broker banker magazine v 127

P E T EJOHNSTON

Broker Banker of the Month:

www.ShouldIRefi.com

AMERICA’S TRADE PUBLICATION FOR LOAN ORIGINATORS

Vol. 127

www.ShouldIRefi.comA Concept so simple, yet

innovative, I can’t believe it’s never been done before.

Entrepreneurs Do It Yourself MarketingGood Idea?

Debunking Delusions About

Referral Sources

Broker Banker Presents:

Saving the Day

“Dumbest” Mistakes #4 Listening to pretend experts andgetting distracted by the next bright shiny object

Whose YSP is it Anyway, New World OrderThe 2010 GFE for the broker

Pass or Fail What every mortgage brokershould know about safe act testing

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BrokerBanker

BrokerBanker | Volume 127, 2010

BROKER BANKER STAFF Executive Publisher: Ed Craine Editor: Deborah Kaya Staff Writer: Ed Craine Staff Writer: Jennifer Hadley Design: Jon Kaya – Kaya Design Production: Kaya Design Photography: Vinit Satyavrata

ARTICLES BROKER BANKER MAGAZINE welcomes editorial submissions. Send your article ideas and letters to: BROKER BANKER MAGAZINE 2645 Ocean Ave. #202, San Francisco, CA 94132 fax us at: 415/406-2340 or e-mail to: [email protected]

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FEATURES

5 WWW.SHOULDIREFI.COM Broker Bankers product of the Month

9 DEBUNKING DELUSIONS ABOUT REFERRAL SOURCES

By Ed Craine and Dr. Ivan Misner

11 BROKER BANKER PRESENTS: SAVING THE DAy

By Jennifer Hadley

12 COMMERCIAL LOAN ExCHANGE

13 INDUSTRy SERVICE PROVIDERS

14 RESIDENTIAL LOAN ExCHANGE

15 WHOSE ySP IS IT ANyWAy? NEW WORLD ORDER: THE 2010 GFE FOR THE BROKER

By Terri Buckman

17 “DUMBEST” MISTAKE #4: By Brian Sacks

18 PRIVATE MONEy LOAN ExCHANGE

19 ENTREPRENEURS DO IT yOURSELF MARKETING – GOOD IDEA?

By Weston Lyon

20 BRANCH OPPORTUNITIES ExCHANGE

21 PASS OR FAIL: WHAT EVERy MORTGAGE BROKER SHOULD KNOW ABOUT SAFE ACT TESTING

By David Reinholtz

Ed CraineExecutive Publisher

3

There is no doubt that the mortgage industry has its share of innovators, and I should know, as I’ve been writing about them for years. From unique lead generation strategies, to creative marketing tactics, to the creation of products designed to make your job easier, more efficient, and of course, more financially successful; if there is one thing I’ve learned, it’s that mortgage professionals are remarkably creative. yet even though I know this to be true, every once in a while I come across a new way of doing things that absolutely captivates me. In this case I’m talking about www.shouldirefi.com, an advertising concept/membership that allows loan originators to exclusively market and advertise the web site www.shouldirefi.com in their local area to generate their own exclusive leads.

I’m fascinated by Should I Refi.com for a couple of reasons. First, I can’t believe no one has thought of the concept before. Second, it’s potentially a huge marketing tool, but it is far from too complicated to use. In fact, it seems so easy to use; I decided there must be a “catch.” This led me to contact Pete Johnston, who runs a small mortgage company in St. Paul, MN, and who is the creative mind behind Should I Refi.com. “I needed a way to tap into customers outside of our sphere of referrals,” Johnston says. No surprise there, in this market, I have yet to find a single originator who hasn’t been wracking their brains for ways to earn more business. Johnston is no different.

There’s an old saying that goes, “Give a man a fish, and you can feed him for a day; but teach a man how to fish, and you’ll feed him forever.” In keeping with these sage words of old, Johnston had no desire to purchase leads. “The margins on purchased leads are low. There is no exclusivity.

Leads purchased through most companies that generate and sell leads are shot out to

multiple companies. Everyone then has to compete for the same deal, and it’s a tough business. It’s also expensive,” he adds. What Johnston recognized he needed instead was a way to generate leads and compete on a

local level, as opposed to on a national level. “So, I started thinking about how

I was going to reach new clients. I knew that most consumers were tired of the same

old mortgage gimmicks, liked the convenience of the internet, and wanted to work with a local

mortgage company that they could trust.” And that’s how the idea for Should I Refi.com was born.

“Our message to consumers is direct and simple; there are no gimmicks. Go to Should

I Refi.com, fill out the free purchase or refinance questionnaire, and expect to hear from a local,

knowledgeable mortgage professional within 24 hours,” Johnston explains.

Continuing he says, “Should I Refi.com is not a company that is generating leads around the country and looking to sell those leads to our members, or to any company, for that


www.ShouldIRefi.comA Concept So Simple, Yet Innovative I Can’t Believe It’s Never Been Done Before.

By Jennifer Hadley

BrokerBanker

Volume 127, 2010 | BrokerBanker 6

matter. We work with our members to help them create successful marketing and advertising campaigns using the domain www.shouldirefi.com in order to generate exclusive leads in their market.” yes indeed, membership with Should I Refi.com guarantees that the member will be the only loan agent or company allowed to market the web site in their geographic region. Moreover, that member will be the only company or individual receiving the leads generated by Should I Refi.com in their market.

I appreciate that Johnston does not hesitate to let me know that members will get out of the membership exactly what they put into it. That is, he’s not going to do all of the work for members. What he provides is the exclusive right to use the catchy domain name in all marketing and advertising efforts. Of course, once the customer visits www.shouldirefi.com and fills out the short, free questionnaire, the software used to run the web site immediately recognizes the location of the customer and shoots the lead directly to the member. But, the member will have to be an active participant in marketing and advertising the web site in their market.

