisor suggests how to maximize and improve the score.

CENTER STAGE

• What-If Simulator allows the broker to predict the results of specific actions by demonstrating the impact that activities such as adding/removing accounts and correcting errors will have on the score.

• Score Plus updates and rescores credit files in as little as 72 hours after the borrower has taken the recommended actions and the supporting documents have been forwarded.

• A new feature analyzes the effect of authorized user accounts (e.g., when a spouse or child is included on a credit card) on the borrower’s credit score by looking at the impact that removing those accounts would have on the score.

PRBC® Reports through Credit Plus/non-traditional credit reports utilize trade line data and payment history on recurring bills, such as rent, mortgage, utility, phone, insurance and childcare to create a Bill Payment Score (BPS). The BPS can be used on its own or in conjunction with a traditional credit score. It can be merged with in-file credit report information from the major credit bureaus for a comprehensive risk assessment of an

applicant. PRBC reports provide a resource for people with poor or no credit to build a credit history.

We also offer tenant screening service that helps landlords and property managers/owners evaluate potential renters, tax return verification reports that verify a borrower’s tax information to reduce occurrences of mortgage fraud, and a comprehensive lead generation program that offers mortgage professionals a strategic method for generating business.

What steps are you taking to educate mortgage professionals on maximizing their business?

Education is a major focus for us right now because it’s such a competitive marketplace and everyone wants to find an edge. We created Credit Plus University (CPU) more than a year ago to provide free online training programs for mortgage professionals to help them work more efficiently with Credit Plus’ products that can help them close more loans. We’ve had very positive feedback on the classes (available at www.creditplus. com), such as ScoreWizard, which provides recommendations on how a consumer can improve his or her score,

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CENTER STAGE

and our overview of how PRBC Reports/non-traditional credit reports help borrowers qualify for a mortgage.

valuations cover full, drive-by and review appraisals, and automated valuation models, to name a few.

Tell us about the strengths that Ariston adds.

What can you tell us about the future for Credit Plus and Ariston?

Ariston offers appraisal, title and settlement closing services. The name Ariston comes from a Greek word meaning “the best,” and an important part of the Ariston philosophy is to always provide the best in service levels, turn times, technology and solutions. For instance, every customer solution is customizable. That’s not just a buzz word at Ariston – there’s a real focus on matching each customer’s unique business needs, workflow and processes so the solution works for them.

The company offers a full suite of products designed to simplify the closing process for lenders of all sizes. That includes totally integrated title, settlement/closing, collateral assessment and flood products. Title services encompass full title, refinance and home equity products, as well as property reports, legal and vesting reports. Settlement/ closing services include pre-closing preparation, scheduling, HUD document preparation, post-closing review and disbursement. Traditional, alternative and warranted

Credit Plus will continue to develop new products and services as well as strengthening our current offerings. As always, we will work closely with our customers to ensure that our technology provides what each one needs to succeed. In addition, we are exploring adding loss mitigation products in 2008.

Ariston had a successful launch in 2007 and will continue to provide the best in service and solutions.

Both companies go forward with the commitment to provide superior products and technology, along with outstanding customer service. Our Beyond Bundled program, for example, combines bundling of essential settlement and title services with superb customer service through the Credit Plus Customer Relationship Management program and Ariston products.

See Credit Plus's advertisement on page 29.

YOU ARE HERE

Can’t find your way through the financial labyrinth?

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Let’s face it; things aren’t looking so good right now.

In uncertain times like these, your clients need guidance, expertise and experience more than ever.

A hard money loan may be the ideal way for your clients to seize an opportunity or solve a problem. Despite these difficult market conditions, Avatar is financially stable and has plenty of capacity to fund new loans.

So if you’re ready to deal, we’re ready to listen.

Call us today at 888.896.0083 to discuss your loan or visit www.avatarfinancial.com for more information.

A different kind of loan. A different kind of lender.

