TNR - October 2007 by The Niche Report

Issue 004 October 2007 TheNicheReportOnline.com

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CONTENTS

Issue 004

October 2007

Ready for a Change?

NICHE REPORTS NONPRIME

pg 35

PRIME

pg 36

ALT–A

pg 37

COMMERCIAL

pg 38

HARD MONEY

pg 39

CONSTRUCTION

pg 40

Maybe it's time to consider commercial hard money. NEIL SIMAN Principal of Blue Water Funding, LLC.

FOUNDER & PRESIDENT Robert Pegg robert@nichereportonline.com

Think Outside the Bun

MITCHELL CHAPMAN EXECUTIVE DIRECTOR OF NATIONAL BUSINESS FINANCE Originating non-mortgage business loans.

STEPHEN PERKEY SENIOR VICE PRESIDENT RETAIL AND WHOLESALE LOAN PRODUCTION

EDITORIAL/CONTENT MANAGER Kristen Moser kristen@nichereportonline.com

ROBERTO VECCHIARELLO VICE PRESIDENT MARKETING RETAIL AND WHOLESALE LOAN PRODUCTION More options for near-prime customers with limited equity.

ACCOUNTING MANAGER Shawna Ingram shawna@nichereportonline.com

Tip of the Month STEWART MEDNICK MORTGAGE BANKER AND REVERSE MORTGAGE SPECIALIST AT AMERICAN MORTGAGE CORPORATION The ubiquitous business card.

How to Succeed in a Tumultuous Market GLEN H. WEINBERG CHIEF OPERATING OFFICER OF FAIRVIEW COMMERCIAL LENDING Plan and strategize.

DEPARTMENTS

October 2007

SALES MANAGERS Jason T. Buff jason@nichereportonline.com Kim Campos kimcampos@nichereportonline.com Kim Lawson kimlawson@nichereportonline.com

NOTE FROM THE FOUNDER

CALENDAR OF EVENTS

TIP OF THE MONTH

41 6

Consider HLTV

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

LENDER & RESOURCE DIRECTORY

DESIGN Plumbline Studios, Inc. Eric Ball PRINTER / CIRCULATION MANAGER Dan K. Beard CONTRIBUTING AUTHORS Mitch Chapman Stewart Mednick Stephen Perkey Neil Siman Roberto Vecchiarello Glen H. Weinberg

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NOT EVERY DEAL FITS.... ...BUT IF IT DOES WE WILL MOVE FAST TO GET YOU THE MONEY YOU NEED. • Raw Land-Residential • Raw Land-Commercial • Resort Developments • Conversions • Warehouses • Marinas • Luxury Residences Is your hard money loan a fit for Anglo-American? • Loans from $1 Million up to $200 Million • From 50% LTV on the liquidation value of the collateral • Nationwide and international (Mexico, Bahamas, Central America, Canada, etc.) • Rates start at 13% To discuss your request and our terms, please contact: Gardy Bloemers on 434 981 1017 gardybloemers@anglofinancial.com or Tom Finnegan on 512 657 9310 tomfinnegan@gmail.com Anglo-American Financial LLC 675 Berkmar Court Charlottesville, VA 22901 www.anglofinancial.com

Anglo-American

:PVS *OWFTUNFOU -FBEFST

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.nichereportonline.com

SUBSCRIPTIONS This publication is intended for real estate finance professionals. If you are a mortgage broker, lender, loan officer, or other real estate finance professional 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.

ADVERTISEMENTS 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.nichereportonline.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.

NOTE FROM THE FOUNDER

As we head into the 4th quarter, which are typically the slow months for residential mortgage brokering, many of you may find yourself contemplating the idea of leaving the mortgage industry due to current market conditions. The thought would be a natural one, as there seems to be fewer qualified borrowers out there and a lot fewer loan programs available to those borrowers. But instead of jumping off the boat, maybe now is the time that we just start thinking about diversifying and expanding our comfort zones a little bit. Given the current state of the market, maybe now is the time to just learn a new lending niche. This issue of The Niche Report continues with a series of articles about lending products that you may not be entirely familiar with right now, but with the wealth of information they offer, I am positive you will be excited to add them to your portfolio of products you have to offer your clients. Our feature article by Neil Siman of BlueWater Funding offers a primer on hard money lending – from the definition, to the history, to marketing it to your clients. A truly excellent and easy to understand break down of this lending type. “How to Succeed in a Tumultuous Market” by Fairview Commercial Lending’s COO, Glen H. Weinberg, offers a fivestep process for succeeding during these tough mortgage market conditions. And Stephen Perkey and Rob Vecchiarello of Irwin Home Equity educate us on the benefits of an incredible niche product – high loan-to-value (HLTV) lending. Be sure to check out all of our articles this month – all are excellent sources of information and education. In addition, I would like to introduce our new monthly columnist, Stewart Mednick. If that name sounds familiar, it should. He is the author of “Looking Forward to Reverse Mortgages” featured in our August issue which received rave reviews from many of our readers. He will begin his series by offering tips on a wide variety of topics pertinent to mortgage brokers and loan officers. Ultimately, he is here to help and all questions and comments are welcomed. As noted on our Upcoming Key Dates & Events Calendar, the Virginia Association of Mortgage Brokers’ 19th annual convention is scheduled for October 17th – 19th at the Virginia Beach Hilton and Virginia Beach Convention Center. Visit www.vamb.org for convention details. The Niche Report will be there! If you are planning to attend, please stop by our booth at the Convention Center on Friday, the 19th. We’d love to talk to you. And that also goes for those of you planning to attend the NAMB/West conference scheduled for November 2nd – 6th at the MGM Grand in Las Vegas (visit www.namb.org for details). We will be there as well, looking forward to hearing your comments on our first four issues and suggestions for future issues of The Niche Report. .

Robert Pegg Founder & President TheNicheReportOnline.com

CALENDAR OF EVENTS

Upcoming Key Dates & Events: OCTOBER â&#x20AC;&#x201C; NOVEMBER F:KF9<I )''. J D K N

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OCTOBER 2 Pending Home Sales Index Released by the National Association of Realtors

OCTOBER 9

Local Event: 19th Annual VAMB Convention Virgina Beach Hilton & Virgina Beach Convention Center Visit www.vamb.org for details

NAMB/West Conference, "The Extreme Event", MGM Grand in Las Vegas. Visit www.namb.org for details.

Local Event: 19th Annual VAMB Convention Virgina Beach Hilton & Virgina Beach Convention Center Visit www.vamb.org for details

OCTOBER 19 Local Event: 19th Annual VAMB Convention Virgina Beach Hilton & Virgina Beach Convention Center Visit www.vamb.org for details

September Existing-Homes Sales Released by the National Association of Realtors

NOVEMBER 1 Pending Home Sales Index Released by the National Association of Realtors

OCTOBER 10

NOVEMBER 2

Housing & Economic Forecast Released by the National Association of Realtors

NAMB/West Conference, "The Extreme Event", MGM Grand in Las Vegas. Visit www.namb.org for details.

October 2007

NOVEMBER 5 NAMB/West Conference, "The Extreme Event", MGM Grand in Las Vegas. Visit www.namb.org for details.

NOVEMBER 6 NAMB/West Conference, "The Extreme Event", MGM Grand in Las Vegas. Visit www.namb.org for details.

NOVEMBER 13 Housing & Economic Forecast Released at the National Association of Relators' annual convention

NOVEMBER 15 OCTOBER 24

Local Event: MAMB's "How to Originate a FHA Loan" Linthicum, Maryland Visit www.mamb.org for details

Local Event: MAMB's Fall Golf Outing. Visit www.mamb.org for details

NOVEMBER 4

OCTOBER 18

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OCTOBER 17

Local Event: VAMB's NOVA Social. Visit www.vamb.org for details.

