Loan Officer Consultant

This is a very popular subject where ever you may live. I use this as a sales tool and it helps sometimes. If I can save someone an extra $150.00 per month doing a rate and term refinance that may get blown off by some customers but now they see that as an extra few tanks of gas!!

I know this may seem trivial but it works. Keep this in mind because I deal with FHA for about 95% of my total loan volume for the past several years I see folks that have real need to save money.

The majority of them are very thankful to save that money and not being stuck in a sub prime loan even though that may be what they had before we spoke. I wanted talk about the gas prices with you guys/gals because I feel if you work it right it will help you connect with your clients and it may even give you a reason to call some of your past clients.

Stay tuned for my next update and we will continue to explore more opportunities with FHA and how to help close those deals!! Here is what I do when I can show my clients extra savings.

First find out what it is that they are looking ot achieve in this refinance. Most likely it will be savings or something of that nature. Current events if brought up in innocent conversation could spark some kind of response that you can work with as a sales tool to better your chances to close that loan.

My example above about the gas prices has been and will continue to be a big attention grabber for a long time. Well if I can show them how to save an extra $150.00 each month or more that is just one more angle I can work to show its worth to them.

Remember it’s you and them and most times it’s over the phone you have to find a way to be professional but create a connection between the two of you that will allow you to stick out in their head especially if they are shopping.

Who would you go with someone that is connecting with you on your needs and helping you solve problems that involve their bottom line or some rate quote from a huge company that is trying to meet their quota and has no time to build that all important word “rapport”.

When buying a home, there are two stages in the home loan approval process.

Stage 1 starts when a home buyer submits a mortgage application to his loan officer for a pre-approval.

A pre-approval is a “walk-through” mortgage approval that says — at a given purchase price and down payment amount — the home loan application will very likely be approved.

Stage 1 ends when the buyer signs a purchase contract on a home. At this point, the “walk-through” approval is useless because the buyer now needs a real home loan approval from an underwriter and not a loan officer.

Thus begins Stage 2. During the second phase of the approval process, a mortgage underwriter is reviewing income, assets, credit, job history, and other items, too; the underwriters job is to make sure that the buyer meets the bank’s criteria for lending.

If the loan officer did his job in Stage 1, Stage 2 is just a formality. And most times, it all goes according to plan.

Occasionally, though, a home buyer sabotages his own mortgage approval by inadvertently changing his “risk profile”. It doesn’t happen on purpose, of course — it just happens.

So, consider this a quick primer of what not to do while you’re between Stage 1 and the completion of Stage 2 of the home loan approval process. Following these pointers will help keep the risk profile consistent.

1. Don’t buy a new car (or take on a larger lease payment)
2. Don’t quit your job or change industries (and certainly don’t switch to a heavily commissioned role)
3. Don’t transfer large sums of money into or out from your bank accounts (and remember that “large” is relative)
4. Don’t miss a payment to a creditor (even if you don’t think you owe it)
5. Don’t open a new credit card (even if you’re getting 10% off your new bedding)
6. Don’t accept a cash gift without talking to your loan officer first (because there’s rules on how to accept them)

There’s other items, too, but this a good start.

We need to educate our borrowers on this stuff and I don’t care if it is a purchase or refinance loan. If we are educating our clients of the above items we are letting them know how to better there experience and make the process easier on them too.

Many times a borrower or broker says they can not go Full Doc and must go Stated. This is not necessary most of the time. A lender can roll the loss from the taxes back into the loan to show the profit. Losses such as traveling expenses and car payments can be added back into as profit, as well as one time charges like a new roof. (and there are many more examples) Structuring this as a Full Doc loan will result in a stronger deal, better rate, and better terms. Knowing how to structure this part of the deal and getting the tax returns will keep you competitive against your experienced competition who would know how to structure the deal and go full doc.

