Resources
Resources by Pitbull Conference and Leonard Rosen
Mortgage Market Commentary
Hard Money in A Changing Economy.
As many of you know, there has been a major shift in the sub prime mortgage market. In the boom years of the turn of the century, the mortgage market was inundated with exotic sub prime money for borrowers. Never has the mortgage community been so borrower friendly to people with low FICO scores, undocumented income and no employment verification. Many in the mortgage business have called this type of loan a “liars loan”. Consequently, thousands of sub prime borrowers from coast to coast took advantage of the opportunity to get their piece of the American dream….home ownership.
For many, this turned out to be a wonderful opportunity to finally own their own home. Except for one small detail…the adjustable rate mortgage. Little did the borrower know that the initial interest rate was only a teaser to last a short period of time. To the dismay of many borrowers, the mortgage interest rate began to adjust and the “affordable” initial monthly payment began to rise significantly. In no time we began to see notice of defaults rise and foreclosure rates hit 20 year all time highs.
To make matters worst the same mortgage companies that were eager to lend mortgage money to this class of borrower has now said “no more for you”. The mortgage companies are not able to sell the paper to the investors. Wall Street has very little appetite for a portfolio of mortgages in foreclosure.
I believe we are at the beginning of what I refer to as “mortgage meltdown” that may have consequences for many years to come. Having said that, where is the silver lining?
The answer is simple, there is no silver lining. However, there are several opportunities that borrowers can choose from. The most common approach is obtaining a hard money loan. A hard money loan is not intended to fix a long term problem but to offer a short term solution. Most hard money lenders loan on the value of the property taking in consideration the LTV ratio. Simply put, the hard money lender generally loans up to 70 to 75% LTV. The hard money loan gives the borrower options. Rather than lose the property to foreclosure, the borrower has gained a valuable commodity…time. Time gives the borrower the ability to sell, refinance, or rent the property without the impending event of foreclosure hanging over their head.
Yes, hard money is more expensive than a conforming mortgage rate. The coupon rate for a hard money first trust deed is in excess of 10% in most cases. In addition hard money HELOC’s or a hard money second mortgage is considerably higher yet. Considering the options, hard money or private money can be a very useful product in many cases.
The key to selling a hard money loan is being able to assist in determining an exit plan and working with the borrower to fully execute the plan.
This type of professional approach will not only help the borrower but may result in a subsequent loan for your pipeline.
Obviously, there is a tremendous opportunity for mortgage brokers to earn a great deal of income in this emerging market.
Remember, you are dealing with people’s lives and the homes that their children live in. Have empathy and treat them fairly.
CA DRE Credits
This course offers a comprehensive study in the following areas:
Loan Programs
Processing and submission procedures
Marketing
Managing the borrower
Appraisals
Lender requirements
Pitbull Conference is a live class covering six hours.
The instructors will be delivering the material by lecture and hand outs.
The cost of this one day seminar and materials range between $595 to $995.
Any additional fees required by the hotel, ie. Parking, etc. will vary depending on venue and will not be covered by Pitbull Conference.
Attendees will be given a one hour lunch break.
Meals will not be provided.
DRE exam will be given at the end of the day and a drivers license will be needed to confirm identity.
Cancellation Policy:
Upon cancellation a credit will be given for use at a future seminar within the next 12 months.
This seminar is approved for 6 hours of Continued Education for Consumer Service by the California Department of Real Estate. However, this approval does not constitute an endorsement of the views or opinions which are expressed by the course sponsor, instructor, authors, or lecturers.
Upon course completion a certificate of verification will be sent to the licensee with 15 days. Records of course completion certificates will be maintained for a minimum of five years.
Attendance Requirement:
The course will begin at 8am and end at 5pm, with 1hour lunch break. You are required to be present 90% of the time in order to qualify for Continuing Education Credits. A record of attendance will be documented and kept on file for each student in the class.
A course and instructor evaluation regarding this seminar can be found on the DRE Website at www.DRE.CA.GOV