NOVEMBER 20 Commerical Lending Indicator Released by the National Association of Realtors

NOVEMBER 21 3rd Quarter Metro Home Prices/ State Resales Released by the National Association of Realtors

NOVEMBER 3

NOVEMBER 28

NAMB/West Conference, "The Extreme Event", MGM Grand in Las Vegas. Visit www.namb.org for details.

October Existing-Home Sales Released by the National Association of Realtors

WHATâ&#x20AC;&#x2122;S YOUR NICHE? Advertise or write with us, monthly in The Niche Report.

info@nichereportonline.com

540.657.2632

www.nichereportonline.com

703.991.2362

THINK OUTSIDE THE BUN Originating non-mortgage business loans. BY MITCHELL CHAPMAN

uring the past several years numerous mortgage brokers, have enjoyed tremendous personal and professional success and the inherent financial rewards as interest rates continued their steady decline. Riding the avalanche of the residential refinancing frenzy scores of newcomers entered the mortgage broker profession seeking to capitalize on this “no brainer” market. However mortgage brokers are living in different times with numerous sub prime lenders closing their doors and other lenders suspending their pipelines creating havoc throughout the industry. As origination and refinancing activity continues their downward trend from the third quarter 2003 historical high, the forward thinking professional residential and commercial mortgage brokers continue to seek other streams of income which will be both financially rewarding and helpful in serving their clients. The creative professional residential mortgage broker has increased and expanded their programs offered to include subprime, jumbos, stand alone seconds and even combos. They have even taken the leap into the “forbidden zone” of small balance commercial mortgages. However, and sad to say, the majority of professional commercial mortgage brokers have sat still and allowed their residential counterparts to gain market territory leading to increased competition. There is an enormous and widely untapped equal opportunity that exists for both the professional residential mortgage broker as well as the professional commercial mortgage broker. However, both must first be willing to become teachable and flexible to become forward in their thinking. Lacking these ingredients you will not have a

competitive edge by thinking “outside the bun”! This specific, awaiting and virtually untapped opportunity is in the realm of originating non-mortgage business loans. Many brokers from both sides of the aisle are finding this to be an extremely lucrative opportunity and option with numerous financial, professional and personal advantages. There are several reasons that professional residential and commercial mortgage broker should venture into the wonderful world of non-mortgage business loans. Among the many are: You already have an existing database of clients to offer these services! Statistics indicate that business owners account for approximately 25 % of a professional residential mortgage broker’s database and almost 100% of the professional commercial mortgage broker’s database. There are no RESPA or licensing requirements for originating non-mortgage business loans. There is very little competition and the market is wide open. Banks are continuing to tighten their submission and approval standards resulting in turning away their existing clients and turning them towards non-mortgage commercial loan brokers. Savy business owners are always looking for alternative financial solutions for additional working capital or for expanding their businesses. Some of the various vehicles employed to originate non-mortgage business loans include unsecured working capital through lines of credit and/or term loans (at bank rates and terms), accounts receivable financing (not factoring), inventory and (customer) purchase order financing; equipment leasing and equipment sale and lease back as well as special programs for medical practices, doctors TheNicheReportOnline.com

and other professionals. Among all of the non-mortgage business loan programs, my personal favorite is the unsecured working capital program, which provides either a line of credit and/or term loan to the business. Over the many years we have successfully used this program to assist, enhance and close numerous residential and commercial real estate acquisitions and refinances. At this point you may very well be thinking to yourself, “How is this possible?” Or, “Can you please give me an example of how this might assist one of my business clients!” Thank you for asking! First and foremost, using unsecured working capital, either in the form of a line of credit or a term loan is possible, ethical and equally importantly, lawful. These funds are made possible through several well known and some not so well known, but, heavily regulated, financial institutions. Let’s say you have a business client, who has a two plus year old business, with a personal credit score of 660 or higher. Your client can even go “full doc” and is aggressively seeking to purchase another, or even refinance their current property. You go through the obligatory steps of pulling credit and completing the 1003. Everything looks great, but you realize after numerous conversations they will never be able to close, even on a refinance, because they are short of cash. Now what are you going to do? If you are not originating non-mortgage business loans your deal is dead! However, if you are a forward thinking mortgage broker you can now close this deal because you have access to among other programs, unsecured working capital. In closing, let me ask this question; “How many deals have you lost in the past because your business client was short of cash and couldn’t close?” Now let me ask another question; “How many of these very same deals would you be able to close if you were able to assist these very same business clients obtain unsecured working capital?” Now is the time to “Think outside the bun!” Mitchell Chapman is the Executive Director of National Business Finance, who provides alternative financial solutions for small businesses. National Business Finance specializes in providing unsecured working capital, 100% NO DOC commercial mortgages as well as residential and commercial construction financing. Mr. Chapman can be reached by telephone: 954-495-4791 or 954-548-1455; fax 954-7934411; or via e-mail at: info@nationabusinessfinance.com. You can also browse online at: www.nationalbusinessfinance.com. 14

October 2007

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READY FOR A CHANGE? Maybe It's Time To Consider Commercial Hard Money. Creative financing solutions for the changing market. BY NEIL SIMAN

f you are a broker reading this article there are a few things that I am going to assume you are quite aware of: 1) we are in a changing market; 2) credit markets and financial markets are significantly tightening up; 3) lenders are changing and modifying their lending programs and guidelines, making it harder for the borrower and/or property type to qualify for the loan; 4) lenders are pulling out from deals last minute due to changes in their programs; and (5) you are not making as much money as you used to. Over the past six months, I have received hundreds of calls that have led to hour-long discussions with brokers

who are feeling this pain from the change in the industry. They are calling for advice, asking questions about hard money lending, how it works, and what deals it is best used for. With the residential market in turmoil, many brokers are asking about commercial lending and more importantly, hard money commercial loans. It obviously takes time to have these conversations and I have had them over and over again. So, I felt it would be best to write an article to help introduce Hard Money lending to you and discuss why it may be a great time to consider it as a niche.

WHAT IS HARD MONEY? The definition of Hard Money means something different to different people. For some it means “Hard to Find” Money. For others it could mean “Hard to Swallow” Money. For me, it means funds used for hard assets (i.e. real estate) and the funds are loaned based on the value of those “hard” assets. To help provide a broad definition, wikipedia.org has a lengthy, but general, definition that I will summarize as follows: A hard money loan is a specific type of financing in which a borrower receives funds based on the value or the “quick sale value” of a specific parcel of real estate. Hard money loans are typically at higher interest than conventional commercial or residential loans and are almost never issued by a commercial bank or other deposit institution. Most hard money lenders will fund in first lien position, meaning in the event of default, they are the first creditor to receive full compensation. Do not be confused by the

term “hard money.” It does not mean that this money is difficult to find or obtain. It should be called EASY money because it is considerably easier and quicker to procure than other conventional financing. So why is it called “hard” money you ask? Good question. In the world of finance, money is either “hard” or “soft”. Hard money refers to funds that come with higher interest rates and points, shorter terms and lower loan to values (LTV’s). “Soft money” is simply money that is borrowed from banks and other lending institutions. In contrast, soft money generally comes with easier terms than those described above, along with more flexible payment schedules. This is the normal loan process where the loan is underwritten by an underwriter. There are rules and guidelines that are made by the lenders or by the groups that buy the loans from the lenders. This would include all loan types and varieties. The criteria of these institutional or soft money lenders is to approve or decline funding (especially for purposes involving real estate) in a much more stringent underwriting fashion than that of hard money lenders. Most often you will find that hard money lenders are people / individuals that you can talk to, get to know and become comfortable with. They are mostly like an investor and often a friend. They also have the capacity to be very flexible in decision-making. Institutional lenders are concerned first and foremost with a potential borrower’s creditworthiness and a large list of difficult underwriting requirements compared to hard money lenders who tend to put more emphasis

on the subject property than on the prospective borrower. In other words, if hard money lenders see the property as a viable investment project, the borrower becomes secondary because they have their security in the property itself.

