mortgage :: value

by: John R. Blakefield

Unfortunately bad credit can haunt you for the rest of your life. If there are bankruptcies or foreclosures on your credit report, you know how hard it is to get any line of credit. Lenders and creditors simply look to as a too big of risk to loan money to.

But we know that even though mistakes were made in the past, your financial situation and behavior can be reformed. Some lenders understand this as well, and the sub prime lending market has grown and become very competitive. The lending market can be broken up into two main segments, the prime, those with average to good credit who are not huge financial risks. Then there is the sub prime market, with those who have poor to very bad or no credit.

Lenders can give ratings to a certain sub prime client giving them a rating from A-D: A being the best rating and D being the worst. When you fall into the C or D category, you are considered very high risk and more likely to default on a loan than that of a person with an A or B rating.

Sub prime lenders generally give loans to even the highest of risk cases. They look at the same information that a prime lender would look at to evaluate the type mortgage you can have. They look at credit history, income, expenses and long term debt. If you do have foreclosures, bankruptcies, delinquent payments, and outstanding debt, they will take all of this into consideration. If you can show steady employment, a good income, an effort to pay back the money you owe and are doing it in a timely fashion, you are more likely to get a better rate than that of someone who is not taking any steps to fix their credit.

Sub prime lenders can loan the money you need by protecting themselves. They do this through higher rates and fees that prime lenders would not charge. Be careful, because some sub prime lenders will take advantage of your poor credit history and charge a ridiculous amount in fees and charge you a too high of interest rate even for a poor credit case.

Fortunately for the consumer, this sub prime market is extremely competitive and you do not have to accept the first lender who offers to loan you money. You actually have the luxury to shop around and compare rates, even for the worst of credit cases! So check online for tools that can aid you in finding and comparing sub prime lenders. The internet is a good place to start your research. You can also ask for referrals from family, friends and even local bank.

Don't allow credit mistakes in the past to dictate how you live your life today. Buying a home is still an option regardless of your credit history. And, as long as the sub prime market continues to be competitive, you, the consumer is at a huge advantage.

It is always a good idea to take steps to repair your credit, and buying a home can aid in this. If you make you mortgage payments on time every month, then you can watch your credit grow! Sub prime lenders specialize in this area, so allow them you help you make your credit score even better! Be sure the sub prime lender you use is trustworthy and qualified. There are sharks in the industry, so be sure to ask for referrals and look at licenses.

So go buy your home and repair your credit at the same time! Take advantage of the opportunities you have at your fingertips.

by: Shane Brooks

Mortgage Broker strategies are important as you very well know, but have you considered all the marketing you can do on a day to day basis. This is not the type of marketing where you put an ad in the paper or hire a call center. These are the little things you can do to make sure that your mortgage business continues to grow. These are the things that cost very little but are huge in terms of keeping business as well as high customer satisfaction.

First Tip
Whether you are sending out a letter, a card, or even an ad for the paper, make sure you use effective writing techniques. First among these is to make sure that you have a headline on everything you do. Whether people realize it or not, the headline grabs the reader. Once they see a headline, they are way more likely to read the rest of the piece of text. Always make sure that the headline has a benefit in it so that your client has a reason to keep reading.

Second Tip
Keep writing! For many people, the thank you note has raised their income by large percentages. Every person, customer or friend, loves to show appreciation. They like to know that you are happy for them and that you realize what they have done for you. When you thank them you are connecting with them and helping to cement a future relationship.

If you make it a point to write thank you notes every day, you can really help your return business. Thank people who didn't even work with you on a mortgage. You can thank those who did something for you: your mechanic, mailman, or even the teacher your kid has at school. Whatever you do, just make sure you send those thank you notes. It will definitely pay off for you.

Third Tip
Be a braggart. When you do something for a client, make sure you tell them. You want to make yourself valuable to the client for a couple of reasons: so that he or she understands why you are getting paid, and so that he or she would refer you to someone else in the future. This can be very valuable down the road. Even though bragging seems harsh normally, so be humble and just point out the things you accomplished because in business you want to be valued.

Fourth Tip
This is a strange one for many, but make sure that if you have a phone person, that he or she always suggests that you are with a client. If he or she says "I'm sorry but he is working with a customer right now, give me one second to see if he can take a call right now".

This allows you to look busy and confirms that you are worth the effort to work with. It also gives you an out if you don't want to talk with a certain person for one reason or another.

Last Tip
Though there is an unlimited amount of advice that could be given about mortgage marketing techniques, there are some that are certainly more important. One of those is this: never stop marketing. Even if you are the best mortgage broker that ever walked the planet, if you cannot market then it won't matter. Nobody will know you are great, you will have no business to close, and you will not make any money.

Above everything else, mortgage is about getting clients in your door. The rest is just paperwork and learning the ropes of the loan biz. With that in mind, there is one other thing you should consider:

Form realtor partnerships whenever you can. If you can find a program that will help you hook up with realtors the right way, you should jump on it. By giving yourself that extra advantage, you are enabling your business to grow without making yourself do more work.

With a partnership with the right realtor, you may find yourself with a large number of renters turned buyers on your desk each day. What a great way to run the mortgage business huh?