“We’re not here to tell anyone to do anything differently. We want members who use their own creative marketing strategies. We want them to keep doing what they’re doing and tie in Should I Refi.com or create new campaigns around the concept.”

“There are many different forms of effective advertising that can be used to drive local traffic to the web site. Examples

range from pay by click ads on Facebook or Google Adwords to radio or billboard advertising. Pay by click ads combined with the domain Should I Refi.com can be a very cost effective way to generate leads.” Personally though, Johnston has found great success in radio advertising, and I can see why. The web site couldn’t possibly be any easier to remember. And a quick search online of the words “Should I Refi” brings up the web site as the top listing on both yahoo! and Google. No wonder 70% of Johnston’s mortgage company’s business comes directly from Should I Refi.com leads. Clearly,

he’s done an incredible job of branding and marketing the site in his target market of the Twin Cities, which he knows others will be able to do in their own geographic areas.

By this point, I still haven’t been able to find a catch. Can this really be as simple as it seems? One company per market? All of the leads generated in that market become exclusive leads for that company? I expect at this point that

the catch must be in the cost of membership. After all, this sounds too good to be true. But I’m dead wrong.

“Our pricing (which is derived from the total population of an area, in combination with the average home value of that area) ranges from $150 per month to several hundred per month for larger markets,” Johnston says. I certainly don’t need a calculator to deduce that in California for example, the monthly membership fee will pay for itself if even one loan from Should I Refi.com is closed. Unless of course, Should I Refi.com takes a huge cut from each transaction a loan officer closes through the web site.

DONCURR I E


HighTechLending, Inc.


Vol. 126

D O N C U R R I E

Branching OutProviding Brokers with a New Home To Thrive

D O N C U R R I E

Branching OutProviding Brokers with a New Home To Thrive

P E T EJOHNSTON


www.ShouldIRefi.com


Vol. 127

A Concept so simple, yet innovative, I can’t believe it’s

never been done before.

www.ShouldIRefi.comwww.ShouldIRefi.comA Concept so simple, yet

innovative, I can’t believe it’s never been done before.

We work with our members to help them create successful marketing and advertising campaigns

using the domain www.shouldirefi.com in order to generate exclusive leads in their market.”

Continued on


“We don’t want revenue sharing,” Johnston states simply. “Our members pay the same monthly fee whether they generate a ton of business or don’t do anything with the domain. That is how I would want it to be if someone was selling this concept to me.” But, what if a member is closing 10 leads from Should I Refi.com each month? Johnston’s company still doesn’t take a percentage. In fact, he tells me, Should I Refi.com was intentionally set up NOT to be a revenue sharing service, unlike many of the other companies who sell leads. I’m stumped at this point. Since it’s not expensive, I assume members must have to agree to a lengthy term.

Again I’m wrong. “We want people to be comfortable with their membership. Our marketing and advertising agreement has a 12 month term with a 60 day voluntary cancellation so our members are not locked into anything long term if they decide that this is not a good fit for them,” Johnston tells me. But, I would be extremely surprised to hear that members didn’t generate more than one quality lead per month,” he adds.

“you get what you give to this concept,” Johnston says. But he has reason to be confident that all members will get a great deal out of their membership. All individuals or companies who sign up with Should I Refi.com have gone through an extensive approval process ensuring that they are, frankly, the best loan officers and mortgage companies in the country. Naturally, only those who are already using effective marketing and advertising campaigns can be counted as the biggest and brightest in the industry. Basically, Johnston explains, membership in this elite group of professionals merely adds to your credibility and marketing reach.

Although Should I Refi.com is essentially an addition to a company’s marketing strategy, Johnston is doing his part to raise the visibility of Should I Refi.com for members. “Each month a portion of membership fees goes directly into a budget for Search Engine Optimization for the web site,” he says of his plan to keep Should I Refi.com at the top of search engine pages. Moreover, the more each member uses the web site in their marketing efforts, the higher the ranking

BrokerBanker

“Founder of Should I Refi.com, Pete Johnston”

BrokerBanker

and recognition of www.shouldirefi.com as the go-to place for local mortgage expertise grows. “What we’ll be able to accomplish as a group will be much greater than most companies can do on their own,” Johnston says.

And that’s exactly what Johnston wants. “There are 273 markets in the United States with a population of more than 100,000. We are determined to create a well respected brand, which will provide exceptional customer service and mortgage advice to consumers in all markets of the country,” he says. While he admits that in 5 years he’d ideally have a membership base of 200 of the top mortgage companies and individuals in the nation, and he has plans to add additional exclusive rights to other domain names he’s already purchased (which he says members will have first dibs on signing up for); for now, Johnston’s goals are simpler.

“I want my colleagues to be extremely glad that they signed up with Should I Refi.com. If a member comes up to me a year or two from now and says, ‘This really helped me

grow. Thank you.’ I’ll be happy.”

From where I’m standing, something tells me that Johnston is going to have no shortage of people thanking him much sooner than he thinks.

Pete Johnston is the founder of www.shouldirefi.com as well as a ten year

veteran of the mortgage industry. His honesty and work ethic stemmed

from a stint at the United States Air Force Academy, and his creativity

comes from a degree in Finance

and Marketing. Pete is not only

the owner of a small mortgage

company in St. Paul, he’s also

an active originator. Contact

Pete at 888-788-REFI (7334)

ext 3 or e-mail him at pete@

shouldirefi.com.

Visit www.shouldirefi.com/sing

up to sign up to become

a member.