THE HISTORY OF HARD MONEY Hard money is a term that is used almost exclusively in the United States and Canada where these types of loans are most common. In commercial real estate, hard money developed as an alternative “last resort” for property owners seeking capital against the value of their holdings. In the past, hard money was used by real estate investors as a method of “last resort” financing. They are the lender people would choose to go to when absolutely no one else would lend to them. More recently, hard money has been used by investors not only as a last resort, but savvy investors used it to capture opportunities. The flexibility of hard money lenders and the speed in which they can respond made them a very profitable weapon for investors (and brokers) to use to capture deep discount opportunities in acquisitions. In today’s market, hard money can be used for a variety of situations including situational bridge lending to allow a “bankable” opportunity to be captured while awaiting slower conventional financing and underwriting to conclude. THE RULES OF HARD MONEY From inception, the hard money arena has always been traditionally unregulated by state or federal laws and hard money lenders are not restricted by institutional TheNicheReportOnline.com

underwriting rules and guidelines. A good comparison: In conventional financing, “Rules” are the guidelines under which loans are underwritten; whereas in hard money financing, “Preferences” are the guidelines under which loans are underwritten. Rules vs Preferences. This notion reigns true because most of the loans funded in the hard money market do not have to meet stringent restrictions and are kept within the specific lender’s portfolio compared to conventional lenders who typically sell their loans or securitize their loans on Wall Street. You will find that preferences vary among hard money lenders. Some lenders prefer to make loans to residential homeowners or homebuyers while others favor commercial properties or non-owner occupied residential. Some hard money lenders require considerably more paperwork in their applications than others. Some will review an applicant’s credit, others will not. The lending criteria can be as varied as their own individuality and risk comfort levels and it is common to find that the preferences of a hard money lender usually correlate with their knowledge and experience of the particular asset type. Understanding the general preferences sought can assist you in packaging the deal for your borrower and highly improve the success to best qualify a deal with a hard money lender.

TYPICAL TERMS OF HARD MONEY LOANS Terms for hard money loans will vary from lender to lender and will usually depend on the property type, the loan amount and/or the experience of the borrower. Typically, hard 18

October 2007

money lenders will lend between 50-80% LTV (loan-to-value), with interest rates between 10-18% and 2-10 lender points. Terms can range from 6 months to 5 years and some loans may also have prepayment penalties. Seem high? They are. These lenders take a lot of risk in that most underwriting is property based, not borrower based, and often the risk requires a higher yield to the lender. Further, when speed is needed for the borrower to secure an opportunity, the cost of losing the deal often far exceeds the costs of borrowing. Some lenders will only charge interest while others will amortize their loans. Some will lend repair money; others will not. Some will place the repair money in escrow to be drawn out as the work is completed; others will let your borrower leave the settlement table with the money. Some will lend closing costs; others will not. Ultimately, when finding hard money lenders, you will need to understand their terms and how they might fit into your client’s goals and objectives.

DETERMINING THE VALUE In commercial lending, most hard money lenders will use their own appraiser to determine a value for the property. Others may simply determine the value based on their own experience in the market place and geographic location. There are different ways in which hard money lenders will establish the value of the property, and one or more may be used in any given situation. Among some of these are the following: (1) a current appraisal by a licensed appraiser approved by lender (2) previous transfer price(s) for the property; (3) tax assessed

value; (4) a previous appraisal assigned to the lender (do not assume that because you have an appraisal, that the lender will accept it); (5) a Market Value Analysis (MVA) also known as a Broker Price Opinion (BPO) provided by a real estate broker or agent; (7) transfer prices for comparable properties; (8) a cashflow analysis; or (9) an evaluation of the cost basis for the property. Hard money lenders will either base their value on the as-is value (“As-Is”) while others will lend based on the after repaired value (ARV) of the real estate. The As-Is value is an extremely common approach within commercial and investment property compared to the after repair value which is more common in the residential hard money market and is mostly found among hard money rehab lenders. As is Value (As-Is) – For the purpose of determining the As-Is value, lenders will base the LTV on today’s valuation. This is the amount a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a 1-4 month timeframe. After Repair Value (ARV) – This is what the property would be worth after the rehab is completed and this value is normally determined by appraisers that work with the hard money lender. Normally hard money lenders will loan up to 65% of the ARV.

CROSS COLLATERALIZING In some cases, the low LTV’s used by commercial hard money lenders do not facilitate a high

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enough loan to enable the borrower to acquire the property or sufficient enough to pay the existing mortgage lender off in order for the hard money lender to be in first lien position. To help shortfalls in equity, many hard money lender programs will allow a “cross lien” on another of the borrower’s properties. Basically, the hard money lender will be able use value and equity in another property to assist in making a larger loan for the subject property. The cross collateralization of more than one property on a hard money loan transaction is also referred to as a “blanket loan”. Not all borrowers have additional property to cross collateralize. Cross collateralizing, or blanket loans, are more frequently used with investors on commercial hard money loan programs.

PACKAGING A DEAL FOR A HARD MONEY LENDER In today’s tech age, many hard money lenders provide various channels for loan submissions including phone, fax, email and online applications. However, with the significant increase in submissions and the short time to review these loans, it is important for mortgage brokers understand the aspects of the deal and submit it in an organized fashion to justify a quick response. BROKERS MUST EXAMINE The following are highlights of some of the items that brokers should prepare to understand and provide to hard money lenders: – What is the Story? What is the story of the borrower and property? Why are they seeking a hard money loan? How much

do the need? What is it for? If purchase, how will the equity be funded at closing? What is the borrowers game plan for the property? How do they intend to repay the loan in full and how do they intend to pay the interest payments? Brokers who provide a detailed executive summary detailing the story and providing more information (see below) will get the fastest answers and close the quickest loans. – Property Type Understanding the property type and location is imperative. Is it mixed-use, office, warehouse, retail, multi-family? What is the nearest metropolitan city? What are the demographics of the location? Most hard money lenders are becoming more selective. The attitude of “lending on anything” with a low LTV is not easily brokered anymore. – Property Condition What is the condition of the property? Does it need a lot of work, or simply some maintenance? How is it heated/cooled? How old is the roof? Do the windows need replacing? What about any environmental concerns? The lender will seek these answers and most lenders hate surprises. Educating yourself and the borrower about the items lenders seek will ultimately reduce the time to funding but also reduce the number of surprises in a deal. Surprises hurt most deals. – Property Occupancy What is the current vacancy rate? What is the average time to lease up? Who are the current tenants in the property? Is there a rent roll? Does owner have a lease abstract highlighting the details of the leases

and their terms?