So no matter what you do, implement a new marketing tip each day. Try to send out thank you notes, thank people in person, look for times to brag about your self, and even try to keep marketing. Above all, find ways to form those partnerships. Getting hooked up with a realtor and with changing renters into buyers, you will grow your business faster than you ever imagined.

by: Joel Teo

Investment property refers to any real estate asset, which is Non-Owner Occupied. The key intent of such an investment is the rental income that is accrued from it, along with the appreciation in its value over a period of time. Those who possess the necessary funds often look for profitable investment properties. In order to cut down the initial expense, by lowering the down payment, people usually acquire an investment property mortgage for financing their purchase.

An investment property mortgage refers to a loan or lien on an investment property that has to be paid over a specified period of time. In essence, it’s a personal guarantee that you would repay the money you have borrowed to purchase your investment property. There are several types of investment property mortgages, each with its unique features, benefits and pitfalls.

Fixed-rate mortgage – This is the most prevalent mortgage type because the monthly payments are stable. The interest rate throughout the life of the mortgage is the same as that at the outset. The major benefits of a fixed-rate mortgage are inflation protection and a relatively low risk.

Adjustable-rate mortgage (ARM) – This type of investment property mortgage has variable interest rates and monthly payments throughout the life of the mortgage. This scheme is popular because it often starts with lower monthly payments and a lower interest rate. The interest rate, however, can change during the life of the mortgage, which means that your monthly payment would change subsequently. It is imperative that you are aware of the nuances of an adjustable-rate mortgage prior to applying for one.

Balloon/reset mortgage – This has monthly mortgage payments based on a 30-year amortization schedule (mortgage repayment schedule). In general, the borrower has an option to pay off the arrears or reset the mortgage at the end of a 5-year or 7-year term. Therefore, this investment property mortgage type offers the advantage of a low payment but the mortgage must be completely paid at the end of the specified term.

Investment property mortgage can be availed on several property types, such as an apartment, a condo, any commercial property, or a plot. It can be acquired from leading banks and financial institutions, which typically verify your credentials (income source, savings and credit score) prior to offering mortgage. Selecting an investment property mortgage is as crucial as selecting a property. Therefore, decide on what amount of interest and monthly payments you are capable to mete out, and then select a mortgage accordingly.

Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.)

by: Jim Olivero



If you where told by a lender you where going to have to pay a high interest rate for your loan, say 12 interest for 30 years on his home with a payment of $750.00 per month. John's friend Bill is renting a house, but he is paying $750.00 per month in rent with no interest (I am using these numbers for illustration purposes). Now, it's a funny thing, but both men live in their homes for the full 30 years and guess how much money both paid out in that 30 years?

Do you think John would have paid more money in the 30 years then Bill did because John was paying a mortgage? The answer is no! Thirty years equal 360 months of payments and if you multiply 360 X $750.00 you get $270,000.00. That means both men paid the same amount of money over the 30 years with one BIG difference! John now OWNS his home but Bill is still paying rent and does not own the home. In fact Bill's rent more then likely paid the mortgage off for the owner of the house he is renting from.

As you can see, even though John was paying a mortgage payment of $750.00 per month, the total amount of dollars paid in the same time period of 30 years is the same. Now Bill has nothing to show for all the rent payments he made except for 360 rent receipts. So you can see how the interest rate does not change the total amount paid over the time period because $750.00 per month is $750.00 per month. No matter what you call it a mortgage payment or rent payment, the bottom line is the same.

So whatever type of mortgage you can qualify for has to suit the payment you can afford and are comfortable with. Of course; the amount of money borrowed, the interest rate, and the term or years the money is borrowed is what will determine your payment.

So the bottom line is: if you get a mortgage that is comfortable for you payment wise... let's say equal to what you were paying for rent, the major thing you changed is the fact that you own the home now and you are not just paying rent or paying off someone else's mortgage.

You know the bottom line is we all have to live somewhere and we have to pay for that living space, so why not own what we have to pay for anyway. And don't get hung up on the interest rate to where it stops you from buying your home... just make the payment amount work for you.

Now let me show you what you can do with a mortgage payment that you can't do with a rent payment.

Stay with me now because it is going to get really good! As you have seen from our example above, the total amount of money paid over the 30 years or 360 payments for the mortgage and rent came out to be the same dollar amount in the end. However, did you know you could change the bottom line or the dollar amount paid when you are making a mortgage payment as well as the amount of time it will take to pay the money back?

A mortgage is calculated by the amount of money borrowed, the interest rate, and the amount of time it will take to pay it back. This calculation is called an amortization schedule. I am going to show you an amortization schedule for a mortgage now and show you how to change the total amount of money you will pay and the amount of time it will take to pay it back! Lets say you get a mortgage for $75,000@12% for 30yrs This is what the amortization schedule will look like:

Payment ---- Interest ---- Principle ---- Balance

$771.46 ----$750.00 -----$21.46 ------$74,978.54

$771.46 ----$749.79----- $21.67 ------$74,956.87

$771.46 ----$749.57 -----$21.89 ------$74,934.98

$771.46 ----$749.35----- $22.11 ------$74,912.87

$771.46 ----$749.13 -----$22.33 ------$74,890.54

$771.46 ----$748.91 -----$22.55 ------$74,867.99

$748.68 ----$748.68 -----$22.78 ------$74,845.21

$771.46 ----$748.45 -----$23.01 ------$74,822.20

$771.46 ----$748.22 -----$23.24 ------$74,798.96

$771.46 ----$747.99 -----$23.47 ------$74,775.49

$771.46 ----$747.75 -----$23.71 ------$74,751.78

Totals ----$8,237.84 ----$248.22

As you can see, when you make a payment on a mortgage a large part of the money goes to interest with a small part of the money going to principle. You will notice the principle balance increases with each payment and the interest balance decreases with each payment, but this happens very slow.