When you ask the borrower for the tax returns and they immediately respond negatively, this is your shot to show why you are an expert. At this time educate the borrower about adding back in losses, this will create value in your word and ultimately trust. Explain to them it doesn’t hurt their chances to get a loan, it actually does the opposite and improves the chances. Let the borrower know showing taxes only gives you and a Lender a full picture of all options and avenues. If you get the taxes and are not sure how to determine let the Lender make the decision if the loan needs to be Stated or not. During a purchase the borrower doesn’t always need to have income that will support the property the property should support itself. Your borrower doesn’t need to be $1 Million liquid to buy a property or have the best taxes ever. A Lender will care about the income the property is making, not what the borrower makes before owning this property. * Currently in the Market Stated is getting more and more difficult to close with most Lenders anyway. So knowing what to do is key. Investor Stated is not happening anywhere from what I see, and this will remain until Lenders start getting aggressive again.

The time has come for you to either hire or recommend a credit repair company.

Who do you choose?
If you do a simple internet search for credit repair you’ll see tens of thousand of companies. What does one do that the other can’t, or even that you can’t do for yourself. I’m sure you’ve heard the same regurgitated response, “you can repair your credit yourself.” You can build your own plane too, but would you really want to fly in it? Do you do your own taxes, or do you hire a professional? Do you represent yourself in court, or do you hire a lawyer?

I literally laugh out loud at those who say, “I have a credit repair letter.” They must be delusional if they think that using the same letter, in the same format, stating the same thing over and over hasn’t been caught by the credit bureaus. Or mortgage brokers who say, “I repair my clients credit all the time,” “no you don’t, please stop fibbing,” is my reply. If they receive the same level of results that we here at HTDI Financial do, they should leave their current profession and start a credit repair company themselves. Incidentally, if this is the case, I can help you out there as well.

Consider this … It is illegal for a credit repair company to guarantee results!!! ILLEGAL!!! We can not guarantee the removal of any one specific item, that would be like a lawyer guaranteeing a verdict of “not guilty.” So how do you gauge the caliber of a credit repair company if they are adhering to the law? That’s easy … statistics. What is their average deletion rate? Do they limit their disputed tradelines and the bureaus they go against? I have scoured the internet for average deletion rates and we are by far the leaders of the pack. We are so good that we actually have other credit repair companies outsource their work to us so they can have the same level of success as we do.

• We go against all three credit bureaus simultaneously and an unlimited number of negative items.

Results as of 01-07-2008 (real time at www.htdifinancial.com)

1st Round 46.50%

2nd Round 20.97%

3rd Round 18.76%

4th Round 14.75%

To achieve the industry leading results in a legal and ethical manner there is no other choice but HTDI Financial.

I read and hear scenario’s all the time stating that the property IS cash flowing, just to discover after getting together all the correct docs that its not at all. You can’t take anyones word for it. The realtor, seller, buyer…nobody, the Lender won’t do it and nor should you. Knowing if the property truly cash flows helps determine what type and which Lender to go to. Many times you are told the property cash flows but someone has forgotten to figure this in with the new mortgage payment that is being sought. This is a good quick measurement. The main items you need to see true cash flow is a rent roll, a recent P&L. These will show the expenses and money made. Once these are all figured in an equation you can get the DSCR ( cash flow ) of the property. Many lenders require this number to be at a specific ratio to even do the loan at all. So getting these docs should be your first priority. You may have a loan that nobody can fund because the cash flow is so bad. These docs are what you want to get to help yourself weed in and out the would be and should be Commercial deals on your desk. Keep in mind not all deals are doable, especially in Commercial. If a property doesn’t cash flow there is nothing you can do. Q * You may be thinking “Can’t the owner just “fix” the P&L/Rent Roll to show less expenses?” A - The Owner can do that, but the P&L & Rent Roll is also recorded in the borrowers tax returns by a CPA. Also as an appraiser reviews comps they will see market rents in the area. The appraiser will see through recorded docs what a property similar to the one you are working on has as rents and Losses. So there is no real loop hole here.