TIP OF THE MONTH

TIP OF THE MONTH If the mortgage industry has gone bad, are we all bad?

BY STEWART MEDNICK

I

received an email from a concerned mortgage broker.

He stated that a previous client of his had reservations about working with a broker and the client wondered if he should consider refinancing with a large national bank instead.

Good question. As most of you know, the attrition amongst mortgage companies has been tremendous in the last two years. The sub-prime market does not really exist any more, and even the large exclusive mortgage companies like Countrywide have been on shaky ground financially. The most stable mortgage origination companies are the large national banks.

As originators, I am sure many of you have felt the pinch of new regulations, product redevelopment and the sting of past loans gone bad.

The best way to defuse this situation is to reinforce the trust in the relationship that you have with your client. Then, state facts about your business history and your track record. This will take a bit of preparation, but it is worth the time and is not difficult to do. Choose three or four topics or categories that would show off your skills and your time in the business. For example, of all the clients that I have visited at their homes, I have gotten signed docs 99.8% of the time. I take great pride in being able to convert a call or referral into an application.

Other figures that you may want to consider is how many ARMs that you originated have ever foreclosed?

If the answer is none, then use that to show that you are an ethical minded professional. How many ARMs that you originated have you refinanced? What 36

March 2008

is the dollar amount of loans that you have closed last year? In your career? Or in what percentage of ranking did you fall nationally in closing amount or dollar amount? How about regionally? What about city wide? How many cumulative years have you had established relationships with clients from the time you closed their first loan? Imagine how secure your customer would feel if you could say that you have 213 years of total, cumulative years of working with clients since you closed their first loans. If you are new to the business and do not have a large book of business, be creative with what you have already established. For example: how much cumulatively per month have you saved your clients as a result of your refinancing their loans? How many years in total have you saved your clients in monthly payments?

How much total consumer debt have you saved your clients by refinancing and rolling their credit cards or car payments into the loan?

Some of this information may take a bit of time to compile, but to state a strong case to a client in factual terms is worth the time.

Does anyone still use a questionnaire or evaluation at closing? I have taken a queue from EBay. I simply ask the client at closing if my services were satisfactory, indifferent or sub par. If positive feedback is warranted, then I ask for a brief statement of twenty words or less similar to what is required following an EBay transaction. I use this information to share with future clients. “My feedback has been 100% positive, and here is a list of comments…” I hand a list of the short statements I have compiled to the customer. At the top of the list, I have some key statistics about me that have been compiled as stated

TIP OF THE MONTH

above. I also have two or three non-profit organizations listed, with whom I associate. I am a veteran, so I state that. I participate in ‘packing parties’ for Iraqi soldiers. My wife is a cancer survivor and I participate in cancer related events.

Why is exposing a personal, non-mortgage related bit of information beneficial? Because your clients are human. As humans, we all like to associate with others that have similar concerns, passions and views as ourselves. I have never met someone that did not know someone that had cancer. Even though many oppose the war in Iraq, everyone supports the troops.

A bonding will begin with your client. The statistics that you provide show that you are competent and damn good at what you do. This combination of being human, having compassion and being competent is a very powerful combination. Emphasize that a large bank will not be interested in spending time to build a relationship in the manner that you have (or

will). In fact, four or five different people will handle the file and no one that the client can trust will even be at the closing.

Like I have stated previously in this column in past months, if the client trusts you, then no selling is necessary, because your relationship is with what they want to do business. Put people before products.

Show you are as human as your client. Build trust based on a common theme that you both have passion or interest. Provide information that establishes you are good at what you do. Paraphrasing a line from the movie, Field of Dreams, “build it and they will come.”

Stewart Mednick is a seasoned mortgage banker and published author. His writing focuses on relationship development, customer satisfaction, marketing and sales techniques. If you have a comment about this column or a question for Stewart, contact him at 651-895-5122 or smednick1@netzero.net.