Now, let me show you what control you have over a mortgage:

As you can see; in the 11 months of payments we made on this mortgage, we paid $8,237.84 in interest and $248.22 in principle! This is what YOU can do. When you looked at this schedule after your closing, you noticed the figures. If you were to add the total of the principle for the 11 months of payments ($248.22) to your first mortgage payment and told the lender you wanted the extra money to go towards the principle this is what would happen for you: you would reduce your mortgage by 11 months and save $8,237.84 in interest payments! This happens whenever you make extra payments on a mortgage, no matter how much or little you pay. You always have to specify that this extra payment is designated to go towards the principle and this works best if you start right away in the very beginning of the mortgage!

This means that in your first month you have already changed the total amount of money and time it will take to pay back your loan. The more you can do this, the less money you pay in interest and less time it takes to pay the money back.

The mortgage has to have no pre-payment penalties. That happens to be the majority of mortgages that we see today. However, ask and make sure so that you have no surprises later. This is just one simple thing you can do with a mortgage which gives you control of the bottom line as far as money paid back and the time it takes to pay it back.

Visit me at http://www.easymoney-123.com

by: Aubrey Clark

The mortgage crisis has had a negative impact on everyone, not just homeowners. Elected officials are working hard to pass legislation that is designed to prevent future banking debacles. Unfortunately, history has proven that when legislators over-regulate banks that it tightens the reins on lending. This is done by raising the bar on what it takes to qualify for a mortgage or installment loan. Predictably, it’s the middle class that will feel the pinch more than anyone. Specifically, it’s the middle-class, self employed small business owner that be injured the worst.

Most people are aware that you can reduce your taxes by deducting expenses and qualified charitable contributions. What most people don’t realize is that small business owners live and die by those deductions. Tax rates have risen on the self employed more than any other segment in our society. To counter these tax hikes, legislators created more “loop-holes” write off’s and deductions for small business owners to use.

For this reason, small business owners rely on creative CPA’s to maximize their deductions in order to show less income and pay less taxes.There are nearly 23 million small businesses in America and over 35 million sole-proprietors and almost every one of them employ savvy CPA’s to keep them in the black. The draw-back is that by doing this most self employed borrowers are unable to prove enough income on paper when applying for a loan or a mortgage.

Traditional mortgage lending practices of yester-year required that borrower’s prove sufficient income when taking out a loan. Over the years, taxes have risen for small business owners at staggering rates, far above what they have for W2 employees. At the same time the self employed borrower's “provable” income has dwindled proportionately. Under traditional banking rules most of the self-employed people wouldn’t be able to qualify for business loans or mortgages. This would ultimately force small business owners out of business and cripple our would economy.

This new business paradigm literally forced the banking industry to create lending products that catered to small business owners who could not prove all of their income. These products were called “stated” income loans and did not require borrowers who had good credit to prove their income. These products originally required good credit and sufficient assets in order to qualify for them. Responsible guidelines and common sense underwriting kept default rates on these products in line with conventional mortgages. Unfortunately, as competition for this segment of borrowers stiffened between lenders the stringency to qualify for these mortgages softened, thus the mortgage crisis.

It is exactly this type of loan that our law-makers are trying to do away with through legislation. The new mortgage bill being bounced around has specific remedies for irresponsible lending. Meaning, if a bank loans you money and it can be proven in court (attorneys like this law by the way) that the bank was irresponsible in doing so they could be penalized. The definition of “irresponsible” is did the borrower have the capacity to repay the loan, meaning did they prove enough income. This bill will kill stated income loans, period.

So where does this leave the responsible self employed borrowers who needed these loans to live and operate their businesses? This leaves them with higher taxes. Should this bill pass self employed borrowers will be forced to claim more income each year on their tax returns in order to qualify for car loans, mortgages and even business loans. This will negate any of the loop-holes and deductions they were promised in lieu of higher taxes.

This means the government will rake in billions in extra revenue as a result of this bill. For example, let’s assume that a small business owner claimed $40,000 in income last year after deductions and business expenses. If she was in a 40% tax bracket she would pay roughly $16,000 in taxes. Under the new banking guidelines that same business owner may have to claim $80,000 In order to qualify for mortgages, car loans and business loans. Assuming she’s in the same tax bracket, she would now have to pay $32,000 in taxes.

Multiply $32,000 by 23 million business owners and that’s one huge pay-day for Uncle Sam. You can bet that the Senators pushing this bill through congress are well aware of this left handed tax raise. You will never hear them mention it either, I wonder why?. You will hear about the naughty lenders that put good wholesome red blooded Americans in the street through predatory lending practices. You will never hear about the 20 million business owners who paid their mortgages on time and actually need these loans to stay in business.

by: Jay Conners

When a loan officer or mortgage broker purchases a mortgage lead from a mortgage lead company, their very next step is to call the customer.