I had come across this when asked by another member of WN. I figured I would share it openly for those who wanted a more clear definition. The link to article and the chart is below.

The statute of limitations (SOL) for a delinquent debt is the time limit for the creditor to file a lawsuit. This period starts when the debtor becomes delinquent. The fact that the SOL has “run” (expired) on a particular debt will not necessarily prevent a lawsuit from being filed (via a Summons And Complaint), but the defendant can have the suit dismissed on this basis.

The Statute Of Limitations only covers lawsuits, and SOL expiration does not affect other types of collection action or reporting of the account to credit bureaus. The creditor or collection agency may theoretically continue with letters and telephone calls forever (although third-party collectors are subject to the “cease and desist” provision of the Fair Debt Collection Practices Act.) However, they will generally put much less effort into collecting “Out-Of-Statute” debts, and may give up easily. Out-Of-Statute debts can still be reported to credit bureaus for the time limits specified in the Fair Credit Reporting Act.

Credit cards are generally considered Open Accounts. Auto loans and other installment agreements are Written Contracts

Off the topic of Direct Marketing I have been thinking of alternate ways for LOs to make money while you grind this thing out. You don’t even have to change much about what you do EXCEPT WORK A LITTLE HARDER for your potential borrowers and TURN DOWNS!!!

Think about this for a second……We are all taking more applications now than we have in the last couple years but for most it’s the qualifying the prospects that is the issue. I talk to so many Loan Officers and Brokers alike that just throw that stuff away…….WHY WOULD YOU DO THAT?

Here is what I would be doing if I was a full time LO….

Do which ever marketing I like best and then really really WORK THE LEADS! Work the potential Refi to the bone until there is absolutely no deal there. On all the turn down leads we have all got to start helping these people. There are other ways that may require any Loan Officer to get out and network to help the homeowners in other financial ways….

I would try building a relationship with a credit repair company….I know most of them pay you a commission for the repair job and then they send you the borrower back for the loan after things are fixed. You not only go the extra mile for your client but you also make a little money on the side form the CR company.

Another example would be to learn loan modification. 4 out of 5 applications taken DO NOT qualify for a loan, so in my mind you should try and modify their loan with their current lender and make a small 1000-1500 commission for HELPING your client. Again this was a turn down before and it could be turned into revenue and maybe even a future deal and more than likely a referral or two for another modification. (you would not believe how much home owners talk about not being able to refinance with each other) If you go the extra mile on either of these two ways or even debt settlement or something like that you will be helping home owners the same way, FINANCIALLY, and still be making money as well as building your client base for future.

Sorry to go off on a rant but i see so many people complain about turn downs but really they should be trying to figure out how to try and help them out. There is a lot of money to be made rehabbing or modifying loans as well as credit repair and settlement. START DIVERSIFYING IF YOU WANT TO LIVE AS WELL AS YOU MIGHT HAVE IN YEARS PAST IN THE INDUSTRY!

I’m in hopes this message gets at least one person motivated again, all the negativity does get overwhelming after a while and there truely is a ton of money to still me made in financial services. Lets get on it!

Personal information

• The top part of your credit report has the identifying information. It includes your name, social security number, date of birth, current and former addresses, any employment history reported to the credit bureau, alerts on file and a consumer statement if you have one.

1. Where the information comes from

• Creditors report consumers’ identifying information along with their account information to the credit bureaus, as do public record collectors with public records. Sometimes when inquiries are made, identifying information that’s typed in also gets reported by creditors.

It’s not a big deal if your employment history has no information listed. Iit doesn’t get updated and your employment history is not an important piece of information as social security numbers and names are. They really don’t care who your employer is as long as you’re paying your bills on time.

Credit summary

This section lists your credit account activity and how many closed accounts you have, how many accounts are in good standing and the number of accounts you have currently past due. It also accumulates the different accounts you have, such as mortgage, revolving or installment.