BrokerBanker

Pete and Paul Johnston (Brothers and Co-founders of Should I Refi.com)


Please visit www.shouldirefi.com/signup

to become a member or

contact Gregg Gianpetro, national sales manager, at [email protected]

or 888-788-REFI (7334)

option 2 for membership sales.

We count on referral sources to keep us surviving when times are tough and to keep us thriving when things are stable (which, fingers crossed, should be any day now). But just as there is a lot of inaccurate information floating around just about any topic you can imagine, the delusions that we may have about referral sources need to be cleared up. Here then are three common delusions that many of us have about our referral sources and why it’s so important that we understand the reality of working with referral partners.

1. Anytimeyouseeyourreferralpartner, youshouldexpectareferral.If part of your strategy to earn referral business mandates that you must be in front of your referral partner to get that lead, you’re limiting yourself in a big way. In fact, the only way referrals will happen when you’re face to face with a referral source is if your strategy is dependent on you asking for the referral and getting it at the same time.

By contrast, in a strong, mutually beneficial referral system most of the referral process will happen when you’re no-where to be found. But don’t be alarmed; this is a good thing! After all, you don’t want your symbiotic relationship with a referral partner to shut down just because you’re not within arm’s reach of one another. On the contrary, you want your referral partners constantly looking for opportunities to refer you. Just as you should be in the habit of recognizing good opportunities for them, you want them to be doing the same and persuading prospects on your behalf. Keep in mind that if your partners aren’t thinking of you unless you’re directly in their face, you probably haven’t done a great job at training

them on how to best sell your services.

This doesn’t mean that you won’t ever receive referrals when you’re in the presence of a source or partner. Often times this works out incredibly well. Certainly we’ve all been fortunate enough to meet someone at a mixer, at the grocery store, or wherever, and wind up with a hot lead. But never limit your opportunity to linear marketing only. you simply can’t meet people quickly enough to sustain your business, not to mention close loans. Remember that networking is based on leveraging the impact you can have on your target market. If you have sources and partners promoting and referring you when you’re not around, your results will be exponential as opposed to linear.

To that end, avoid turning every gathering into a quest for referrals. If you ask for referrals from clients every time you talk with them or meet with them, you’re doing yourself a disservice in at least two ways. First, you’re training them to refer you when you’re there, but not when you’re elsewhere. Second, you’re really just making withdrawals from your referral bank when you should be making deposits by finding ways to help your partners in return.

2. Maximizingyourpotentialfor referralsmeansyoushouldbouncefrom onenetworkinggrouptoanother.In theory, this would seem to make sense, wouldn’t it? The more networking, the better? Well, that’s not necessarily the case. This is known as “scorched-earth” networking, and it’s about as appealing to others as its name implies. The


DebunkingDelusionsaboutReferralSources

By Ed Craine and Dr. Ivan Misner


scorched-earth networker essentially burns and pillages for new business. He’s a hunter at mixers and events and always far more interested in bagging the big sale than in building relationships. In short, he does everything he shouldn’t do if he’s looking to earn referrals.

The scorched-earth networker is eternally dissatisfied with the quantity and quality of the referrals he receives, so he figures he better move on. He jumps from one networking group to another, never taking the time to establish relation-ships, networks relentlessly with everyone he meets (often in-appropriately), and expects referrals from others even though he has done nothing whatsoever to earn them.

The scorched-earth networker doesn’t stay in one place long enough to build the kind of relationships necessary to capitalize on networking opportunities. Successful network-ers instead understand that in order to build mature, mutually beneficial relationships, they must devote a lot of time and effort to growing those relationships.

“Time equals money,” right? This is particularly true when it comes to membership in a referral-networking group. The longer you commit to building the relationships, the greater the results you get.

3. Yourbestsourceofreferrals isyourclients.People sometimes fall into this delusion because they’ve been trained to believe it and have never pursued any other source of referrals. To put it another way, the only referrals they’ve ever received are from clients.

Don’t get us wrong. Clients can be a good source of referrals;

we know that. However, other referral sources are available that can be extraordinarily powerful as well. Just because your clients are the most readily available sources, doesn’t mean that they are necessarily the best or steadiest sources of high-quality referrals. The best sources in the long run are likely to be the people you refer business to. When you help another build their business, you’re cultivating a long-term relationship with someone who will then have motivation to return the favor.

With a strong referral network, you can earn more qualified referrals from one or two sources than from all your clients combined. Why? Because these professionals are--by and large--better salespeople than your clients. They know how to sell you, especially since you’ve taken the time to educate and train them how to refer business to you.

yes, you can expect to get referrals from a happy client, but you’d better make darn sure the client is ecstatic with your services. This means you must keep your attention and your motivations focused on your client’s needs when that is the purpose of the meeting. However, you can certainly ask for a follow up appointment to specifically discuss how they might be able to refer you to others.

Ed Craine is the publisher of Broker Banker Magazine and the CEO of Smith Craine Finance, one of the nation’s leading mortgage brokerages in 2009, according to Goldline Research. Ed welcomes questions at [email protected] or via phone at 415-406-2330.

Called the “father of modern networking” by CNN, Dr. Ivan Misner is a New York Times bestselling author. He is the Founder & Chairman of BNI, the world’s largest business networking organization. His latest #1 bestseller, The 29% Solution can be viewed at www.29PercentSolution.com.

Threecommondelusionsthatmanyofushaveaboutourreferralsourcesandwhyit’ssoimportantthatweunderstandtherealityofworkingwith

referralpartners.

BrokerBanker

Sometimes one of those loans comes along that you want to champion,

because you just believe in the borrower so much. For Joseph Perez,

CFO of Better Loans & Realty, a boutique hard moneylender, that’s

exactly what happened. Recently a client came to Joseph’s company

after being turned away from multiple lenders. The reason? In addition

to being on the brink of foreclosure, the property in question (a

commercial mixed use property in a less than desirable neighborhood in

Los Angeles) had a whole slew of problems.