DUE DILIGENCE ITEMS TO PROVIDE TO LENDERS CAN INCLUDE: • Executive summary • Loan application and/or personal financial statement • Rent rolls • Copies of leases • A prior year and year-to-date operating statement of the property and balance sheet • Proforma budgets • Is there an appraisal? • Digital color photos of subject property • Tri-merge credit report • Verification of existing mortgage • Transaction history of the property (Date last sold? Price?) MARKETING FOR COMMERCIAL HARD MONEY LOAN OPPORTUNITIES How can you find these opportunities? With the lending industry changing each day, securing your financial goals and protecting your company, your employees and your clients must be imperative. To develop a new niche, efficient and effective marketing is one way to do help. Below are some ways to market for this business which will not only increase your revenues, but your reputation as well. – Established Clientele A good way to start off with commercial loans is through your current residential clients. Consult the Schedule of Real Estate Owned on their 1003 and see if they have any commercial properties that may benefit from financing or discuss with them their interest in purchasing any new commercial real estate. Since already have a relationship with

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these clients, they will likely trust you and not have to second guess your commercial lending experience. – Current Marketing/Advertising Ventures Use the word “commercial” on any marketing medium your company uses such as business cards, matrices, your email signature, your website, and your letterhead. Any potential clients that may have passed over your advertisement because they were unaware that you did commercial lending will now give attention to your name due to the addition of one key word. – Local Banks/ Conventional Institutions Form a relationship with local commercial bankers and lenders. Inform them of your requirements and let them know that you can provide funding for many clients that their company would not be able to approve. In many cases, the ability to provide for their clients will prove more valuable than any compensation for referrals. If you build a trusting relationship, these banks will feel more comfortable with having to turn down clients when they have a reliable source to refer them to. This may help sustain the good relationship the banks have with their clientele. – Partnerships For instance, consider making an agreement with a larger commercial lending firm or brokerage firm and offer to refer loans too large for your guidelines in exchange for referral of smaller deals. – Networking The real estate brokers and agents that you know from your work in

October 2007

the residential market probably see commercial deals fairly regularly as well. Give them a call or shoot them an email informing them that you are now working with commercial loans. Offering a referral fee is a great way to entice them and it is such a small amount compared to the amount of commission you will earn. Also, try attending seminars and tradeshows to network and gain valuable information about the industry. – Organizations/Publications Get involved with as many business-related publications or associations in your area as possible. Place ads in your chamber of commerce’s weekly newsletter. Offer to run an instructional class or seminar on commercial financing. Gaining the trust of your business community is valuable because many people prefer to deal with businesses they are comfortable with rather than whoever provides the best price. – Traditional Media This includes financial magazines, newspapers, internet ads and radio ads. The cost will be higher than smaller publications, but depending on the size of your organization, it may be worth it. They will generate a much larger response usually, but make sure you are prepared to handle the extra calls. Also note that often times you get a large volume of callers who are looking for financing that you may not be able to provide. – “Grassroots” Marketing Walk into local businesses and ask for general information about the property and who owns it. If you are speaking to the business owner, and find out they are currently renting, ask them if they would be

interested in buying the property. You can help make it easy for owners of small businesses to purchase their properties. They will most likely go to a traditional bank first because they are unaware of what you can offer them. When the traditional banks cannot close on their deal, it is your job to let them know that you can.

CONCLUSION Is it time for a change? Only you can decide that. Taking on something new and working within a new niche is often confusing, scary and exciting. For those of you interested in considering a change; now is the time. Not only is the market for hard money improving daily, longevity within the niche has been proven. Further, the compensation to brokers is incredible…generally between 1-5 percentage points payable at closings. We trust the tools described in this article will assist you in growing your business and improve upon your lifestyles. Lastly, we hope to further assist you in the future by evaluating and funding some of your loans. Neil Siman is a principal of BlueWater Funding, LLC. BlueWater Funding, LLC is a direct private lender serving the small balance commercial loan market within the Mid-Atlantic region. At BlueWater Funding, our primary focus is to bring to the marketplace creative and quick financing solutions for situations that need immediate funding. Visit us and apply online at www.bluewaterfundingllc.com. Contact Neil Siman at (301) 6566566 / 866-551-BLUE or via email at neil@bluewaterfundingllc.com

Make more money without selling rate! Selling pay-off solutions can re-energize your business long-term. Use CMG’s revolutionary new Home Ownership Accelerator® loan

to revitalize your business. The Accelerator can build your client’s wealth faster, lower their interest costs and won’t crimp their lifestyle.

Home Ownership Accelerator ® Spend five minutes at www.homeownershipaccelerator.net and see the future of mortgages. Then call your CMG Account Executive and get certified to sell the Home Ownership Accelerator.® 㩵㩷Open doors to high-credit, high net worth prospects 㩵㩷Put your current client list back in play 㩵㩷Attract new referral sources: financial planners, realtors, CPAs

800.501.2001, ext. 3043 The Accelerator will change the way you and your clients think about mortgages and money forever. “Home Ownership Accelerator” and the yellow flying house logo are trademarks of CMG Financial Services, Inc. 2007 CMG Mortgage, Inc. CA Dept. of Corp. Lic. #4150025 under CRLA. This information is for mortgage bokers only. MI, Lic. #FR0989/#SR1689, MO, DFI HUD Exempt, OH, DFI #MB5018/#SM342; OR, ML Lic. #3000, TN, DFI Reg. #2275; VA, Lic. #MLB-760; AZ Mortgage Banker License #0903132.

TIP OF THE MONTH

TIP OF THE MONTH The ubiquitous business card. BY STEWART MEDNICK

arketing is the foundation for business development. We market through networking, advertising, presentations, and word of mouth. In each of these examples, a business card is dispersed. Early on in anyone’s career in sales or service, the golden rule of “carry business cards with you all the time” is indelibly etched in one’s mind. After all, a business card is who we are and how people are able to contact us. With all this exposure, we should be busier than a ketchup bottle at a picnic, right? So how come we have trouble mustering up business or retaining repeat business? I believe the business card is far too under utilized. Let me examine various possibilities on how to better utilize what I call “The Ubiquitous Business Card.” Ubiquitous is defined as being or seeming to be everywhere at the same time. Isn’t that how you would like to have your name spread? I want to define the parameters of business card marketing and why it is important. Let me use two extremes of marketing to define the exposure you may have with a business card. If no one in your area (area defined as a 20 mile radius from your office) has your business card, then no one has your contact information and therefore, you will have a very quiet office; no visits, no phone calls, no applications to process, and no closings. If everyone in your area had your business card, then you would be busier beyond belief; the proverbial ketchup bottle. One percent of 500,000 people is still 5,000 people. If 500,000 people had your business card and one percent called you, would you be happy? I just established a simple analogy that seems to be too difficult to fulfill. The reason: not enough business cards are being dispersed on a daily basis. I believe that in our regular daily routine, we forego approximately 25 marketing opportunities to pass out a business card. In a work week, that is 125 business cards handed out. In a month that is 550, and in a year, that is 6,500. If you stay in the business for ten 26

October 2007

years, you can theoretically pass out 65,000 business cards just through your daily routine and not spend an extra cent on marketing or mailing. How? First, make a list of all the events in your day and the places you go for these events. For example: 1) drive to the gas station to pump gas; 2) stop at the coffee shop for a latte; 3) drive through a fast-food stand for breakfast; 4) stop in a drug store for a prescription or to have film developed; 5) go to a grocery store to food shop; 6) shop at department or discount store; 7) drop off or pick-up the kids from daycare; 8) have lunch with a business associate or friend at a restaurant; 9) stop at a pub or bar for happy hour and to meet friends for a drink…etc. In all these examples, would it be accurate to say that even though we carry business cards with us, seldom would one be passed out? This is where the value of the business card can far exceed its cost. A box of 1,000 business cards may cost $60 - $80. That is 6 to 8 cents apiece. A mailing of 1,000 pieces will cost $410 in postage alone, and another 10 cents each for the printing, totaling $510. In the end, an application is the end result regardless of the cost to obtain it. The business card is established as being a cost effective way to market. It is also a more effective lead generator because YOU hand it to a person directly, or is handed to a person from a succession of people originating back to you. Compare this method to a cold piece of mail being received with ten or twenty other envelopes or post cards daily…it will get lost in the volume of mail and is very impersonal. Here is the method. Have fifty cards accessible in your car. I keep a box of cards on the front passenger seat. I can grab one or a few as I need them, and will never again need to grab some from the office, which I often forget to do and wind up at a networking event without cards. Every time you come in contact with a person, hand them your card. Do not go out of your way to hand them out nor approach people for the sole purpose of handing out cards. In your everyday life, be conscience of when to do so. An example: stopping for gas. DO NOT pay at the pump! Pay inside. Pump the

