It’s common knowledge that most loan agents started in the “A” Paper Market, with many loan agents spending their whole career on that side of the mortgage market…..…often never realizing that there are Qualified Borrowers who want and need real estate financing, but just can’t get approved by traditional mortgage lenders.
Many of us at our company have heard of instances where Borrowers in need of financing contacts a Mortgage Broker who then runs their credit or checks their income and summarily notifies them that “They don’t Qualify “, due to either their FICO scores being too low or their income not adequately reflected on their tax returns.
The Borrowers are then forced to walk away without a loan and the Mortgage Broker goes the other way without a commission.
The result of this event is; the Borrowers are still out there and still need a loan.
The above situation has happened to many Mortgage Brokers……….has it happened to you?
Often Borrowers who don’t qualify for FNMA financing, but have a pressing need for funds will be interested in nontraditional financing where getting the lowest rate is not the driving force.
1.Credit not up to FNMA, FHLMC and Institutional standards
2.Income not documented as per institutional lending standards
3.The Subject Property’s condition not being up to institutional standards
4.The Borrower has an opportunity and needs money NOW!
The above “Borrower Situations” while possibly being a reason for FNMA and other institutional lenders declining the loan, Private Equity Investors will welcome the opportunity to provide a loan the Borrowers needs.
The main qualifying requirement is EQUITY.
When the opportunity presents itself and a prospective borrower has one of the above Negatives and there is equity in the subject property, take the time to investigate further if there might be a Plan “B” or even a Plan “C” financing option the Borrower might consider accepting.
If you are looking for additional commission income and are willing to invest a little time and effort in generating Private Equity Borrowers then the following marketing strategies might provide you some suggestions to increase your monthly loan origination and of course your monthly income.
There are many data sources available that provides a complete list of every property that is in some stage of the foreclosure process. Reviewing the data can be done quickly to determine the properties that have equity and that are potential candidates for a Private Equity Loan. Marketing to the potential Borrowers can be done by mail, telephone or by direct contact.
The death of a parent while tragic enough can be made so much worse when the reverse mortgage that was taken out by the decedent prior to death isn’t paid fast enough and goes into foreclosure. The children or heirs are then forced to either sell or refinance the property to satisfy the reverse mortgage. Institutional lenders will not touch a property that is in foreclosure but a Private Equity Loan can in many instances provide the funds to pay off the reverse mortgage and allow the heirs to keep the property in the family. These leads are included in the data comprised in the foreclosure list mentioned above. Often a review of the property data will reveal if the loan in foreclosure is a reverse mortgage or just a traditional mortgage.
Many heirs are “Hot to Trot” to get money or money is needed to pay estate expenses, including attorney fees. Institutional lenders never tough these situations but Private Equity Investors are willing to lend the money needed prior to the probate being completed by the court. Most Executors of Estates have what is referred to as “Unlimited Authority”, where the need for court approval isn’t necessary. In the situations where the Executor or Administrator of an Estate has only “Limited Authority” then a simple court hearing can be set up to obtain court approval for the Probate Loan. The process is quick and simple and usually takes less than 30 days. Marketing to Probate Attorneys by either a direct mail or E-mail campaign informing the attorneys that your company provides Probate Loans can lead to additional monthly closed loans and additional commission.
There are many Borrowers who either have a Tax lien or Judgment that they want to pay off since the penalties and interest are so high in some instances that it makes sense to borrower the money with a Private Equity Loan to pay off the liens. There are many services that provide a list of property owners that have either a Tax Lien or a Judgment. A simple letter or better yet a well designed post card mailed to the property owner might make the phone ring and provide additional monthly commission income.
Delinquent Property Taxes
This information is available from the county where the subject property is located. Each county puts out a list of delinquent properties that are getting ready to go on the auction block for a Property Tax Sale. A mailing campaign to owners of each property that has equity can lead to additional Borrowers and commission income. These Borrowers are very motivated to resolve their property tax problem.
Fix & Flip Borrowers
Many real estate investors make a full time business buying, fixing and later selling properties, and they’re in a hurry, since “Time is Money” or the property is in such bad shape that no FNMA or institutional lender would even touch the property. These situations are great opportunities to provide these types of Borrowers Private Equity Financing. It’s a great way to set up an ongoing business relationship with Borrowers who will come back for financing often. Many of these Borrowers can be referred to you by Realtors you might already be doing business financing their “A” Paper Borrowers.
Deferred Maintenance Properties
This situation usually occurs when a Borrower applies for financing and in the course of interviewing the Borrower or from the appraisal it is determined that the property in not up to FNMA or institutional property standards. If the property has equity then a arranging a Private Equity Loan for the Borrower might get the Borrower the funds needed.
Properties “A” Paper Lenders Don’t Like
There are so many here that we just can’t list them all but think commercial properties, auto repair, small stand alone buildings, attached buildings or even churches.
Most of the time the Borrowers have good income credit but the loan amount is below the “minimum loan amount” for many institutional lenders. Many commercial lenders have a $500,000.00 minimum loan amount. There are many Borrowers that own properties that are in need of loan amounts that are less than the minimum loan amounts of many institutional lenders. Your title company can provide you a list of properties that would be great candidates for a Private Equity Loan. There are so many potential opportunities available with these types of properties to generate additional Borrowers and monthly commissions.
We hope the above marketing suggestions will give you additional ideas to increase your loan origination business and your monthly income. Like most things in life……….Nothing Ventured Nothing Gained…………take some time to go outside your comfort zone……………….…your business and your income just might benefit.
Our company provides many helpful resources to our Mortgage Brokers who are currently originating Private Equity Loans or for those who are considering setting up a Private Equity marketing program or just want add Private Equity Loans to their available loan programs for their Borrowers.
Call us at (888) 797-7970 or E-Mail us at firstname.lastname@example.org and we’ll be happy to assist you with marketing and sales support.