Account information

This is where you’ll find the detailed information about your accounts. It includes all facts about your account, like the type of account it is and when you opened it and also payment information, such as the highest balance and the amount past due.

Inquiries

The CBR separates inquiries that hurt your credit score from those that do not — AKA - hard and soft inquiries. A hard inquirie occurs when you apply for new credit and give permission for a company to pull your credit report. Consumers and subscribers can see these inquiries. Soft inquiries are displayed only to the consumer and can occur when you request your own report or when one of your existing creditors reviews your account.

Collections

These are accounts that have been sent to collection agencies.

Public records

This section lists any bankruptcies, liens, garnishments and other judgments against you. Public record information comes from the courts at every level - city court, county court, state and federal courts.

What is Factoring? Factoring is loaning money to a company against their accounts receivables. Company’s that are not financially strong or just are in a Cash Crunch. What is reviewed? The borrowers PFS, Equity in company, cash flow, how high leveraged he is, the debt to cash flow ratio, Monthly sells, What type of product do the sell and who to and Amount of receivables outstanding. They are looking at the customer and how strong that money coming in is. If the customer is credit worthy, and is their an income trail of money coming in from the client. In other words do they have some good contracts that pay them consistently. When is factoring the option? A. Many times a company may pick up a new account or increase production to an account. They will need to get cash to pay for the needed inventory, payroll, supplies, etc… Many company’s hurt during payroll time, because they are not paid by their clients for 30days+ Factoring can help the business owner get paid for these contracts before the payment date. B. Business owners turn to their bank turn for credit lines. If these These clients are turned down from the bank due to low net worth or taxes showing a large loss for example. In this case Factoring Is good option. The bank will not look at the current contracts or new contracts made, but Factoring Companies will. C. Maybe the borrower has an existing credit line with the bank can not go high enough. Factoring can pay off that line and add to it. D. Also if the borrower has a credit line with their supplier but they will not increase their line because they have not been in business long enough. *Great idea for the client: Factoring cost 2% and if they client gets a 2% discount for paying early then factoring pays for itself. They would be borrowing money for free. If they negotiate well they can get a 3% discount and make 1% using the factoring company. E. (This is my favorite) If you have a Commercial borrower looking to refi their business to get cash out, and are denied because the property is not able to be refinanced. Factoring becomes an awesome option. *Another plus in factoring is pay out to you. Most factoring Lenders will pay a monthly fee ( like a Maint. fee or Activity fee ) to you as long as the client continues to use their services. Many times a company will continue this service for a long period of time because spending 10% or so is worth getting their money early. At the end of the year they add this to the loss column and write it off. A Good Example of the above.I have a client that is a tile company. They just landed a big contract with a major Nationwide chain that will be selling their tile. The downside is that immediately they need to stock up on all of this tile that that will be for sell. This is a huge order. But when the new contract comes calling they can’t say ok, I’ll order it and expect it in 30 days. Their product needs to be available then and there. So that means to stock up on this they will need to come out of pocket and wait for the Tile to be sold and then they need to wait to be paid. This can put a major hault on cash flow for other projects, jobs, and or daily operation. As you can already tell Factoring was perfect. Once the first order was in my Purchase order contract or Factoring facility was ready to go and in play. Now they will not have to wait for the 30-60 day payment I can supply them with cash now. As this company grows, and their business grows, as does the orders and my check back from the facility I put in place.

Figures reflect national average rates for $165,000, 30-year fixed mortgage.

Credit score– Interest rate–Monthly payment–Savings with higher score*

760-850 —– 6.274% —— $1,019 ———— $0
700-759 —– 6.496% —— $1,042 ———— $8,627
660-699 —– 6.780% —— $1,073 ———— $19,788
620-659 —– 7.590% —— $1,164 ———— $52,336
580-619 —– 8.905% —— $1,316 ———— $107,234
500-579 —– 9.899% —— $1,436 ———— $150,192

* The amount one could save over the life of the loan if credit score was 760 or higher.