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NICHE REPORTS

PRIME Gateway Mortgage Group 817.545.6153 A.E. is Jerry Lair

24hr TAT & C2C for Platinum Accts. - Rates and service you expect from an Inc. 500 Co. - Credit - SISA Conf. - Jumbo - EAI & II -VA Visit www.JerryLair.com today!

Gateway Mortgage Group

Best FHA team you may ever work with - Manual FHA to 530 Visit www.JerryLair.com today!

817.545.6153 A.E. is Jerry Lair

Indymac Bank

Agency Conforming and Fannie Mae programs available, including MyCommunityMortgage™, Flexible 97™, Flexible 100®

866.690.2240

Indymac Bank

Reverse Mortgage products available for FHA- and Non-FHAapproved customers. Flexible lending limits for higher-value homes

866.690.2240

Irwin Home Equity 888.524.7946

World Alliance Financial

Agency cash-out combo to 95% CLTV; Full Doc; Cash Back up to $300K Reverse Mortgage opportunity for non-FHA licensed brokers

877.692.7762 ext. 404

ALT–A Emigrant Mortgage Company, Inc. 1.800.EMIGRANT (364.4726) x Mid-Atlantic

Emigrant Mortgage Company, Inc. 1.800.EMIGRANT (364.4726) x Mid-Atlantic

True Portfolio Lender offering NINA Loan Programs, Max LTV of 75%, Loan Amounts up to $1MM+ considered. Don't forget to mention this ad when calling for special service response!

NINA financing for applicants with Ficos below 600, max LTV 60%, Loan Amounts up to $1mm+ considered. LowDoc (Income Verification) financing for foreclosure bailouts also available up to Max LTV of 60%

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.

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39

NICHE REPORTS

ALT-A niches continuedâ&#x20AC;Ś

Griffin Capital Funding 800.710.6762

Indymac Bank

Full Doc and Stated income commercial loans. 3% YSP +2 points paid to brokers 3/1, 5/1, 7/1, and 10/1 LIBOR ARMs; 15- and 30-year Fixed; 10-year I/O period available for ARMs and 30-year; temporary buydowns and long-term locks also available

866.690.2242

Indymac Bank 866.690.2242

Full Doc up to 95% LTV with a minimum 660 Decision Credit Score (DCS); Stated Income up to 80% LTV with a minimum 660 DCS; DTI as high as 50%. First-time homebuyers eligible without restrictions.

Irwin Home Equity

Agency cash-out combo to 95% CLTV; Full Doc; Cash Back up to $300K

888.524.7946

NONPRIME EquiFirst Corporation 800.232.3477

EquiFirst Corporation 800.232.3477

Griffin Capital Funding 800.710.6762

M&I Home Lending Solutions 800.827.2654 ext. 2130 Sonia McClure

M&I Home Lending Solutions 800.827.2654 ext. 2130 Sonia McClure

Up to 95% LTV with a 660 Score, Full Doc Purchase. Up to 90% LTV with a 580 Score, Full Doc Refinance Loan amounts up to $750,000 Full Doc Core Product. Loan amounts up to $1.5 million Full Doc Jumbo Product Full Doc and Stated income commercial loans. 3% YSP +2 points paid to brokers 100% Stand-Alone Seconds with 640+ credit score, CO, MD, NC, NV, OR, PA, UT, VA & WA 100% Cash Out First Refi with 640+ credit score, 100% Purchases with 720+ credit score, No Mortgage Insurance, CO, MD, NC, NV, OR, PA, UT, VA & WA

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 lenderâ&#x20AC;&#x2122;s information on products, program, procedures, representations, and warranties for details.