“The property was in foreclosure and scheduled to go to sale 14 days

from when we got the submission. The current lender decided to

foreclose because there were back taxes on the property. The borrower

had been trying to acquire financing for over 3 months, so they were

pretty skeptical that we could perform in just two weeks. We were

their last and final hope,” says Perez.

Moreover, the borrower had a 500 FICO, 15 separate judgments,

and 4 tax liens on the property. There were also problems with

title, causing some confusion as to who really owned the

property. But Perez wanted desperately to help. The mixed-

use property provided the family’s only source of income as

it housed their business, a car dealership, and a residential

apartment. Suffice to say that losing the property would have

been devastating for the family.

But the borrower did have a few things going for them. The LTV was

below 50%, which was helpful, and the amount of the loan was about

$250,000, so it wasn’t a huge loan by L.A. standards.

In speaking with private investors Perez works with, it was determined

that the property did have genuine equity. So with the help of title,

escrow and the borrower working diligently to acquire updated payoffs,

Better Loans & Realty was able to get everything lined up for funding.

And then, just 1 day before the foreclosure sale date, the loan was

funded and recorded, curing all liens on title and hence saving the

property from foreclosure.

“This was a loan that just made us feel good. It wasn’t a loan

that provided much yield, and it did require a lot of effort,

but we really believed in our client, and we’re so happy

we were able to save their property and their family

business.”

Joseph Perez is the CFO of Better Loans & Realty (http://betterloansandrealty.com/), a company

specializing in hard money lending for residential and commercial properties throughout the entire state of CA. Contact Joseph at 818-553-3829 Crystalline

By Jennifer Hadley

Presents

Saving The DayHow Joseph Perez Saved a Family Business, In Just Two Weeks


Commercial Loan ExchangeStephan Kachani E-mail: [email protected]: 310-826-2888 x28Lone Oak Fund, LLC is a private mortgage fund larger than many banks that makes bridge loans typically ranging from $250K to $10M on commercial property located throughout California. Interest from 8.9% to 9.9%; first trust deeds only; no prepayment penalties; funding within one week; minimal paperwork; creative structuring; broker cooperation. Ask about special pricing arranged by Broker Banker Publisher Ed Craine.

“Helping mortgage brokers successfully fund small commercial loans since 1976. Stated income loans and other niche products available. Call Leo for marketing tips.”

Type: Private LenderMin Loan: $250,000Max Loan: $10,000,000

Lone Oak Fund

Samuel ShummonE-mail: [email protected]: 415-257-3701

Lori Randich E-mail: [email protected]: 650-365-5341 x 218

David Gruebele E-mail: [email protected]: 916-863-7300

Jim Barnett E-mail: [email protected]: 925-946-4270

Type: BankMin Loan: CallMax Loan: Call

Type: Private MoneyMin Loan: CallMax Loan: Call



Luther BurbankSavings

RedwoodMortgage

Second AngelBancorp

Sonoma Bank

Michael ThurmanE-mail: [email protected]: 916-338-3232 x310


Blackburne & Brown MortgageCompany, Inc.

Brent HoustonE-mail: [email protected]: 877-663-4268


BridgelockCapital

Mark Sklonick E-mail: [email protected]: 415-893-9321


Circle Bank

Don Sonsma E-mail: [email protected]: 800-714-4106


First CaliforniaBank

Timothy FisherE-mail: [email protected]: 818-957-8110


Beach BusinessBank

The lenders in our Commercial Loan Exchange are all active commercial lenders who are broker friendly. We encourage you to contact them for your commercial lending needs.

Leo GluckE-mail: [email protected]: 800-538-5626 x3

Type: Mortgage BankerMin Loan: $200,000Max Loan: $3,000,000

Commercial Mortgage Corporation

BrokerBanker


BrokerBanker

Industry Service Providers

David NaciriE-mail: [email protected] Phone: 888-835-3741

Value Express, the easiest and quickest way to the value of any property.

Value Express

Nickolas C. JonesE-mail: [email protected]: 408-458-4300 x 318

Jeffrey PinkertonE-mail: jeffrey @myratetrack.com Phone: 678-488-5159

Edward Jamison, Esq.Web: www.creditcrm.comPhone: 877-256-8162

Claire FennesseyE-mail: [email protected]: 203-724-1140

Gordon G. ChinE-mail: [email protected]: 415-252-2888

Cameron PannabeckerE-mail: [email protected]: 209-478-3200

Henry Davidson - Director E-mail: [email protected]: 888.282.9747

Jon Kaya E-mail: [email protected]: 805-495-8215

Jim RichmanE-mail: [email protected]: 877-502-7283

Jon Kaya E-mail: [email protected]: 805-495-8215

InTouch keeps you in touch with your clients. Ask about our Broker Banker special.

Is your business refi-ready? Get ready with myRateTrack.comReady. Set. Refi.

Start your own credit repair business and make $10k a month easy. Call to get your free brochure.

Buy Title Insurance Direct and Save your Borrowers Thousands in Closing Costs! Now in 32 states and Growing.

Achieve higher FICO scores with our Credit Scoring Tools. We are here 24 hours a day to serve you.

Let Our 30 years of Experience Pro-vide Light to the End of your Home Loan Tunnel.

We specialize in corporate identity branding including logos, ads, print colaterial, e-zines, and more.

Serving the clients of mortgage bro-kers and attorneys across the nation for over 9 1/2 years.

We design custom SEO compatible websites that help you stand out from the competition.