This is not as easy as it sounds, because we all know you never have a second chance to make a first impression. So you want to be prepared before you make the call.

By being prepared I mean have a few mortgage products you want to go over with the customer that you believe will meet their needs based off of what information you were given on the mortgage lead.

Also, mortgage lead companies will sell their mortgage leads up to as many as five times. So, you may end up running into some challenges if the customer is already working with another loan officer.

Or, perhaps they have even lost their nerve.

Here are a few scenarios you may run into and how you can lessen the impact should you be confronted with such a situation.

Purchasing or refinancing a home is a very big financial deal, so it is understandable if your customer gets cold feet.

Say something to this effect in the nicest voice you have . . .

Oh, I’m very sorry to hear that, after looking at the on-line form you filled out, I was able to fit you into one of our loan programs that I am sure you would have some interest in.

If a prospect says to you that they are working with another loan officer, they either really are, or again, they have lost their nerve.

Say something to this effect . . .

I’m really sorry to hear that. We offer some really nice mortgage products and I only wanted to take a few minutes of your time to go over some of our mortgage programs.

Although these approaches will get the customer talking the majority of the time, there are the times when it does not work.

Here are a few other things you can do . . .

Most mortgage lead providers supply you with an e-mail address, so e-mail them with some attractive mortgage products and tell them briefly about the benefits of working with you and your company.

Also, you can mail them out some flyers with some mortgage products that you believe would meet their mortgage needs along with some of your business cards.

Whatever happens on your sales call, do not give up after one objection. If you have not been having success with your leads, than you need to change your approach.

Also, you may end up having to leave a voice mail which is not at all uncommon these days.

Should you have to leave a message, be sure to be direct and to the point. Let the customer know who you are and why you are calling, and give them a reason to call you back.

Tell them you have a product that you believe they will be interested in and it is very important that they call them back.

To sum it all up, no single mortgage lead is a slam dunk, no matter how good it looks on paper. Nine times out of ten you will be faced with some sort of challenge. So do your homework and be prepared to face your challenge’s head on.

by: Alan Lim

Getting a home mortgage loan but confused which particular type to get? Read about fixed and adjustable rate mortgages through this article.

If you are getting yourself a home mortgage loan, you will most likely encounter a phase where you are torn between choosing a fixed rate or an adjustable type of mortgage. No one can really say that one loan is better than the other. The choice you make is dependent on a number of factors which may include your interest rate outlook, your budget, the number of years you intend to stay in your home, and how much risk you can tolerate. Let us look through these two types of mortgage loans so you can determine which among the two is best for you.

A fixed rate home mortgage loan (FRM), as its name itself suggest, involves loans whose interest rates remain the same all throughout the lifetime of the mortgage. They generally cost more to compensate for the lesser risk and the greater comfort involved. If the current interest rates are low, an FRM will prove to be a good choice as you will be assured of locking in at a low interest all throughout your loan term.

On the other hand, an adjustable rate home mortgage loan (ARM) is that whose rate fluctuates as the interest rates in the market rise and fall. ARMs are given initially cheaper than FRMs since they involve greater risk. They are a great option if the current interest rates are high and you foresee them to lower in the coming years. If you know that you will stay in your home for a relatively short period, you can get a good deal with an ARM.

The downside of getting an adjustable home mortgage loan is that you can run a real risk of having to pay more if interest rates rise sharply. This means that you will need to pay more in monthly payments. The rate of your ARM loan varies depending on your loan agreement terms. Some rates change as frequently as three months, while others change once a year or every three years. ARMs generally come with a rate cap, which limits the amount by which the lender can raise their rate. The cap is usually set to 2% meaning that the rate increase should only be a maximum of two percent for a given adjustment period.

Because of its stability and lesser risk, FRMs are understandably more popular. Even if they come more expensive, getting a fixed rate home mortgage loan will enable you to easily manage your monthly budget so you can have better control of your finances. It is also less risky since you always have the option to refinance in case interest rates drop uncontrollably. Conversely, although ARMs can be risky and confusing, there are good deals provided by many lenders which are actually better than FRMs.

The type of home mortgage loan you should choose depends on various factors. It all boils down to how open you are with taking risks. To help you figure out which one is best, you can try to imagine your worst and best case scenarios. You can calculate and compare your options and determine which one can give you the best deal possible.

by: Leonard Rosen



With the recent upsurge in residential foreclosures nationally, homeowners are finding themselves in a very unusual predicament. Over the last 7, borrowers with less than perfect credit fell into a category called :sub prime borrowers". This class of borrower was able to obtain a mortgage with little or no documentation.

The lenders were all too anxious to lend money to this class of borrower. Consequently, many borrowers took advantage of possibly a once in a life time opportunity to own a piece of the American dream.

Then reality set in. Many borrowers purchased a mortgage with a negative amortization option along with interest only options. Rather than pay the fully amortized 30 year rate, they only paid the interest and in many cases paid the negative amortization rate.

The problem with this scenario is that mother time has caught up and the once easy affordable payment has re-set and the borrower no longer could afford to keep the property and make timely payments when the adjustable rate changed.

The question is, who is at fault? Many politicians and consumer agencies believe the mortgage companies are at fault for funding to this class of borrower. The mortgage companies qualified the borrowers on the teaser rate of 1%, not on the fully amortized 30 year rate. This turned out to be a perfect recipe for disaster.