40

March 2008

NICHE REPORTS

Nonprime niches continued…

M&I Home Lending Solutions 800.827.2654 ext. 2130 Sonia McClure

New South Federal Saving Bank 866.582.5901

The Helvetica Group 888.866.3426

Up to 90% LTV with 580+ credit score & up to 95% with 620+ credit score, 12 months out of BK, No Mortgage Insurance, Call for details, CO, MD, NC, NV, OR, PA, UT, VA & WA Portfolio Lender, 100% Purchase/95% Cash Out with 621 Credit Score, 90% Purchase/85% Cash Out with 550 Credit Score, 80% Purchase/75% Cash Out with 525 Credit Score, 75% Purchase/65% Cash Out with 500 Credit Score No FICO® underwriting, foreclosure bailouts, BK buyouts, no seasoning, unlimited cashout, unlimited mortgage lates; Up to 65% LTV. Stated income, flex DTI, interest only programs available. Super Jumbo loans to $7M+. CA, AZ, CO, NV, OR, WA

HARD MONEY 24 Capital 888.333.9923

AgriCap Financial Corporation

Specializing in commercial real estate bridge loans from $3 M to $100 Million. All property types. 24-Hour commitments. Close in as little as 5 days. Great low rates. No upfront fees beyond out-ofpocket expenses on qualified loans. www.24capital.com

213.542.5232

Commercial real estate loans, agricultural and farm loans, hard money loans, and bridge financing. Our knowledge and experience gives us greater insight into financing the real estate needs of a variety of persons and businesses

Anglo-American Financial, LLC

DIP (Debtor-in-Possession) Financing Available

512.657.9310

Anglo-American Financial, LLC 512.657.9310

Avatar Financial Group 888.896.0083

Blue Water Funding, LLC 301.656.6566 or toll free 866.551.Blue

Asset-based lending on real estate, consumer receivables and other readily marketable assets No-prepayment penalty bridge loans starting at 9.99% on existing commercial. Including churches, gas stations and SFR’s Apply online at www.BlueWaterFundingLLC.com, Immediate Response, Brokers Protected and Respected

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.

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41

NICHE REPORTS

Hard Money niches continued…

Blue Water Funding, LLC 301.656.6566 or toll free 866.551.Blue

Commercial Lending, LLC

Direct Lender, 65% Loan to Value, No Pre-Payment Penalty, Lending Throughout the Mid-Atlantic Region

800.755.7310 ext. 201

Direct Lender of Non O/O, Equity-Based, No Prepayment, No minimum credit score, Rehab, Fix & Flip, Construction, Land, Up to 70% LTV, No Payment Programs, Online Broker Portal

Crown Valley Group, Inc

Fast turn around, Brokers paid at closing

770.642.8140

Equity Development Corp (EDC) 757.460.9096 or toll free 888.460.9096

Fairview Commerical Lending 866.634.1270

First Mount Vernon 866.908.FMV1 (3681)

First Mount Vernon

Investor Rehab Loans, Up to 73% Loan to Value, 100% Loan to Cost, Six Month Loan with No Monthly Interest Payments, No Application Fees, No Junk Fees, 660 Minimum Credit Score, Lending in PA, MD, DC, VA, NC, SC, FL, Brokers paid at closing No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours No seasoning requirements, No upfront commitment or processing fees, Minimum credit score 400 Minimal documentation required, Combined Loan-to-Values to 105%

866.908.FMV1 (3681)

The Helvetica Group 888.866.3426

The Helvetica Group

No FICO® underwriting, foreclosure bailouts, BK buyouts, no seasoning, unlimited cashout, unlimited mortgage lates; Up to 65% LTV. Stated income, flex DTI, interest only programs available. Super Jumbo loans to $7M+. CA, AZ, CO, NV, OR, WA

888.866.3426

Commercial Private Equity Lending: No FICO® underwriting, foreclosure bailouts, BK buyouts. Multi-family and Commercial loans from $300K to $10.0M+ Up to 60% LTV. Fast flexible underwriting and creative solutions. Nationwide, metro areas