In Touch

MyRateTrack.com

Credit CRM

ENTITLEDIRECT

Cal Coast Credit Reports

Mortgage Modification Center

Express Notary Service Inc.EsignNotaries.com

Kaya Design

Richman & Associates

Thinking2

The businesses represented in this Industry Service Providers page are all broker friendly. We encourage you to contact them for your particular needs.

Don’t see your Industry below? Call us at 415-406-2330 to add your Service to our growing list.

Stephen McClanskeyE-mail: [email protected]: 949-981-0456

Need an Appraisal Report? If so, we can help. We cover most of Southern California.

Landmark Appraisals

Accounting Services

Appraisal Services

Branch Opportunities

Client Retention

Credit Repair Services

Insurance

Credit Reporting Services

Loan Modifications

Notary Services

Marketing & Advertising

Web site Services

Other services that can be advertised in the “Industry Services Providers include: • Coaching • Efficiency Services • Insurance Services • Legal Services • Licensing Services • Processing

Companies • SBA Loan Exchange • and more. Call 415-406-1210 to add your service to the list.

Marie CurrieE-mail: [email protected]: 866-714-2040 x 2626

Need FHA? Want to lend in multiple states? We’re focused on your success.

HighTechLending Inc.


BrokerBanker

14Volume 127, 2010 | BrokerBanker

Residential Loan ExchangeStephan Kachani E-mail: [email protected]: 310-826-2888 x28Lone Oak Fund, LLC is a private mortgage fund larger than many banks that makes bridge loans typically ranging from $250K to $10M on commercial property located throughout California. Interest from 8.9% to 9.9%; first trust deeds only; no prepayment penalties; funding within one week; minimal paperwork; creative structuring; broker cooperation. Ask about special pricing arranged by Broker Banker Publisher Ed Craine.

Bay Equity is a Direct Lender in 8 Western States providing Mortgage Brokers a dependable funding solution in today’s turbulent mortgage environment. Our mission is to provide you with competitive pricing and unmatched customer service. Our experienced team is focused on what is important to you, which we believe, is PRICE & SERVICE! We have the ability to move quickly and give you answers in hours, rather than days.

Area: CaliforniaType: Private Money

Area: 8 Western StatesType: Conforming

Lone Oak Fund

John CurtinBay Equity

Raoul BaddeE-mail: [email protected]: 415-699-0980

Darren SiegristE-mail: [email protected]: 818-575-2600

Web: www.wmfinc.com

Marilyn TsaiE-mail: [email protected] Phone: 415-265-2470

To find your rep., go to our web siteWeb: www.prmglending

Area: No. California Type: Conf., FHA, VA





CMG Mortgage

Franklin AmericanMortgage Company

MetLifeHomeLoans

MountainWestFinancial

Paramount ResidentialMortgage Group, Inc.

ReunionMortgage

Phone: 415-699-4063 E-mail: [email protected]

Phone: 949-202-5092 E-mail: [email protected]

Colin Field


Brian CerrutiE-mail: [email protected]

p: 707-338-3632


Brent EckhardtE-mail: [email protected]

p: 831-566-0022

Area: Seattle & Portland Type: Conf., FHA, VA

Jeff Parry E-mail: [email protected]

p: 206-280-1500


Todd AlbrigoE-mail: [email protected]

p: 619-742-5460

Wendy EdwardsE-mail: [email protected] Phone: 775-852-6888 Ext. 225


Titan Wholesale

The lenders in our Residential Loan Exchange are all active residential lenders who are broker friendly. We encourage you to contact them for your residential lending needs.

BrokerBanker


Let’s start by understanding what changed, and we’ll finish with some ideas of how to use the changes to your advantage.In December, lenders credited 100% of ySP as a POC (paid outside of closing) directly to the mortgage broker. The broker then instructed the lender how much of the ySP they would like to “credit” the borrower. The broker retained their compensation from the ySP. Today, with the new GFE, ySP is handled quite differently. The only portion of ySP that passes directly to the broker now is the portion that they have disclosed and included in their “origination fee” in box one of the new GFE. Any remaining ySP, if there is any, gets credited directly to the borrower to offset other closing costs. This is the new world order. The ySP really belongs 100% to the borrower. To participate in ySP, the broker must disclose it as a part of their origination fee on the new GFE.

There is another option and that is to simply charge all compensation as origination fee instead of ySP and let the borrower get 100% of ySP directly as a credit. The latter option works a little better with most LOS software and may save you some work around hassles. But this is not your best option on a VA loan, due to origination fee constraints. Both methodologies are treated the same on the GFE, re-quiring brokers to put the compensation they expect to make (whether all origination fee, all ySP, or a combo of the two) as expressed in a dollar amount plus the lender fees in box one. If the rate desired pays ySP, it is disclosed in its entirety in Box 2, as a credit to the borrower. But any way you dice broker compensation, at the end of the day, 100% of the ySP gets credited to offset borrower costs on a brokered loan. It is worth saying it in yet another way:

ySP = borrowers creditDiscount points = borrowers charge

you cannot increase your origination charges except in very narrowly defined circumstances, but you can reduce them. I hear from many of you that you are quoting very high origi-nation charges so you can absorb fees you under disclosed or inadvertently undisclosed. This strategy will work with clients that blindly trust you. But it will put you at a severe disad-vantage with a borrower that does not know you and actually

uses the GFE as the shopping tool it was intended to be.

I suggest a couple of things here. First, since you will no longer credit the borrower on a brokered loan, as ySP now gets credited directly to the borrower, it is time we moved away from terms like “zero point” loans or “no cost” loans. They were always misnomers anyway. More to the point, and the pun is intended, you may corner yourself in using this ter-minology. Look at any wholesale rate sheet. ySP only comes in certain options and sometimes there are big anomalies between tiers. you will rarely have ySP that will exactly offset origination charges, which you would need for a “zero point” loan. If you are suddenly short on available ySP, from the time you initially disclosed and the time you are ready to lock, you may have to reduce your origination fee to affect the zero point loan. Many brokers have already realized this, hence the large origination fee cushions. The same challenge exists if you sell a “no cost” loan.