We now have thousands of borrowers across the country facing foreclosure. So what’s the solution?

A borrower may be able to obtain a hard money loan based on the equity and value of the property. This is called a hard money mortgage or private mortgage. The interest rate is considerably higher than a sub prime loan but the borrower is able to keep their property and develop a game plan rather than lose their home to foreclosure.

Many call hard money lenders "satin" for taking advantage of a homeowner in desperation. I suggest that the hard money lenders who offer this type of hard money mortgage are "angels".

Without a safety net, many borrowers would surely lose their house. Hard money mortgages, when properly used, can be a very useful tool and a life saver.

I prefer to call hard money lenders "Angels".
http://www.pitbullmortgageschool.com/article_leadexpert.htm

by: Rob Lawrence



I get a lot of emails from loan officers who are currently working for a mortgage company, but are looking to advance their career and go out on their own. When they see the kind of money that can be made in this business, it’s no wonder they aren’t satisfied with their 50% commission spread (or even less!).

When I first started in the industry, my commission spread was 20% of the yield spread premium or YSP. And, if that wasn’t bad enough, we worked on teams of three people—two loan officers and a processor. This meant that any commissions I and my team earned, had to be split three-ways amongst us all. I’m not kidding! My commission after all was said and done was a measly 6.5-7.0% of the YSP. So, on a $3,000 loan, I would make about $200 at most. You don’t want to see what it looked like after they took taxes-out. Absolutely pitiful. Being ignorant (of the mortgage industry), didn’t make me stupid.

That was many years ago. You can see why I was eager to get out of there ASAP. Of course, not having any mortgage experience at all, at the time, I didn’t know any better. I had no idea what the “reasonable” commission structure was. I figured this was how the industry worked. How shocked I was when my eyes were opened. And to think on that original $3,000 loan, I could have at least had $1,500 or more (depending on the mortgage company). But, I have no regrets because it gave me my start and is the main reason I am successful today.

I’m sure many of you encountered the same dilemma as I did. You have to start somewhere. You have to learn the business inside and out. You have to put a stake in the ground. So, no matter where you work currently, or how bad you think the pay scale is, think of me and my first loan and my sad paycheck. ;-)

My point is, learn all you can learn. Observe everything. Take lots of notes and ask questions. Be curious. Make contacts with as many wholesale reps as you can. And network like crazy. Yes, there is a steep learning curve to this business. The first 6 months are grueling, but if you keep the faith and learn as you go, your rewards won’t be too far away.

And even if you can’t stand the mortgage firm you currently are with, the good news is that there is always a way out. Mortgage companies are always hiring and bigger commission checks may be only a phone call and an interview away. :-)

by: Brad Stroh

When you first apply for a mortgage, you may feel you’ve stepped into a different culture with a language all its own. More than likely, your mortgage professional is throwing many new terms and expressions your way. It’s the responsibility of that same mortgage professional to make sure you understand everything that’s being explained to you, so you should never hesitate to ask them to stop and clarify. However, if you can approach your application meeting armed with some familiarity with mortgage terms, everyone can be more comfortable from the very beginning. Familiarize yourself with the following and you’ll be a step ahead of the average first-time borrower.

HUD: HUD stands for Housing and Urban Development, and refers to the US Department of Housing and Urban Development Settlement Statement documents pertaining to the house being financed. When your loan officer talks about having you sign the HUD, they are referring to that settlement statement. The “HUD” will detail all payoff information, including any fees associated with your mortgage loan.

LTV and CLTV: LTV and CLTV stand for Loan to Value and Cumulative Loan to Value (or Combined Loan to Value). LTV refers to the percentage of the home’s value that is being financed. Thus an $80,000 loan for a $100,000 home constitutes 80% LTV. Higher LTV loans may carry higher interest rates and mortgage insurance than lower LTV loans. CLTV refers to the combined amount being financed between two loans for the same property. If the $100,000 home mentioned above has a first mortgage of $80,000 and a second mortgage of $20,000, the LTVs of those loans would be 80% and 20% respectively for a CLTV of 100%.

Designation 80/20: Designation 80/20 in the same line of thought, refers to the technique of obtaining 100% financing for a borrower without using a program that offers 100% in one loan. 80/20 refers to the percentage of the home that will be financed with each loan, 80% with the first mortgage and 20% with the second mortgage. 80/15s, 80/10s, and so on are also available and are options you should consider under the advisement of your loan officer or financial planner.

Stips: Stips are stipulations, and they are the requirements handed down by your lender and its underwriting department in order for your mortgage to be cleared to close. Common stips are copies of pay stubs, bank statements, and verifications of rent and employment.

VOR and VOE: VOR and VOE stand for Verification of Rent and Verification of Employment. Both may be required by your lender in order for your loan to be approved. Not all lenders and not all loans require either one of these.

HELOC: HELOC, while not something you will probably hear during your first mortgage experience, is one of the most common mortgage acronyms. It refers to a Home Equity Line of Credit, which is one option borrowers have for taking equity out of their homes. With a HELOC, borrowers can draw up to the full amount of the loan as many times as they choose, paying down all or part of the amount and drawing it back out again. In this way, a HELOC is a loan similar to a credit card, except that the interest paid on a HELOC is tax-deductible.