Manaseh, Epharim & Associates

Private hard money financing for commercial real estate investments

678.387.3230

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

March 2008

NICHE REPORTS

COMMERCIAL 24 Capital 888.333.9923

Specializing in commercial real estate bridge loans from $3 M to $100 Million. All property types. 24-Hour commitments Close in as little as 5 days. Great low rates. No upfront fees beyond out-ofpocket expenses on qualified loans. www.24capital.com

AcuPen Financial

High LTVs, and low debt coverage ratio requirements

305.666.1879

AgriCap Financial Corporation 213.542.5232

Avatar Financial Group

Commercial real estate loans, agricultural and farm loans, hard money loans, and bridge financing. Our knowledge and experience gives us greater insight into financing the real estate needs of a variety of persons and businesses 20 & 25 year fully amortizing on existing commercial properties

888.896.0083

Commercial Funding Corp 973.471.2229

Crown Valley Group, Inc

Stated & Full doc Commercial Lenders, Up to 90% Financing, Will consider credit scores below 600, Most property types consider Fast turn around, Brokers paid at closing

770.642.8140

Fairview Commercial Lending 866.634.1270

Griffin Capital Funding 800.710.6762

The Helvetica Group 888.866.3426

Indymac Bank 866.908.3279

No minimum credit score, foreclosure bailouts, Quick Closings nationwide, commitments in 24 hours YSP Commercial Loans, Full doc and Stated income. Earn up to 3% YSP + 2 points.

Commercial Private Equity Lending: No FICO® underwriting, foreclosure bailouts, BK buyouts. Multi-family and Commercial loans from $300K to $10.0M+ Up to 60% LTV. Fast flexible underwriting and creative solutions. Nationwide, metro areas Up to $5 million; purchase and refinance (including cash out); 5, 7, and 10 year Hybrid ARMs (30 year fully amortized with Interest Only option); 7, 10, 15, and 30 year Fixed (30 year fully amortized with Interest Only option on 10 and 30 for up to two years)

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.

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43

NICHE REPORTS

Commercial niches continued…

Indymac Bank

Loans for: Multifamily / Apartment Complexes (5+ units); Mixed Use (if Commercial is less than 35%); Mobile Home Parks

866.908.3279

We're the real deal for subprime owner-occupied commercial mortgages to $2M. Credit scores to 500. Up to 90% financing. Low debt-service coverage. Stated & investment programs. Difficult-tofinance industries welcome

Ocean Capital 877.337.3757

Manaseh, Epharim & Associates

Fast, flexible funding for all your commercial financing needs

678.387.3230

Metro Funding Corp 866.302.6360

Fast closing, no points upfront, all commercial properties including land, acquisitions, refis, and development loans

CONSTRUCTION / REHAB 24 Capital 888.333.9923

Bismark Mortgage 503.741.7334

Commercial Lending, LLC 800.755.7310 ext. 201

Equity Development Corp (EDC)

Specializing in commercial real estate bridge loans from $3 M to $100 Million. All property types. 24-Hour commitments. Close in as little as 5 days. Great low rates. No upfront fees beyond out-ofpocket expenses on qualified loans. www.24capital.com Residential construction loans for custom, owner-builder, spec and construction completion projects. All programs Stated Income/ Stated Asset. Nationwide lender.

Equity Based, No Prepayment, No Minumum Credit Score, 6 month and 12 month programs, No pay and interest only pay programs, Up to 70% LTV, Online Broker Portal

757.460.9096 or toll free 888.460.9096

Residential Rehab Loans, Non-Owner Occupied Only, No Prepayment, No Monthly Interest Payments, Weekly Inspections and Construction Draws, No Junk Fees & No Inspection Fees, Online Draw Requests, 660 Minimum Credit Score, Lending in the Mid-Atlantic

Manaseh, Epharim & Associates

Private lender specializing in commercial real estate loans nationwide and internationally

678.387.3230

New South Federal Savings Bank 866.582.5901

Conforming and Non-Prime, Single Close CP, LTV’s up to 100% of Construction Cost, Full Doc only

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.