Since you have already disclosed your origination charges and all other closing costs to the borrower, you may want to present them their “wholesale” price options. Rather than sell a zero point loan, for example, you could assist your client in selecting the rate that offers the best combination of monthly payment, and credit or discount cost that works for them. Explain to your customer that when they lock in they may receive the ySP credit they see today--or it could be a little more or a little less--but it will be their choice, and they can rest assured that on a brokered loan all ySP will be disclosed and credited against their closing costs. They are in the driver’s seat. This is a subtle change in scripting, but it will save you from having to over disclose your origination fees, thereby making you look more competitive on your GFE. And, it will certainly save you from kicking in your origination fee.

Second, make sure you understand how to quote the fees of the companies you feature on your settlement services pro-vider list accurately. Get a list of common title endorsements your lenders request and get the fees for those as well. Make sure you don’t miss any transfer taxes. Have your escrow officer prepare an estimated HUD-1 for you before you pre-pare your GFE and ask them to include seller paid fees for

Whose YSP Is It Anyway? New World OrderThe 2010 GFE for the Broker

Whose YSP Is It Anyway? New World OrderBrokerBanker


transfer taxes and title and escrow fees. Recently, several large investors and HUD have confirmed that all title and settle-ment fees, including those customarily paid by the seller in specific geographic areas, must be disclosed on the new GFE, unless required to be paid by the seller by state law or local code. There are a few exceptions, preparation and recording of grant deed and seller notary fees, for example. But if in doubt, disclose, disclose, disclose.

Third, remember that ySP credited to the borrower from the lender does count toward maximum interested party contribution, except for any portion credited to the broker as compensation in line 801 of the new HUD-1. So, watch your seller’s and ySP credits. They can’t exceed the actual fees, and you can’t increase fees now to absorb excess credit. you will have to re-lock at lower rate, re-disclose, and redraw your closing docs. Last minute credits to the buyer to cure is-sues could postpone an otherwise timely closing. Educate your realtor partners to work closely with you on seller/broker credits.

And last, bankers at present do not have to disclose ySP on loans they fund internally on their warehouse lines, nor must they credit 100% of ySP to the borrower. It is a little more, business as usual, for bankers where ySP is concerned. That said, a well-prepared broker could use the new GFE to their advantage by selling the benefits to the borrower of full disclosure. The borrow-er does not own the ySP on a banked loan which means it is at the discretion of the originator whether or not to share ySP with the borrower.

Brokers could take things a step further and show the borrower how they can structure the transaction for better tax advantages. Origination fees are tax

deductible. A mortgage broker could take all their compensa-tion in loan origination fee (not ySP) and then apply all the borrower’s ySP credit against non-deductible closing costs first.

As always, learning to adapt and understanding how best to present this new world order for your customer’s best advantage will elevate the true professionals from the rest.

Terri Buckman is the Vice President and Sales Manager of Affiliate Branching for Pinnacle Capital Mortgage. With more than 25 years of experience in the mortgage banking and brokering industries, Terri welcomes questions at [email protected] or via phone at 925.822.5931.

By Terri Buckman


Moving along in our series of the dumbest mistakes loan officers can make, we arrive at mistake #4, which are really two mistakes wrapped into one. Doesn’t it seem like everywhere we turn someone is trying to sell us the next “magic pill?” This, despite the fact that in this market very few of us have the time or the hard-earned money to throw away on more useless marketing or business tactics! Instead, what we need is an edge that works, and works now!

Please don’t misunderstand me. It’s been proven time and again that if you want to be successful in the origination industry, you must invest in your education. But, you’ll notice I used the word “invest.” Worthwhile education truly is an investment that will pay off for you, but there are a few important considerations you’ll need to make first.

To begin, you need to think about who you are listening to. Is your educator worthy of your respect? Are they qualified, and can they prove it? Next, you need to think about what you’re being taught. Will it really get you closer to your goals? Or will it set you off on another wild goose chase causing you to lose time, money, and worst yet, your focus?

Practical Guidelines:Be careful who you listen to. Heaven knows there are a ton of “experts” and “gurus” in our industry. Many are have valuable information to share, but many do not. They may have never even originated a loan, or they did so very long ago. I know it’s not a news flash, but the market has changed. What works during a refi-boom doesn’t work during a “crash” and vice versa. The one thing you can count on is the market being volatile.

It has always bothered me that many of these one-trick-pony “gurus” only have a few dated tricks in their toolbox that they keep repeating

over and over again. So, I challenge you to ask of any educator charging you a fee for their

knowledge if they are willing to put their money where their mouth is. That is, are they willing to guarantee results? If their tactics work as well as they

claim they do, then they should have no problem offering this.

You deserve, and should demand the right to field test the information they provide, to see if it really does work in today’s market. Unfortunately, much information for sale out there may be purely theoretical or ideas that

worked decades again but are now obsolete.

I caution you specifically to steer clear of any expert who is only selling you a template. There simply isn’t a one-size-fits-all magic template out there. Save your money. Moreover, wasting time listening to the wrong educator can cause you to lose focus, which you need more than ever in today’s market. Unfortunately, once you go down the wrong path chasing after the next shiny object, it becomes more difficult to get back on track. So be diligent when researching the investment you’ll make in your education, and you’ll be able to avoid the mistake of listening to pretend experts and chasing shiny-but useless objects. Brian Sacks is the CEO of www.loanofficerformula.com. He has been an industry expert for over 24 years closing over 6000 loans totaling 1 BILLION Dollars. Brian has trained thousands of originators And company owners in North America sharing his “FORMULA” for success that will allow you to close LESS loans, Make More Money, and Have a Life REGARDLESS OF MARKET CONDITIONS.