This is not a comprehensive list of the new terminology you may encounter when securing a mortgage, but familiarity with these terms will help you understand what your loan officer or financial planner is talking about when it comes time to finance a home.

by: Patrick Bedall



Niagara Falls or babbling brook. How is your flow?

How do you get clients in the door? Do you have the budget and time to undertake a massive marketing campaign? Could experience with multiple property types and applications increase your value to the commercial market? Where are your deals located? How is the market in your area? Is your referral network bringing you enough business? These are all questions you need to consider when you think about how to increase your deal flow.

Of course every loan you work will not close; that is not the reality of the commercial mortgage industry. You need to be in front of the right people at the right time with the right solution to even be considered. Here are the 5 main factors that affect your deal flow which ultimately affects your cash flow. The first step is awareness; knowing what the issues are will allow you to determine a solution. Rate yourself in each of these areas:

-Referrals: Referrals are king. This is by far the number one way for a commercial broker to get business. This certainly works well for those that have been in the industry for years and have a large network, but what about those new to the industry? Can you survive waiting on someone to refer you when no one knows you exist?

-Marketing: This is how we let our potential clients know who we are and that we can provide them with a solution for their financing needs. The problem is that there are hundreds of other solutions out there all competing for the same client. Without the budget and knowledge to do it right, it is very difficult to get a good return on your marketing investment.

-Expertise: What you know and how long you have been in the business has a dramatic affect on deal flow. Of course, those that have been in the commercial business for 10 years have a greater client base and referral network. You can't buy experience, no matter how much you spend, but what you can get is training. Through continuing training, especially at the beginning of your commercial career, you can build the knowledge it takes to get the deals done. Share that knowledge with your potential clients and you have set yourself up as the expert in the field, despite your lack of experience.

-Geography: It is no surprise that by serving a larger geographic area, you will be exposed to more deals. However, without the support of a large national company this is very difficult and potentially cost prohibitive. The downside of most national companies it that by bringing the deals to you they will expect something in return. Often a big chunk of your commission. It's a catch 22, you get more clients, but now you need even more than before just to break even.

-The Market: Some markets are hot and some are cold that is the reality of the industry. If you are only serving a small geographic area and that area goes cold, what do you do? The key is to ensure that your client base is as diverse as possible, not only by location, but by property type and industry.

What to do? Build your business. Start by looking at the percentages that each of the above are contributing to your total deal flow and set targets for the coming year as to what you want the percentages to look like. For example, if referrals now make up 10 percent of your total business, set your targets for 20% next year and establish the game plan to do it.

For marketing, are you tracking a cost per closed loan? Do you know what you're spending for the revenue you're generating? Begin to cull out the sources that are not generating the returns you require.

When looking at geography, start to examine how you can expand the markets you serve. This will both increase your deal flow and minimize a downward movement in any one particular market. In effect, it is diversifying your portfolio. Look for a partner that can introduce you to new markets and provide you with lead sources into those markets.

In summary, deal flow is driven by your presence. When the market knows you're there and do quality work, your flow will build exponentially. The next step is to formulate your plan to increase that presence and identify the partners that can help you do it.

Copyright (c) 2007 VEC Financial Group

by: Michael Sterios



Prior to 2004 there was little regulation for mortgage brokers conducting business in the UK. Anybody could call themselves a mortgage broker, regardless of whether or not they held the necessary qualifications, and they could source clients and conduct their businesses in any way they chose to.

However the Financial Services Authority introduced a strict regime of regulation on 31 October 2004. Mortgage brokers were forced to obtain industry approved qualifications and conduct their business in accordance with the FSA’s rules and regulations.

One rule that was introduced on that date eliminated the ability of mortgage brokers to source clients through cold calling. Cold calling involves phoning people at random without any prior consent given by the individuals. It is a technique that was used by many mortgage brokers to find new customers prior to the new rules coming into effect.

This meant that mortgage brokers who relied on cold calling to expand their customer base were forced to invent new ways of finding clients. Because of this, lead generation companies began to emerge that generate leads for mortgage brokers who do not have the ability to do it themselves.

The lead generation companies are mostly internet based and gather leads through websites. This type of business activity is mostly unregulated by the FSA as it is not the mortgage brokers themselves who are gathering the leads. Some rules do exist for lead generators including that they are required to advise visitors to their websites that they will be contacted by an independent mortgage broker. The leads must then be sold to an independent broker rather than a tied advisor.

Despite this, lead generation is not considered to be cold calling and would therefore not endure the wrath of the industry regulator with regards to the ban on this activity. Generating leads with the purpose of calling back the clients would be considered a “warm lead” rather than cold calling.

However, mortgage brokers and the general public should be aware that a minority of lead generation companies have used unscrupulous means to obtain data for potential mortgage customers and have sold it to mortgage brokers disguised as qualified leads. If you receive a phone call from a mortgage broker and you did not submit your details online for this purpose you should contact the authorities.

Mortgage brokers who buy such leads will then call the potential clients only to find that the leads are not genuine. This means that the mortgage broker has effectively made a cold call to that member of the public because they have not given prior approval for the mortgage broker to contact them. This is a potentially dangerous situation for a mortgage broker to find themselves in so all efforts should be made to stamp out this practise.