44

March 2008

LENDER & RESOURCE DIRECTORY

24 Capital Corp. www.24capital.com Two University Plaza, Suite 206 Hackensack, NJ 07601 [phone] 888.333.9923 [fax] 201.881.7221 [e] info@24capital.com

AcuPen FINANCIAL, LLC The Premier One-Stop Commercial Mortgage HUB www.acupenfinancial.com

AgriCap FINANCIAL corporation www.agricap.com 350 S. Figueroa Street, Suite 501 Los Angeles, CA 90071 Contact: Loan Submissions [phone] 213.542.5232 [fax] 213.687.8333 [e] sales@agricap.com

a la mode, inc. www.alamode.com Anglo-American Financial www.anglofinancial.com 675 Berkmar Court Charlottesville, VA 22901 Gardy Bloemers: 434.981.1017 [e] gardybloemers@anglofinancial.com Tom Finnegan: 512.657.9310 [e] tomfinnegan@gmail.com AppraiserLoft www.appraiserloft.com [phone] 877.229.7799 [fax] 877.797.0280

ASCENT HOME LOANS, INC. www.ascenthomeloans.com 6465 S. Greenwood Plaza Blvd.

Englewood, CO 80111 [phone] 866.467.3157 ext. 2605

AVATAR financial group www.avatarfinancial.com 100 Wall Street Seattle, WA 98121 Contact: Allison Payne, Loan Analyst [phone] 888.896.0083 [fax] 206.728.5993 [e] loans@avatarfinancial.com BISMARK MORTGAGE www.bismarkmortgage.com 10500 NE 8th St. Suite 700 Bellevue, WA 98004 Contact: Ron Maes [phone] 503.741.7334 [fax] 425.283.5005 [e] ron@bismarkmortgage.com

BlueWater Funding, LLC www.bluewaterfundingllc.com 4925 St. Elmo Avenue Bethesda, Maryland 20814 [phone] 301.656.6566 [fax] 240.766.0609 [e] info@bluewaterfundingllc.com

THEBOARDNETWORK.COM www.mortgageboard.com www.titleboard.com www.bankingboard.com www.creditunionboard.com www.escrowboard.com 101 Continental Blvd.

16 Floor, Suite 1657 [phone] 866.452.8800 [fax] 866.452.8799 Contact: Julie Messina or Jodie Messina [e] info@theboardnetwork.com COMMERCIAL LENDING, LLC www.commercialfundingcorp.com 335 Clifton, NJ 07011 Clifton, NJ 07011 Contact: Enrique Gomez [phone] 973.471.2229 [fax] 973.471.2266 [e] gomez@commercialfundingcorp.com

COMMERCIAL LENDING, LLC www.commericallendingllc.com 7603 Maple Branch Road Clifton, VA 20124 [phone] 800.755.7310 ext. 201 [fax] 703.852.7933 Contact: Will Lansing [e] wlansing@commerciallendingll.com

credit plus inc. www.creditplus.com 31550 Winterplace Pkwy Salisbury, MD 21804 [phone] 800.258.3488 [fax] 800.258.3287 [e] beyondbundled@creditplus.com Crown valley group, inc. www.crownvalleygroup.com 1405 Old Alabama Rd. Roswell, GA 30076 Contact: Robert Pick [phone] 770.642.8140 [fax] 770.518.0823 [e] rpick@crownvalleygroup.com

direct marketing associates www.dmaleads.com 5215 NW 33rd Avenue Ft. Lauderdale, FL 33309 [phone] 561.807.6909 [fax] 877.984.9401 Contact: Jim Gilbert [e] jgilbert@dmaleads.com

DOUBLE POSITIVE MARKETING www.doublepositive.com Corporate Headquarters Tide Point - Cascade Building 1030 Hull Street Suite 300 Baltimore, MD 21230 [phone] 888.dpositive (888.376.7484) [fax] 410.332.1059 continued on next page TheNicheReport.com

45

LENDER & RESOURCE DIRECTORY CONT.

