I’m just now coming up for air after the Crittenden National Private Lender’s Conference two weeks ago in Vegas. I met so many great people at the event, from private money lenders and brokers to savvy real estate investors and industry innovators. You know it’s been a successful networking event when 2 weeks afterward you’re still following up with new contacts.
What is Crittenden? Crittenden National is a meet up of a bunch of different entities within the world of private money. Hosted this year in Las Vegas by private money players Western Capital Partners, this was my first introduction to the 2009 Conference. Because the Crittenden Event is so small, only 250 attendees, its easier to network as compared with a large trade show of say thousands of attendees.
The Conference is not just an opportunity for networking with industry profs. The meat of it is actually comprised of 6 hours of educational sessions where industry executives are panelists that discuss relevant topics and trends in private and commercial lending. In these sessions, attendees are able to ask questions to panelists and get insight and feedback. These sessions are a good opportunity to see what challenges others are facing in the industry and creative ways they are overcoming such challenges.
Some of the attendees and panelists included: Western Capital Partners, NonBankLender, LBG Realty Advisors, North Hill Capital Management, Northwestern Mortgage, and of course Corey Curwick from Private Money Utah!
What a great time. I recommend this event for anyone who wants to know what’s happening in the world of private money.
Posted by Corey Curwick on May 12, 2009
Many people cannot underestimate the value of a qualified broker when it comes to private or hard money loan requests. I always use the comparison between a good broker and a good attorney. The analogy is presenting a deal for funding to the lender compared with presenting a case to the judge and jury in the courtroom. If you were being tried for a felony and possibly facing jail time, would you go before the court and present your case without a good attorney?
I can’t tell you how many stories I’ve heard where a borrower tried to go before the lender (the judge & the jury) by him or herself and was denied the loan (found guilty). This being said, we have also funded many a loan (court case) by presenting it properly to our lender (the court).
Many times when borrowers are seeking private or hard money they are in a delicate situation. This is where a good broker plays a crucial role in getting a deal funded. A good broker understands all of the details of the loan request, including the strengths and weaknesses, and is able to present this to the lender in the best way possible.
A story that happened recently is about a client that needed a construction loan for a halfway completed condominium project. As his broker, we determined that private/hard money was his only alternative for completing the condo project. We queried his loan request to all of our lenders and luckily we were able to find one lender that was willing to stick his neck out and help our borrower finish his project.
Our lender gave us the initial terms sheet and our client tentatively agreed to the terms set forth by signing off on them. However, without consulting us first, the client decided to call the lender himself to see if he could negotiate the interest rate down. BIG MISTAKE.
In the course of the short phone call with our client, the lender began asking him questions about the project that were “delicate” questions, to say the least. These were certainly questions that we as the broker should have answered for our client. Back to the analogy of the court case, our lender heard some things that gave him a bad taste in his mouth. Several hours later, the lender called me back and said he was withdrawing the initial terms and had decided NOT to do the deal. GUILTY!
Because our client decided to go straight to the lender without our representation, he lost the terms that were on the table and as of today, his project is still sitting in limbo. This is a valuable lesson for all of us. Pick a good broker that’s been in the private/hard money lending game for a long time. This is your best chance for getting your deal funded (or winning your case!).
Posted by Corey Curwick on April 6, 2009
For more on this topic: http://www.PrivateMoneyUtah.com
II found an interesting post on a popular blog, The Consumerist, about popular mortgage scams to watch out for. Although I thought I had probably heard of all of the scams floating around out there, I was surprised to read about one scam that I had not yet heard of.
This particular scam is related to securing funding for condo conversions, construction, rehab, or other developmental-related uses. In this scam, individuals seeking funds for distressed or halfway completed projects will approach investor groups for funding.
Unbeknownst to the investor, no additional work is actually performed on the property and the investors and/or lenders are left with incomplete or completely uninhabitable structures. Yuck.
Any thoughts on how you could prevent this from happening if you were a lender? One thought seems the most obvious which is dispersing the funds in stages or even directly to the contractors. Any other ideas?
The other two mortgage scams mentioned in this blog post on The Consumerist I have already heard of.
- Foreclosure Prevention Scheme—In this scam, desperate homeowners who are about to lose their homes put their trust into individuals who claim they can prevent the house from going into foreclosure. In many cases, the homeowners will quit claim deed the property over to the fraudsters. Ouch. Talk about adding insult to injury! Does anyone have a story to share about one of these particular scams?
- Elderly and Immigrant Identity Fraud—Not a new scam, this type of mortgage fraud has to do with stealing an individual’s identity. Elderly and non English-speaking individuals get their identities stolen by scam artists who then use them to “straw buy”’ a property. Apparently this is being used right now with reverse mortgages. Does anyone have a story to share about this type of scam?
Another scam I wanted to mention that is really being talked about right now is the ‘forensic’ loan analysis. Now this isn’t actually mortgage fraud and I can’t confirm that all operations are indeed scams but it’s definitely along the same lines. As I understand it, in this scenario, individuals are being approached by entities posing as law firms. The firms claim that they will analyze the loan documents, trying to find fault and thus grounds for a law suit against the bank. Not wanting to get tangled in a suit, the bank pays damages to the borrower by reducing the principal of the loan. Borrowers who think they have a case will pay the law firm an initial deposit and then a monthly retainer. Does anyone have a good or bad experience to share with this type of an offer?
Utah actually has one of the highest rates of loan fraud in the U.S. A popular scam in Utah that has given it this ‘award’ is related to straw buying. A recent article in the Salt Lake Tribune shares a story about three Utah men who were recently indicted for recruiting people with high credit scores to be “straw buyers” to purchase 12 homes in Utah from 2005 through August 2007. The article said the men “siphoned off assets totaling nearly $2.9 million while leaving the straw buyers with mortgage payments they could not afford.”
Any other stories anyone would like to share that include some type of mortgage fraud? These stories are good to share between borrowers, brokers, and lenders alike. We all should be a little bit more aware of some of the fraudulent behavior that is happening out there.
I found a few good items that I wanted to add to this checklist. In an older article out of the Scotsman Guide, written by John Kutac of Western Capital, some other things jumped out at me that I wanted to add to this list.
John discusses the importance of the “initial presentation.” With so much competition for the eyes of the lenders, you have to know how to present your deal in just the right way. This is where an experienced broker can truly be of value because, as John wrote, quality presentation at the outset can give your deal the “best opportunity for funding.”
Another thing that jumped out at me from the article was the need to present both the strengths and weaknesses of the deal in a clear, concise fashion. Your broker should understand the points that make your deal a good deal, as well as any issues with the deal.
Posted by Corey Curwick on March 15, 2009