“Dumbest” Mistakes #4:Listening To Pretend Experts and Getting Distracted by the Next Bright Shiny Object

By Brian Sacks

Private Money Loan ExchangeStephan Kachani E-mail: [email protected]: 310-826-2888 x28Lone Oak Fund, LLC is a private mortgage fund larger than many banks that makes bridge loans typically ranging from $250K to $10M on commercial property located throughout California. Interest from 8.9% to 9.9%; first trust deeds only; no prepayment penalties; funding within one week; minimal paperwork; creative structuring; broker cooperation. Ask about special pricing arranged by Broker Banker Publisher Ed Craine.

Type: Private LenderMin Loan: $250,000Max Loan: $10,000,000

Lone Oak Fund

Web: www.agricap.com E-mail: [email protected]: 213-542-5232

Area: CaliforniaType: SFR & CommercialAmount: $500k to $5MM

Agricap

Michael ThurmanE-mail: [email protected]: 916-338-3232 x310

Brent HoustonE-mail: [email protected]: 877-663-4268

Alex NackoulWeb: www.brownstoneloans.comPhone: 1-800-547-1285

Mike Christl E-mail: [email protected]: 818-807-3866

Lori RandichE-mail: [email protected]: 650-365-5341 x218

Eva RozaE-mail: [email protected]: 415-584-3000

David Gruebele E-mail: [email protected]: 916-863-7300






Area: Northern CaliforniaType: 1-4 NOO & Comm.Amount: $200k to $1.5MM


Blackburne & Brown MortgageCompany, Inc.

BridgelockCapital

BrownstoneMortgage CapitalCorporation

CaliforniaEquity LendersInc.

RedwoodMortgage

Roza Real EstateLoans

Second AngelBancorp

The lenders in our Private Money Loan Exchange are all active private money lenders who are broker friendly. We encourage you to contact them for your private money lending needs.

Your Listing Here

Your Listing Here

Your Listing Here

Your Listing Here

BrokerBanker



As a mortgage broker, you have a ‘to-do’ list a mile long. There are things that need to be done now, things that needed to be done yesterday, and things that need to be done as soon as you can get to them. Being a mortgage broker is tough. That’s why getting help is essential. The question is: what do you get help with?

Do you get help with my important tasks like marketing, or do you get help with smaller but meaningful tasks like paper work? The correct answer: YES. You need help with both if you want to succeed. However, in this article, I’d like to focus exclusively on marketing. So let’s not waste any time in exploring whether or not asking for help with your marketing efforts are a good or a bad idea. We’ll do this by looking at the three stages of marketing: Planning, Implementing, Following Up.

Planning: Good idea because… you’ll have complete control over the look and feel of your marketing. After all, you have the vision; you’re the entrepreneur. Having complete control will allow you to paint the picture you want.Bad idea because… you’ll have complete control. Having control isn’t the bad part; it’s being so controlling that you can’t see the forest through the trees, that’s bad. In other words, you may become so controlling that you become blind to the possibilities and opportunities around you that will lead you to the success you desire.

Implementing:Good idea because… you know the pulse of your business and your industry. Marketing yourself will bring your energy and your passion to your business. No one can market your business like you. No one! Plus, marketing yourself allows

you to stay sharp and enhance your marketing skills in the pro-cess. Marketing is the most important aspect of your business. These skills are vital to your survival.Bad idea because… implementing marketing strate-gies can be time consuming. It takes time to write articles and copy for mailers, newsletters, brochures, etc. It takes time to make calls and send e-mails. It takes time to design an ad or webpage.

Following Up:Good idea because… you’ll be able to connect better with your clients. You’ll know their response to your marketing as well as their feedback, likes and dislikes. Knowing all this will help you market better to them and others in the future.Bad idea because… you’ll be spending time with non-action takers instead of spending time to sell to the people who have raised their hands and want your help. Follow up is crucial to your business. However, it does take time away from the act of making money…selling.

Verdict:As you can see, there are pros and cons to doing your own marketing. And this doesn’t even take into consideration other important aspects of marketing such as automating, system-atizing, or partnering. We’ll cover those in a later article. With that said, the bottom line for today is: you need to be involved in every aspect of your marketing, in one way or another. But, you need help to make your marketing easier, faster, and more productive.

Weston Lyon is the author of 10 books & a passionate professional speaker. More of Weston Lyon’s articles and strategies can be found at www.westonlyon.com

By Weston Lyon

BrokerBanker


BrokerBanker

Branch Opportunities ExchangeThe Branch Opportunities Exchange members are all broker friendly. We encourage you to contact them for their services.

Your Listing Here

Your Listing Here

Your Listing Here

Your Listing Here

Your Listing Here

Your Listing Here

Marie CurrieE-mail: [email protected]: 866-714-2040 ext 2626

Excellent rates. Fast closings. Paperless. Focused on your success.

HighTechLending Inc.

Greg FrostE-mail: [email protected]: 800-659-3767

Great pricing. Fast U/W. On time closings. Mentoring. 100% net payout. $2 Billion monthly line.

Frost MortgageLending Group

Melissa ArntzenE-mail: [email protected]: 916-960-0493

Retail Banking and Branching Company since 1996. 160+ branches. Banker/broker platform. your DBA ok.

AmericanPacific Mortgage

Amber WiertallaE-mail: [email protected]: 888-708-2707 ext 18286

Turnkey. Keep your DBA. Keep 100% of profits. All products. Western states.