[phone] 703.823.6800 [fax] 703.997.2499 emigrant mortgage company www.emigrantmortgage.com 7 Westchester Plaza Elmsford, NY 10523 [phone] 1.800.emigrant ext "mid-atlantic" Contact: Terry Auth [e] uthT@emigrantmortgage.com

equifirst corporation www.equifirst.com 500 Forest Point Circle Charlotte, NC 28273 [phone] 800.232.3477 [e] results@equifirst.com

EQUity development corporation (EDC) www.equitydevelopmentcorp.com 448 Viking Drive, Suite 380 Virginia Beach, VA 23452 Contact: Shawn Skiff [phone] 757.460.9096 [fax] 757.460.4079 [e] info@equitydevelopmentcorp.com

Fairview Commercial Lending www.fairviewlending.com 1932 North Druid Hills Road Suite 250 Atlanta, GA 30319 [phone] 866.634.1270 [fax] 404.634.0319

first fINANCIAL mortgage service, LLC www.ffmloans.com [phone] 571.261.2354 [fax] 703.991.0597 [e] kristen@ffmloans.com First Mount Vernon I.L.A. www.FMV1.com 6019 Tower Court Alexandria, VA 22304

46

March 2008

GATEWAY MORTGAGE GROUP www.nonprimewholesale.com 3820 Laurel Lane Bedford, Texas 76021 [e] weirdloans@nonprimewholesale.com AE: Jerry Lair [phone] 817.545.6153 [fax] 918.392.8364 griffin capital funding www.ysploans.com 1135 Heatherstone Dr. Suite 102 Fredericksburg, VA 22407 Contact: Mike Brewer [e] mbrewer@gcfunding.com [phone] 540.548.1001 ext. 105 [fax] 540.548.1117 the helvetica group www.helveticagroup.com 11620 Wilshire Blvd., Suite 890 Los Angeles, CA 90025 Contact: Johnny Camarena [e] loans@helveticagroup.com [phone] 888.866.3426 [fax] 866.844.3295 IndyMac Bank www.indymacb2b.com 3465 East Foothill Boulevard Pasadena, CA 91107 [phone] 866.419.4639

irwin home equity www.ihepartners.com 12677 Alcosta Blvd., Suite 500 [e] wholesalelending@ihe.com [phone] 888.524.7946

M&i home lending solutions www.mihomelendingsolutions.com Contact: Sonia McClure [e] mihls.brokersupport@micorp.com [phone] 800.827.2654 ext. 2130 [fax] 800.277.2569

manaseh, epharim & associates www.meandassociates.com 5932 Hugh Howell Rd. Suite 109 Stone Mountain, GA 30087 Contact: R.D. Walker [e] info@meandassociates.com [phone] 678.387.3230 [fax] 678.302.6444

metro funding corp www.metrofundingcorp.com One Kalisa Way, Suite 310 Paramus, NJ 07652 Contact: Jennifer Smith [e] jennifer@metrofundingcorp.com [phone] 866.302.6360 [fax] 201.262.6910

NEW SOUTH FEDERAL Savings bank www.newsouthfederal.com/wholesale 210 Automation Way Contact: Randy Brown [phone] 866.582.5901 [fax] 205.951.7111 [e] randyb@newsouthfederal.com

ocean capital www.oceancapitalonline.com 2 Altieri Way Warwick, RI 02886 [e] information@oceancapitalonline.com [phone] 877.337.3757 [fax] 401.739.9711 plumbline studios, inc. www.plumbline.com 1754 2nd Street, Suite C Napa, CA 94559 [phone] 888.282.1248 [direct] 707.251.9884 world alliance financial www.worldalliancefinancial.com 3 Huntington Quadrangle, Suite 303N Melville, NY 11747

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