Mortgage brokers should be careful to ensure that any mortgage leads they purchase are genuine. There are several large lead resellers operating in the UK who have excellent methods for filtering out invalid leads. High quality lead resellers will also offer mortgage brokers refunds on all invalid leads.

by: John D. Waller



Recently, I met with a commercial lender who mentioned a problem with one of his projects. Construction had started, but the developer hadn’t closed the construction loan. Thus the lender’s mortgage hadn’t been recorded, but likely would be soon. He wondered how the delay might affect the priority of his bank’s mortgage lien. Attorneys representing secured lenders in commercial foreclosure cases, or contractors in mechanic’s lien actions, should be conversant with Indiana law in this area.

1910: A Draw. The Indiana Supreme Court’s 1910 decision in Ward v. Yarnelle, 91 N.E.7 (Ind. 1910) is the landmark opinion on this subject. At the time, Indiana’s mechanic’s lien statute “failed to address the lien priority between a [construction mortgage] and the mechanic’s liens of those who [completed] the construction.” In Re Venture, 139 B.R. 890, 895 (N.D. Ind. 1990) (excellent summary of the law). The Court therefore announced the equitable “doctrine of parity” in which a “real estate mortgage executed while a building was in the process of construction was entitled to equal priority with the claims of [contractors that] worked after [recordation] of the mortgage and with full knowledge of its purpose and effect.” Beneficial Finance v. Wegmiller Bender, 402 N.E.2d 41, 47 (Ind. Ct. App. 1980) (no parity because contractor completed its work before lender recorded its mortgage); Brenneman Mechanical v. First Nat. Bank, 495 N.E.2d 233, 242 (Ind. Ct. App. 1986) (parity because contractors had knowledge of loan, which helped pay them).

Whether the contractor had knowledge of the construction mortgage was critical to the Ward analysis. In such instances, the Court felt that lenders and contractors were in a kind of “common enterprise.” Ward, 91 N.E. at 15. Under Ward, if funds derived from the mortgage were used in the construction project and if the contractors had knowledge of the loan when they performed their work, then the mortgage and the mechanic’s lien had equal priority. Conversely, if the loan was not for purposes of construction or if the contractors worked without knowledge of the purpose of the loan, then the mortgage had priority over mechanic’s liens for work performed after recordation of the mortgage. Venture, 139 B.R. at 896

1999: Statutory Amendments. I.C. §32-28-3-5 is the pivotal statute. Subsection (b) provides that a mechanic’s lien is “created” when the lien notice is recorded. But the recorded lien relates back to the date the work began, which could pre-date a mortgage. In 1999, the General Assembly added the language now in subsection (d) that says construction mortgages have priority over mechanic’s liens if the mortgage is recorded before the notice of mechanic’s lien is recorded (not created). My reading is that subsection (d) disposes of Ward’s doctrine of parity, at least as to commercial and industrial projects. (Note that section 5(d)(1)-(3) has carve-outs for certain residential and utility projects.) Accordingly, courts should focus on relative filing dates, and not on work dates or contractor knowledge.

Post-1999: One Case. The meaning of section 5(d) has not been tested on appeal, however, and I.C. §32-28-3-2(b)(2) priority, which favors contractors, may to some extent conflict with section 5(d) priority, which favors lenders. For more on this subtlety, read section 2(b), as well as Provident Bank v. Tri-County Southside, 804 N.E.2d 161, reh’g granted, 806 N.E.2d 802 (Ind. Ct. App. 2004), which gives some insight into the potential inconsistency. (Provident Bank also has an amusing result. The opinion dealt with a contractor’s improvement [installation of a driveway] at a residence long after a purchase money mortgage had been recorded. Believe it or not, the majority held that the contractor’s statutory remedy was to remove and sell the driveway.) Anyway, in the dissenting opinion, Judge Sharpnack toyed with Ward and the new I.C. §32-28-3-5. “In 1999, our legislature amended I.C. §32-28-3-5 and specifically addressed the situation before our supreme court in Ward and again discussed by the bankruptcy court in Venture.” Id. at 168. Judge Sharpnack concluded in dicta that I.C. §32-28-3-5(d) applies “where funds from the loan secured by the mortgage are for the project which gave rise to the mechanic’s lien. In such an instance, the mortgage lien has priority over the mechanic’s liens recorded after the mortgage.” Id. at 169

2007: Lender Wins. At least as to a standard commercial project, therefore, the Ward doctrine of parity seems to be a thing of the past. The lender, in the scenario presented to me, shouldn’t be forced to share equally with any contractors that started construction before the developer closed the deal. Instead, the lender should hold a superior lien, assuming the lender records its mortgage before a contractor records a notice of mechanic’s lien. In other words, if the project goes south, the lender should get paid first. Please e-mail me if you know of any recent trial court or unpublished appellate court opinions touching on the 1999 amendments or the doctrine of parity. Because it’s been almost 100 years since Ward, perhaps we’re due for another landmark opinion from our Supreme Court. As the law evolves, I’ll provide updates on my blog.

by: Rob Lawrence



In my last article, I covered the two main ways to start your own mortgage company. One way, was to go it completely alone…apply for your own broker’s license, set-up all the relationships with the various lenders, handle all the back office stuff like accounting, compliance, etc. All of this, giving you your independence, but being extremely time consuming.