TIP OF THE MONTH

gas, then walk to the attendant and hand them your credit card or your money with a business card on top. This will act in two ways. First, they will be mildly shocked and now you are a memorable person because you gave them a reason to remember you above the two hundred other customers they serve daily. Second, it will be a conversation starter. They will inquire what it is for. Simply reply, “I come here regularly and thought that it is rude for me to not introduce myself. I am Stewart, and you are (look at their name tag and state their name), nice to meet you. I happen to be in the mortgage business, so if you or anyone you know may have any questions I am willing to answer them, just give me a call…” The next time you go to that same station for gas, do the same thing. A different attendant may be there, so repeat the same spiel. If the original attendant is there, act as if he is a best friend but still hand a business card to him again with payment. The card may be thrown away, but losing 6 cents instead of 51 cents for a mailer is economically sounder in my book. However, they may keep it on the register, tape it

to the wall, put it in their pocket or wallet or even hand it to another person who may need your services. Repeat this routine every time you buy lunch, and even if you drive through, hand your card with payment. Repeat the routine when you purchase a coffee, buy a newspaper, have lunch and pay the waitress, or any other time you come in contact with anyone in the course of a regular day. Shopping in a grocery store, you should be able to pass out five to ten cards just from meeting people in the aisles and starting a conversation with them about the high price of spaghettiO’s or whatever. I have a method to learn how to schmooze effectively, called the “Two Minute Mingle” SM … but that is a tip for another month. Stewart Mednick is a mortgage banker and reverse mortgage specialist at American Mortgage Corporation. Mednick trains and coaches professionally to mortgage brokers and bankers on effective relationship development, marketing, and sales. You can contact Mednick at 651-895-5122 or email at smednick1@netzero.net.

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HOW TO SUCCEED IN A TUMULTUOUS MARKET Plan and Strategize. BY GLEN H. WEINBERG

veryday a headline story is published stating that another lender has gone out of business and/or is no longer offering certain products. Each time you try to place a loan it seems like the products are changing constantly, commitments are being rescinded by lenders, and closings are substantially down. With events like this, many wonder how or if they can even weather the storm. Unfortunately, most will not be able to weather the storm without being proactive. Those that can will emerge stronger once the market stabilizes. In any market downturn it is imperative to be proactive and anticipate market changes. A simple Five-Step Process is extremely helpful in a rapidly changing market:

1.) 2.) 3.) 4.) 5.)

Evaluate/Plan Get back to the basics Diversify Become an expert Continue strategy adjustments as the market continues to oscillate

EVALUATE/PLAN First, you need to evaluate both the market changes as well as how you fit into the changing market. Many residential products are no longer available to certain borrowers (i.e. 100% financing) and the products that remain have changed their standards (>650 for many light documentation products). For example, if someone specializes in credit impaired borrowers with little or no money to put down on a purchase, it will be difficult, if not impossible, to be successful in this new environment. During the evaluation stage, it is helpful to make 28

October 2007

a list of all the products you currently offer listing your three most common client profiles. Once this list is complete, analyze how/if the borrowers fit into these products. If the borrowers do not fit into the products, research if there are alternate products still available for these borrowers. If there are no longer products for these borrowers, evaluate what types of borrowers do fit into the available products. After evaluating the landscape, create a plan to target the borrowers and products that fit together. What is most critical is locating borrowers that fit the products you know you can offer as opposed to locating a multitude of borrowers and trying to fit their specific needs into the product. By following this advice, substantially less time will be consumed focusing on deals that will likely never close.

GET BACK TO THE BASICS The next step in excelling in a changing market is to get back to the basics. Back to the basics means that you cannot simply rely on the phone to ring and hope that word of mouth will bring viable transactions in the door. In go-go days the sheer volume of transactions allowed many brokers to become complacent. Unfortunately, in the current market, it is critical to be proactive and not wait for deals to walk in the door. Seek out your target audience through building and establishing personal relationships. By physically meeting with someone, you have a greater opportunity to impact their decisions and transact business rather than just having a brief phone conversation. To be successful in getting back to the basics, develop a plan and stick to it. For example; a goal might be to meet five new people everyday and call ten prior contacts to touch base and see how everything is going with them. By getting back to the basics, you substantially differentiate yourself from the competition.

DIVERSIFY PRODUCT OFFERINGS Along with getting back to the basics, brokers must also diversify their product offerings. With less available business, you must offer a full spectrum of products to succeed. For example, if an individual solely focused on residential conforming products, they are likely losing substantial business from their existing client base. For instance, a current client might have recently gone through a divorce that has impacted their business cash flow (i.e. this client owns a dental practice and the building it occupies is free and clear.) If a broker is solely focused on residential conforming products, they likely just lost a very viable commercial transaction. One area that many brokers should add to their mortgage tool belt is commercial loans. With proper training, commercial loans will allow brokers to diversify their product offerings and not be solely dependent on the residential market. BECOME AN EXPERT Before fully implementing a new product, it is vital to not only ensure that you fully understand the new product inside and out, but also that you become an expert on the new product. By becoming an expert, you distinguish yourself significantly from your competitors. You will have a better understanding of the products, benefits, etc... and be able to sell these benefits to your clients. To gain the required knowledge, it is important to spend time learning about the various specialty products available (No-Doc, small balance commercial, hard money, etc…). Most lenders provide training sessions to educate brokers on their various products, underwriting guidelines, and processes. If they do not provide a training session,

most are more than willing to provide ad-hoc training on their products over the phone, in person or via the internet. The information gathered from this training is critical and will enable you to properly place loans that will fit a particular lender and ultimately close.

CONTINUE STRATEGY ADJUSTMENTS The final step in the process is to continue to evaluate the market changes and your plan as defined in step one. The current markets are extremely fluid and therefore your plan may need to be adapted or completely changed based on events occurring in the market. For example, you might begin offering small balance stated commercial loans and soon find out that the product has become commoditized and facing margin reductions. You could then adjust your plan to focus on non-prime commercial loans (i.e. no-doc commercial loans) where each loan is unique and the margins are considerably better. Adjusting your plan will ensure success in a rapidly changing market. The market gyrations appear that they will continue for the short term. Brokers have a decision to make. They can either continue with the status quo or adapt to the changing times. By following this five step process, a broker can anticipate and adapt to the market challenges and substantially differentiate him/herself from the competition. Glen H. Weinberg is the Chief Operating Officer of Fairview Commercial Lending, a private, wholesale “no-doc” lender. He specializes in funding “alternative” loans, including “out of the box” deals to borrowers with less-than-perfect 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

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CONSIDER HLTV More options for near-prime customers with limited equity. BY ROBERTO VECCHIARELLO AND STEPHEN PERKEY

ith all the turmoil in the market lately, you might want to consider HLTV lending as a way to build your business back up. How ROB VECCHIARELLO STEPHEN PERKEY many times do you meet customers who need extra cash or would like to consolidate debts, yet donâ&#x20AC;&#x2122;t have significant equity in their homes? Or, do you have customers that would like to get out of their Neg Am or ARM loans but donâ&#x20AC;&#x2122;t have much equity? If youâ&#x20AC;&#x2122;re turning away business just because a customerâ&#x20AC;&#x2122;s equity appears â&#x20AC;&#x153;maxed out,â&#x20AC;? youâ&#x20AC;&#x2122;ll want to learn more about selling and marketing high loan-to-value (HLTV) programs.

