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Goldstar Credit Corporation expands commercial offerings

National Mortgage Professional
May 01, 2008

Atypical bailoutsJoe Cornoreverse mortgages, FHA, home equity conversion mortgages, adjustable-rate mortgages I have been writing articles for more than seven years now. Out of all of the articles, podcasts and Web site newsletters, the top two articles I have written that have generated the biggest response have been "Mortgage modification" and "Debt to income management." Credit re-structuring is at a far third place in comparison. This is possibly due to the unique market our industry is experiencing. Teaching unique concepts is very popular, but rather than being popular, they are dearly needed in today's market. The need for uniqueness in the industry is required to service the modern homeowner and purchaser. So, the busy time spent in responding to inquiries has fostered yet another article in utilizing things atypically. Let's begin. I have found hardly any need for reverse mortgages. They run at higher rates, charge monthly and annual fees until the cost in obtaining the loan compares with a conventional loan, and you have to sell them to the older generation, which I am personally approaching quickly. The Federal Housing Administration has home equity conversion mortgages (HECMs) in both adjustable-rate mortgages (ARM) and fixed-rate mortgages, Fannie Mae has the Home Keeper Mortgage in ARM only, and there are some private sources that do jumbo loan limits, such as Financial Freedom's Cash Account Advantage Plan in ARM only. You need to be trained, and you must personally be present at either the application or the counseling of the borrowers. Most choose the application, as you need to obtain approximately 60 signatures and disclose about 130 pages to the borrowers before starting the loan process. I am not exaggerating the figures. When I am in my late 70s to early 80s, I will not be interested in signing so many things in one sitting. However, if the borrowers are over 62 years of age and are facing default and possible foreclosure, the reverse mortgage can salvage their home if they have equity in the property. People playing the 100 percent HECM game, along with depressed areas that may have diminished equity, will not be able to take advantage of the reverse loan as a bailout. There are plenty of baby boomers that fall within a percentile that could utilize such a loan. Now do you see why the age of a borrower is so important? The reverse mortgage does not concern itself with credit scores, mortgage rates, credit period or notices of default. In fact, most of what is concerned in the standard amortized loan is not a concern in a reverse loan. I do not believe in encumbering a property later in life, except if you must. Learning about and using the reverse mortgage loan as a bailout is a must. I have previously written about short sales and a lender restructuring a loan for a borrower. How about contacting the lender and arranging for him to take the property back in lieu of foreclosure and establishing a lease agreement with the recent ex-owners of the property? Im sure your next question is: Why would a lender take a property back and rent it back to the just recent ex-owners? By taking the property back, the lender saves in processing and foreclosure, legal, vacancy, repairs, and re-marketing costs. Using this approach also reduces the amount of people affected financially by the loss of the property. In essence, the lender gets the property back swiftly, he leases it back to the past owners, and if the tenants do not keep up on the rent payments, they are evicted. As a licensed broker, you may wish to contact various lenders and work out an arrangement for expediting potential defaults and foreclosures for them, at a fee. There are so many ways to generate income in this industry, and I love showing you ones that others do not even think about. You can obtain the lenders' default list and work to assist the borrowers in retaining their home as owners or renters. Remember, there may be some that work on a reverse mortgage and you are not requesting the lender to take the property back every time. Come on, folks! Put your imagination to work here. In the arrangement with the lender, you are explaining that you will incorporate many methods and concepts for helping him save by taking the property back and working to remedy the bad debt load sitting on his books. You will need to pay for more training in this regard. This leads me into my final concept on unique ways to bailout borrowers and brokers like you. If you are providing service at lower fees, you need to seek other means of compensation. You need a unique bailout. Trainers market, contract, receive payments and fill classes to train. They usually promote themselves, and they net all of the gain for their efforts. You see the ads exclaiming that the guru will be in a city near you. They book the class and pay for the cost before they secure a flight and hotel accommodations. If a course is not selling well, they cancel the engagement and schedule the pre-paid sales for a later date. I, on the other hand, have always established training classes uniquely. I let the brokers promote and sponsor my trainings. The brokers send out the ads and promote the course. They collect the fees, and when they can cover the cost for the event, they contact and secure the date with me. Usually, 16 paid attendees cover my charges and expenses. I have trained classes of 40 to 50 people. However, I do not bank any more after the initial 16. If 16 people create $5,000, it makes sense that 32 people create $10,000. You, as the promoting broker, earn $5,000 of income with 32 attendees. Of course, they can have two days of training by putting three to four attendees' payments towards having me for two days. You become known in your market, you assist in organizing and promoting strong education for the industry, and you bank while doing such. Wouldn't it be fantastic to teach unique ways to work your area by sponsoring training? Now, for the sake of other trainers, you are free to contact and pick any trainer to arrange a local class if you wish. Earning additional money in this way does not mean there will be no competition or copycats. In essence, I have given a unique and atypical way to market, thus opening up my concept to becoming typical. I may be protected from the average trainer by thinking atypically, but nevertheless, it is now published and public for all to take advantage of. Let us see if there are atypical brokers out there, and maybe in the future I will be writing that this is the most responded to article that I have written to date. Perhaps it won't, unless you incorporate these opportunities to benefit both your borrowers and your paycheck. Joe Corno is president of Utah-based We Be Consulting and Seminars. He may be reached at (801) 836-2077 or e-mail [email protected]
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