An easier and more productive way for the loan officer wanting to go on their own, is to join an existing company and operate their own individual “net branch”. It’s where you are working under a head-office, but operating as an individual with all the perks and privileges that go along with independence, but without a lot of the chores and headaches associated with a start-up company. A net branch is simply a way of doing business.

Net branching is a term that is very loosely thrown around the industry, and not every partnership opportunity a company offers is a true “net branch”. Please be careful.

Mortgage companies net branch because it is a way for them to expand their sales force with very little cost or financial risk. Because you are working solely on commission, they don’t have to pay a salary. And, if you don’t produce, you won’t last. Only the strongest will survive. It’s as simple as that!

Companies also already have the structure, compliance, auditing and lender relationships set in place. To add a new salesperson or branch, takes little time and can mean a new on-going revenue source for the firm.

Since the start of the low interest rate boom, companies have recognized that net branching is a smart and viable solution to expansion, especially when adding new states to their lending roster.

Here are the top reasons why loan officers decide to branch-out on their own:

1. They want more commission. They are sick of doing all the work, and getting a measly pay split. They want financial independence.

2. They want more control over their career. They are sick of being micro-managed and controlled by the boss.

3. They want their time back. They have other life obligations and want to spend more time with their family doing the things they enjoy. They are sick of the long hours and late nights.

4. They are emotionally drained and tired of all the office politics. They want to “choose” the people they deal and work with.

5. They are sick of being a robot. They want to fully use all their skills and knowledge and remain challenged in their career. In essence, they want creative and personal freedom.

Here are the advantages of joining a net branch:

1. Better pricing on rates, due to the volume of loans the company as a whole originates. Remember, although you are a single net branch, you have the buying power of thousands of other net branches that are within the company.

2. Greater depth of loan programs. With access to more lenders, you can offer more programs to the consumer and cover virtually any loan scenario.

3. Higher commission payment, usually in the 70% to 80% range, sometimes 90% to almost 100%.

4. Ability to originate loans in multiple states, even all 50! This means more loans for you! Don’t throw those out-of-state leads away!

5. No accounting or compliance headaches to deal with. The head office has these structures already in place. This leaves you more time for selling.

6. More attention from the wholesale account executive. Account reps know that if they are dealing with a large firm, they will get more business. They don’t want to waste their time dealing with the small fries.

7. Ready marketing materials. You do not have to start from scratch and create your own marketing collateral and brochures.

8. Licensing and start-up requirements from the state are significantly less, because there is an operating mortgage firm already underway.

9. You have the resources of the head office, as well as other local net branches. This forms a significant support network, which should not be underestimated.

10. Freedom to make your own schedule and call your own shots. You are in the driver’s seat and if you want to earn more income, simply work harder. No one is holding you back from your career.

11. You can multiply your efforts by hiring loan officers underneath you, and get a cut of THEIR commission as well.

Disadvantages of joining a net branch are:

1. You still must follow the company’s internal rules. You are technically an “employee” of theirs, and at their mercy.

2. Are they really telling you the whole story upfront? Will you be hit with any company surprises down the road?

3. Once you join a net branch you can’t easily jump and join another one.

4. You can’t choose the mortgage company name, you have to use their name. Also their logo, business cards, marketing materials, etc.

5. You may feel isolated by not having an office to go to, as most net branches are operated out of the loan officer’s home. And, if you do choose to rent an office, that’s an expense you must pay for.

6. People may not always be accessible or return phone calls when you have a question.

7. Some net branches have minimum sales requirements, and will fire you if you do not meet their sales goals.

8. Expect to do a lot of the loan processing yourself. After all, you are working solo now. Or, if you don’t want to do processing, expect to hire someone to do the work. Again, another expense.

9. Most net branches don’t offer health benefits. Some say they do, but when you read the fine print, they have 1 or 2 year timeframes you must be with the firm first. Or, they don’t cover all states. Mostly, it’s just the run around. So, make sure you get on your spouse’s health plan before you make the jump. Or shop around for personal health coverage.

Before deciding to join a net branch, here are some personal questions to consider:

1. Are you financially ready? Can you live off your current savings while your new branch is getting set-up? How much are your personal living expenses? What future expenses are likely to come-up?

2. Are there any business start-up costs? What are the fees upfront that must be paid before you can begin? Things like individual state licensing, setting-up a reserve account, office expenses etc. are costs that are borne by the individual loan office NOT the net branch.

3. Do you have a support network in place? Will your family support your efforts in your new business? Who will you turn to when things get rough?

4. Who is your competition? If you are leaving a local firm, mostly likely your former employer will be your fiercest competitor.

5. Did you sign a non-compete clause with your current mortgage firm? Check you’re your attorney. Although, not entirely legal in all states, companies will use this as a way to brow-beat you into submission. You can’t be stopped from earning a living. Don’t let them stop you from your dream.

Remember, going it alone comes with a price; and one which should be carefully considered. There are advantages and disadvantages of starting your own firm. In the end, a net branch is simply a way of doing business. It’s a conduit by which you can originate and close loans. Net branching is a great way to have the freedom and independence of your own mortgage firm, but with significantly less risk.

So, go ahead and give yourself an instant promotion this year. Consider net branching, but look carefully before you leap.