WHAT YOU NEED TO KNOW ABOUT HLTV LENDINGâ&#x20AC;Ś While at first glance, 100%+ financing seems to be a subprime product, thatâ&#x20AC;&#x2122;s not the case. In fact, borrowers need higher than average credit scores and disposable incomes to qualify. Because many customers are unaware that these programs exist, they may shy away from seeking additional financing. And they may not appreciate the significant benefits they can enjoy right away by consolidating debt or adding to their monthly cash flow. HLTV products are designed for borrowers with high disposable incomes and FICO scores in the 700+ range. In return for the privilege of borrowing more than their available equity would usually allow, customers are willing to pay somewhat higher rates to secure the cash they need to make home improvements, consolidate debt, and reduce monthly payments. 30

October 2007

Keep in mind that HLTV programs arenâ&#x20AC;&#x2122;t suitable for everyone. Itâ&#x20AC;&#x2122;s important to understand how to recognize a good opportunity from this select market niche, prequalify prospects, and effectively communicate the many benefits of financing up to 125% of a propertyâ&#x20AC;&#x2122;s value.

HOW HLTV FINANCING CAN IMPROVE CASH FLOW Consider Janice with a first mortgage of about $221,000, a second mortgage of about $56,000, credit card debt of almost $44,000, and student loans of almost $164,000 â&#x20AC;&#x201C; with combined monthly payments of $4,700. With a home worth $320,000, she has only 13.5% equity, so under many traditional underwriting guidelines, sheâ&#x20AC;&#x2122;d fail to qualify to refinance her credit card debt. But with Janiceâ&#x20AC;&#x2122;s monthly income of $8,450 and credit score of 718, Janice can get a second mortgage with a CLTV of about 98% so she can move her credit card debt to that new second mortgage and cut her monthly payments right away: 9<=FI<

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more than 96%. With just over $33,000 in other debt, his monthly debt payments total $2,243. By consolidating his consumer debt with a second mortgage, he can free up a significant amount of cash each month: 9<=FI<

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Michael has cut his monthly payments right away by 18%, giving him an additional $415 available every month â&#x20AC;&#x201C; and was able to take $13,000 cash out. You can now see why HLTV is a niche that can help supplement your loan fundings, while helping your customers to consolidate debt, get cash out, protect their credit, or fund virtually any expense â&#x20AC;&#x201C; at payments that are attractive when compared to credit cards or personal loans.

RECOGNIZING THE HLTV PROSPECT â&#x20AC;˘ Lower Appraisal Than Expected With a softer real estate market, a low appraisal may require more than the traditional 90% financing. â&#x20AC;˘ High Revolving Debt Customers with near-prime credit may be able to eliminate credit card debt by taking advantage of up to 125% financing. â&#x20AC;˘ Low Equity Plus A Need For Cash Whether to fund home improvements or other expenses, the need to finance past 100% of value to make a deal work could make a HLTV program a good match. â&#x20AC;˘ Existing Second Mortgage Homeowners who already have a second mortgage are experienced at making two mortgage payments and may be more comfortable replacing their second mortgage or obtaining a line of credit. â&#x20AC;˘ Aggressive Lenders When you learn that a prospectâ&#x20AC;&#x2122;s current financing is with a lender known for aggressive marketing, you may find that the homeowner has a negative amortization loan or an

adjustable rate loan that might be converted to a fixed rate. â&#x20AC;˘ High Debt-to-Income Ratio While traditional mortgage underwriting is based largely on the percentage of debtâ&#x20AC;&#x201C;to-income, HLTV lenders often allow a higher ratio if disposable income is higher than average.

KEY CRITERIA: PRE-QUALIFYING POTENTIAL HLTV BORROWERS HLTV products offer many great benefits, but the criteria for a successful application are somewhat different than for traditional financing. To avoid disappointing your customer, itâ&#x20AC;&#x2122;s a good idea to be familiar with how lenders often evaluate a borrower: â&#x20AC;˘ Less Focus On Collateral, More Scrutiny On The Borrower With traditional mortgage products, underwriters know their loan is secured by a home worth more than the loan amount. Yet with 125% financing, lenders donâ&#x20AC;&#x2122;t have that assurance. Thatâ&#x20AC;&#x2122;s why borrowers must demonstrate that they have the ability to repay the debt. â&#x20AC;˘ Fico Scores In most cases a score of 700 or above is needed to qualify. Some lenders offer 125% products at 680, but you should check with your lender as lower scores typically require much higher than average disposable income. â&#x20AC;˘ Disposable Income While traditional lenders look at debt-to-income (DTI) ratios as a measurement of ability to repay, some lenders rely more on disposable income, which is simply the amount of money left over at the end of the month after monthly debts are paid. You can see why this is a critical factor by looking at two borrowers â&#x20AC;&#x201C; Alice and Betty: 8C@:<

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WHEN IT COMES TO

SUBPRIME

COMMERCIAL LENDING, Here’s the Proof: • Owner occupied commercial mortgages to $2MM • Difficult-to-finance industries welcome including gas stations, auto repair, motels and specialty trade contractors • Up to 90% financing

Call now for a fast evaluation and approval of your deal!

1-877-337-3757 www.oceancapitalonline.com

• Credit scores as low as 500 • Low minimum debt-service coverage required • Private money refinancing specialists

B R O K E R S A R E F U L LY P R O T E C T E D A N D PA I D H A N D S O M E LY

debt to income ratio of 45%, Betty has a much higher disposable income. Even though Betty’s credit score is somewhat lower than Alice’s, Betty’s higher income puts her into a better position to repay the loan if she were to face any unexpected expenses. In fact, borrowers who have higher disposable incomes and/or higher FICO scores usually have a greater ability to repay the loan which will be reflected in their loan terms. Other important factors: • Loan amount: Larger loan amounts may carry a higher interest rate • Doc type: Full documentation of assets are often charged a lower rate

“IS THIS RIGHT FOR ME?” POSITIONING THE HLTV PRODUCT TO YOUR CUSTOMERS: At first glance, your customer may conclude that you’re trying to place them into a subprime loan. That’s because the interest rates are somewhat higher to reflect the risk of financing more than the home’s value. To reassure a prospect that your recommendation is a sound one and a smart, appropriate financing option, consider these suggestions: • Position The HLTV Option As “Good News” By congratulating a prospect on their ability to qualify for 125% financing, and suggesting that most borrowers do not qualify for these loans, your customer may feel pride that mortgage professionals are impressed with how they manage their finances.

may be tax deductible on the portion of their loan up to 100% of the home’s value. And always remind your customers to consult their tax advisor. You will also want to ensure your customer understands the risks of the product as well. This product makes the most sense for a customer that does not plan to move in the near future.

IN CONCLUSION: DON’T PASS UP GOOD OPPORTUNITIES For most mortgage brokers, selling a HLTV product is the exception rather than the rule. That’s because while the interest rates are somewhat higher, there are strict borrower standards for 125% financing. These are not subprime loans and are suitable only for those with good credit. There will be many occasions when you’ll meet a qualified prospect who really needs HLTV financing. By keeping these programs in mind and understanding how to position them to your customers, you won’t have to turn down opportunities just because a borrower seems to have little or no equity. Stephen Perkey, Senior Vice President Retail and Wholesale Loan Production. Steve oversees Irwin’s origination process from sales, loan processing and underwriting to funding. Roberto (Rob) Vecchiarello, Vice President Marketing. Rob is responsible for all of IHE’s marketing activities including marketing communications, sales collateral development, event management and brand management. Visit Irwin Home Equity online at www.IHEPartners.com or call 1-888-524.7946 to speak to either Steve or Rob.