Pinnacle CapitalMortgage Corporation

Dane Basham Web site: gatewayloan.comPhone: 888-544-0034 ext 222

FNMA and GNMA direct lender. We provide leads. Grow with us.25 States.

GatewayMortgage Group

Linda LittE-mail: [email protected]: 877-878-8989

Since 1993, we have been the industry leader in branch opportunities. Southwest

Funding, LP

Jeff MillerWeb site: debtzeroprocessing.comPhone: 866-356-2755

Topnotch business support, training, and back-end processing for Debt Settlement.

Debt Zero

Rick CossanoE-mail: [email protected]: 925-997-8923

FNMA direct lender with retained servicing, FHA/VA, private AMC, 20 Day Purchase Guarantee, cutting-edge technology - Can Do.

RPM Mortgage

Unless you’ve been selling real estate on Mars for the past few years, you’ve heard about the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (called the SAFE Mortgage Licensing Act of 2008). The SAFE Act mandates increased federal regulation of the mortgage lending industry, enhanced licensing requirements, and professional liability for mortgage loan originators (MLOs) who fail to comply. So, if digging your way out of the reces-sion were not challenging enough, now you have additional federal and state hurdles to clear.

How did this happen? In response to the foreclosure epidemic and the global economic crisis that erupted in 2008, Congress passed legislation to establish more government oversight of individual mortgage loan originators, with the outcome of increased consumer protection. Primarily, the law set forth objectives for a Nationwide Mortgage Licensing System (NMLS) for the residential mortgage industry. The SAFE Act requires that all residential mortgage loan originators must be either federally registered or state-licensed. A mortgage loan originator employed by a federally insured depository institution, credit union, or an owned and controlled subsidiary that is federally supervised must be federally registered. All other mort-gage loan originators, without exception, must be state licensed.

All state licensed and federally registered mortgage loan originators must be registered with the NMLS, which is maintained by the Con-ference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.

Striving for Uniformity among the 50 StatesAt the time of the law’s passage, state systems varied greatly. The SAFE Act required the states to have a licensing and registration

system in place by either July 31, 2009 (for states whose legisla-tures meet annually) or July 31, 2010 (for states whose legislatures meet biennially). For either of these deadlines, the U.S. Department of Housing and Urban Development (HUD) offered to extend the deadline if HUD determined that a state is making a good faith effort to establish a state licensing law that meets the minimum require-ments of the SAFE Act. By January 2010, 43 states, the District of Columbia, and Puerto Rico had adopted NMLS. But HUD recognizes that in many states individuals currently performing loan originations may not be able to meet the educational, testing, and background check requirements by the time required regulations become effective. In addition, HUD is aware that some states already require licensure of loan originators.

In those states that have adopted NMLS all individuals acting as a residential mortgage loan originator (RMLO) must create an account in NMLS and have filed or file a Form MU42 through NMLS with the state regulatory agency. Filing deadlines depend on the type of license required.

NMLS Requirements and Your ResponsibilitiesWhat do you have to do? In addition to certain other requirements, all MLOs need to file a Form MU4 through NMLS with the their state’s Division of Banking. The applicant, as a state-licensed loan originator, must furnish certain information to the NMLS including fingerprints for a criminal background check and personal history and experience. Minimum standards for license issuance includes:• Never having had a revocation of loan originator license• Never having had a felony conviction involving an act of fraud,

dishonesty, or a breach of trust, or money laundering (no other BrokerBanker | Volume 127, 201021

What Every

Mortgage Broker

Should Know about

SAFE Act Testing

Pass or Fail

By David Reinholtz

BrokerBanker


types of felonies seven years prior to application)• Demonstration of financial responsibility• Completing pre-licensing education, reviewed and

approved by the NMLS (at least 20 hours)• Passing a written test developed and administered

by the NMLS (at least 75% correct answers out of minimum 100 questions)

• States must include a minimum net worth requirement or surety bond requirement for applicants, or have had the ap-plicant pay into a state fund.

The SAFE Mortgage Loan Originator Test Some requirements (such as no felony conviction and no license revocation) are straightforward: either you can comply or you can’t. What’s bringing fear and trembling to the hearts of MLOs nationwide is the SAFE Mortgage Loan Originator Test. All MLOs must pass the test, which is comprised of two components: a state component and a national component. MLOs must pass each component with a score of 75% or higher prior to renewal for 2011. The SAFE Act exam covers topics including federal law and regulation, fair lending issues, consumer protection, instruction on fraud, ethics, and the nontraditional marketplace.

To date, industry sources place the failure rate at anywhere from 30% to a whopping 70% for first-time takers. As part of the SAFE Act licensing requirements, the Act requires that all new mortgage loan originator applicants must complete 20 hours of NMLS-approved Pre-licensure Education (PE) and annual Continuing Education (CE). You’d think that 20 hours of instruction should make the test a breeze. Apparently, results depend upon the quality of the program.

So, take time to find the best mortgage industry education organiza-tion you can. Companies who have stood the test of time and have been educating MLOs for years (long before new regulation was in place) are probably your best bet. There’s a reason they’ve been around a long time…because they provide valuable training and quality education programs so that when it’s your turn to take the SAFE act test, you’ll be ready.

David Reinholtz possesses 25 years in the mortgage business as a top produce and educator. He is an NMLS Specialist and on the Board of Advisory for MortgageCurrency.com. He is a prolific industry publication writer and authored the 125-page national handbook “Navigating the National Mortgage Licensing System: Your all-in-one guide to meet-ing the requirements of the new NMLS for loan originators”. He has published a national manual and a series of 50 state-specific study guides for mortgage brokers.

Broker Banker Magazine and Loan Officer

School are joining together to bring you the

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California Edition Volume 127, 2010

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Documents

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