• Explain Why Loans Are Priced Accordingly When customers understand that to some extent the loan is “unsecured”, they’ll be more appreciative of the trust you’re placing in them to repay the loan. • Clarify The Benefits Be sure to demonstrate that with the flexibility to borrow up to 125% of their home’s value, they can access more funds or lower their monthly payments to meet their immediate financial needs. • Compare The Payments Point out that although 125% financing carries a higher interest rate, it’s still a far less expensive alternative to using credit cards or personal loans – and that their interest

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VAMB 19th Annual Convention October 17th, 18th, and 19th, 2007 Hilton Va Beach Oceanfront 3001 Atlantic Avenue Va Beach, Virginia 23451

Education

Networking

Ocean Air Exhibitor Showcase Please visit www.vamb.org or call Steve Baugher at 804-285-7557 for more details

NICHE REPORTS

NONPRIME Gateway Mortgage Group 972.365.409 A.E. is Jerry Lair

Gateway Mortgage Group 972.365.409 A.E. is Jerry Lair

24/7 instant prequals and pricing : www.gatewaybroker.com/training/gps/gps.html

90% Stated with no reserves cash out to 620 credit – 95% F/D to 590 credit - no title seasoning required

877.377.4067

100% to 620 Mid Full Doc w/unlimited 60 day MTG lates OK. Co/borrower w/scores below 500 OK No reserves, No seasoning reﬁ’s. 1 day off MLS OK/ 55 DTI. Loan amounts 750K. Higher on exception, case by case

Guaranteed Rate

G-Rate will pay 3 YSP on 100% loan, and will pay YSP in no PrePay States

Guaranteed Rate

877.377.4067

888.285.2536

D - Product: Foreclosure/BK bailout. 100K - $999,999, 75% max LTV Full Doc, 65% max for Stated Income, No minimum FICO required, DTI up to 50%

Tribeca Lending

C – Product: 100K - $999,999 Min FICO of 500 , no NOD’s or BK’s in 12 months, 1 x 120 (no rolling) DTI up to 50%

Tribeca Lending

888.285.2536

ADVERTISE YOUR NONPRIME NICHE 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.

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NICHE REPORTS

PRIME Gateway Mortgage Group 972.365.409 A.E. is Jerry Lair

Guaranteed Rate 877.377.4067

Indymac Bank 866.690.2240

EAII’s, FHA Manual Underwriting, Portfolio Underwriting, 100% to $750,000

Jumbo - Super Jumbo, Full Doc, SIVA, DTI up to 50% Industry leading rates, Work Visa’s accepted

Levels I, II, and III, Flex 97 and 100, NO MI (Lender Paid), Program up to 100%, No hit on SISA w/720+, My Community Rates consistently ranked in top 3 Agency Conforming and Fannie Mae programs available, including MyCommunityMortgage™, Flexible 97™, Flexible 100®

866.690.2240

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

Irwin Home Equity

100% LTV First Mortgage with no PMI, Full Doc, Cash Back up to $200K

Indymac Bank

888.524.7946

Irwin Home Equity 888.524.7946

Combo programs; 100% First with 125% Second for complete ﬁnancing with no PMI, Full Doc, Cash Back up to $100K

ADVERTISE YOUR PRIME NICHE 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.

October 2007

NICHE REPORTS

ALT–A Gateway Mortgage Group 972.365.409 A.E. is Jerry Lair

Gateway Mortgage Group 972.365.409 A.E. is Jerry Lair

Guaranteed Rate 877.377.4067

Indymac Bank 866.690.2242

24/7 instant prequals and pricing : www.gatewaybroker.com/training/gps/gps.html

90% Stated w/ no reserves cash out to 620 credit – 95% F/D to 590 credit – no title seasoning required

90% NOO Full Doc, 90% NOO SIVA , Non-Warrantable Condo’s Allowed

Jumbo – Super Jumbo, Full Doc, SIVA, DTI up to 50% Industry leading rates, Work Visa’s accepted

3/1, 5/1, 7/1, and 10/1 LIBOR ARMs; 15- and 30-year Fixed; 10year I/O period available for ARMs and 30-year. Temporary buydowns and long-term locks also available.

866.690.2242

Full Doc up to 97% LTV with a minimum 680 Decision Credit Score (DCS); Stated Income up to 95% LTV with a minimum 660 DCS; No Ratio up to 95% with a minimum 700 DCS; DTI as high as 55%; NINA doc type also available

Irwin Home Equity

100% LTV First Mortgage with no PMI, Full Doc, Cash Back up to $200K

Indymac Bank

888.524.7946

Irwin Home Equity 888.524.7946

Combo programs; 100% First with 125% Second for complete ﬁnancing with no PMI, Full Doc, Cash Back up to $100K

ADVERTISE YOUR ALT–A NICHE 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.

TheNicheReportOnline.com

NICHE REPORTS

COMMERCIAL AcuPen Financial

High LTVs, and low debt coverage ratio requirements

305.299.7197

Commercial Loan Capital 800.979.4470

Commercial Loan Capital

Loans to $8 million on Multifamily and Commercial Properties, Loans to $5 million on Hospitality Full Doc and Stated Income/Stated Asset Programs

800.979.4470

Edgewood Capital Advisors, LLC 610.293.1976

Private commercial lenders, Loans From $ 1,000,000-$ 50,000,000, Mid Atlantic Region

213.249.9113 or 626.296.0120

Nationwide Wholesale Commercial Lender. Stated Income, Full Doc & SBA programs available. Loan amounts from $100k - 5 Million. Easy Broker Approval Process

Fairview Commercial Lending

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

Equitable Commercial Lender, Inc

866.634.1270 888.886.3580

Adjustable & ﬁxed perm programs up to 80% LTV. Hybrid & Bridge loans available for most income property types. Flexible structures to meet the needs of the brokers and borrower

Indymac Bank

Loan amounts to $5 million; 3-, 5-, 7, and 10-year Hybrid ARMs (30-year fully amortized with Interest Only option)

Imperial Capital Bank

866.908.3279

Indymac Bank 866.908.3279

Ocean Capital 877.337.3757

Strongtower Financial Inc. 800.333.9893 ext. 111

Multi-family and Commercial property eligible; 3-, 5-, 7, and 10-year Hybrid ARMs (30-year Interest Only option) 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-to-finance industries welcome Loans for churches, nonprofits, schools and assisted living centers – bond, bridge and permanent loans for purchase, refinance and remodel/renovation.

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.

October 2007

NICHE REPORTS

HARDMONEY Anglo–American Financial 434.981.1017

Anglo–American Financial 512.657.9310

BlueWater Funding, LLC 301.656.6566

DIP (Debtor in Possession) Financing, Loans from $1M up to $200M, Nationwide Fast, ﬂexible, full range of real estate collateral accepted, nationwide and international Direct Lender, 65% Loan-To-Value, No prepayment penalty, Brokers Protected , Lending throughout the Mid Atlantic Region

301.656.6566

Apply online www.bluewaterfundingllc.com, Immediate response, Closing in 7 days, Loan amounts up to 2 million

Commercial Loan Capital

Hard Money on Commercial Properties with no prepayment penalties

BlueWater Funding, LLC

800.979.4470 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

Equity Funding

Commercial Equity Loans, Direct Lender, Low docs, fast evaluation

Commercial Lending, LLC

206.226.5548

Fairview Commercial Lending 866.634.1270

First Mount Vernon 866.908.FMV1 (3681)

Miner Capital Funding, LLC 702.466.8952

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% Specializing in collateral-based real estate loans nationwide. We get deals done!! As fast as 4 days! Loan amounts 1 million to 20 million

TheNicheReportOnline.com

NICHE REPORTS

CONSTRUCTION Bismark Mortgage 800.350.7199 ext. 103

Commercial Lending, LLC 800.755.7310 ext. 201

Unique programs for new construction ﬁnancing on SFR (1-4 units) and Modular Homes

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

888.886.3580

Loan amounts up to $10 Mil, 80% LTC & 75% Stabilized value. Term up to 30 months. Negotiable fee based on LTC and tenor. Common sense underwriting with uncommon ﬂexibility

Indymac Bank

Purchase and Reﬁnance Lot Loans to $1,000,000; Interest Only owner-occupied lot available; Full Doc and Stated Income

Imperial Capital Bank

866.913.3863

Indymac Bank 866.913.3863

Normandy 585.256.2600

Strongtower Financial Inc. 800.333.9893 ext. 111

Construction-to-Permanent (CTP) Loans up to $5,000,000, Owner-builder program; 24/7 Online Draw Requests; Full Doc and Stated Income; dedicated construction support Construction to Permanent, Self Build, Spec, Pre-Sold, Custom Build, Multi-Family Construction and Lot Loans for owner and non-owner occupied properties, Creative financing using additional collateral is also available Commercial construction programs for properties that include but are not limited to office space, restaurants, gas stations and small strip plaza’s New construction and renovation loans for churches, nonprofits, schools and assisted living centers.

ADVERTISE YOUR CONSTRUCTION NICHE 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.

October 2007

LENDER & RESOURCE DIRECTORY

Contact: Carl Shorley [e] cshorly@clcloans.net

ACUPEN FINANCIAL, LLC The Premier One-Stop Commerical Mortgage HUB www.acupenfinancial.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 APPRASIERLOFT www.appraiserloft.com [phone] 877.229.7799 [fax] 877.797.0280 BISMARK MORTGAGE www.bismarkmortgage.com [phone] 800.350.7199 ext. 103

CUSTOM MORTGAGE MARKETING.COM www.custommortgagemarketing.com [phone] 1.800.533.3579 [fax] 717.854.2554 DKS SETTLEMENT GROUP, LLC www.dkstitle.com 15852 Montview Dr. Montclair, VA 22025 [phone] 703.730.9737 [fax] 703.656.4915 Contact: Shanna Glatz DOUBLE POSITIVE MARKETING www.doublepositive.com Corporate Headquarters Tide Point - Cascade Building 1030 Hull St. Ste 300 Baltimore MD 21230 [phone] 888.DPOSITIVE (888.376.7484) [fax] 410.332.1059 EDGEWOOD CAPITAL ADVISORS, LLC 511 West Beechtree Lane Wayne, PA 19087 [phone] 610.293.1976

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 CMG MORTGAGE www.homeownershipaccelerator.com [phone] 800.501.2001 ext. 3043

EQUITABLE COMMERCIAL LENDER, INC 3250 Wilshire Blvd Suite 1001 Los Angeles, CA 90010 [phone] 213.249.9113 [fax] 213.249.9116 EQUITY FUNDING www.equity-funding.com 2101 Fourth Avenue, Suite 1300 Seattle, WA 98121 [phone] 866.332.3863

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 COMMERICIAL LOAN CAPITAL www.clcloans.net 868 West Street Road #401 [phone] 610.272.3553 [fax] 206.350.5900

FAIRVIEW COMMERCIAL LENDING www.fairviewcommerciallending.com 1932 North Druid Hills Road Suite 250 Atlanta, GA 30319 [phone] 866.634.1270 [fax] 404.634.0319 FANNIE MAE www.efanniemae.com

FIRST FINANCIAL MORTGAGE SERVICE, LLC www.ffmloans.com [phone] 703.989.2293 [fax] 703.991.2362 [e] kristen@ffmloans.com FIRST MOUNT VERNON I.L.A. www.FMV1.com 6019 Tower Court Alexandria, VA 22304 [phone] 703.823.6800 [fax] 703.997.2499

GATEWAY MORTGAGE GROUP www.nonprimewholesale.com 3820 Laurel Lane Bedford, Texas 76021 [e] weirdloans@nonprimewholesale.com AE: Jerry Lair [phone] 972.365.4090 [fax] 918.392.8364 GUARANTEED RATE, INC. www.griwholesale.com 3940 N. Ravenswood Chicago, IL 60613 Contact: Tim Dooley [e] tim@teamdooley.com [phone] 877.377.4067 [fax] 877.377.4970

IMPERIAL CAPITAL BANK www.imperialcapitalbank.com [phone] 888.886.3580 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 continued on next page

TheNicheReportOnline.com

LENDER & RESOURCE DIRECTORY CONT.

MINER CAPITAL FUNDING, LLC www.minercapitalfunding.com 144 Winchester Place Fairview Heights, IL 62208 [e] orlando@minercapitalfunding.com [phone] 702.466.8952 [fax] 314.667.3092

NATIONWIDE COMMERCIAL FUNDING www.commerciallendingpartner.com 253 South Orem Blvd Orem, UT 84058 [phone] 866.369.5168 NORMANDY www.normandy.com Contact: Rodney Buchbinder [phone] 585.256.2600 [fax] 585.256.2836

OCEAN CAPITAL www.oceancapitalonline.com 2 Altieri Way

Warwick, RI 02886 [e] information@oceancapitalonline.com [phone] 877.337.3757 [fax] 401.739.9711 OSI EXPRESS www.openhouseflyers.com Orange County, CA [phone] 866.674.1999 or 714.748.4199 [fax] 714.748.4192 PLUMBLINE STUDIOS, INC. www.plumbline.com 830 School Street, Suite 12 Napa, CA 94559 [phone] 888.282.1248 [direct] 707.251.9884

STERLING COMMERCIAL CAPITAL, LLC www.sterlingcommercialcapital.com [phone] 203.459.1031 [fax] 707.361.0320 STRONGTOWER FINANCIAL INC. www.strongtowerfinancial.com 7120 North Whitney Avenue, Suite 105 Fresno, CA 93720 [phone] 800.333.9893 ext. 111 [fax] 973.695.9381 TRIBECA LENDING CORP. www.tribeca-wholesale.com [phone] 888.285.2536 (888.2.tlc.lend)

PRO SOURCE MORTGAGE MARKETING www.prosourcemm.com [phone] 503.624.4841 [cell] 350.606.8404 [toll free] 866.761.7767 [fax] 503.684.2900 [e] jcarlisle@prosourcemm.com

YOU ARE HERE

TROIKA MARKETING www.mynfcredit.com [phone] 404.949.9598 [fax] 404.949.9450 WEBB INSURANCE AGENCY www.farmersagent.com/pwebb Contact: Pete Webb [phone] 703.753.5526

Can’t find your way through the financial labyrinth? First Mount Vernon will lead you through!

Hard Money Loans from $100,000 to $1,500,000 •Minimum Credit 400 •No seasoning

•No up front fees •48 hour closing

All loans for business or investment purposes only For an immediate online approval and commitment letter, go to WWW.FMV1.COM and fill out our loan qualifier 6019 Tower Cour t, Alexandria, VA 22304 Phone: 703-823- 6800 or 866-902-FMV1 (3681) Fa x: 703-997-2499 Paul Fogle or Ar t B ennet t First Mount Vernon is a privately-owned, equity-based lender which specializes in lending to borrowers who require expedited closings or cannot secure funding from traditional financing sources. Loans typically funded within two business days upon receipt of completed package

"TheNicheReport currently serves real estate finance professionals licensed in Virginia, Maryland, and Washington DC."