JEROME GENTOLIA - COMMERCIAL LENDING - WESTCHESTER NY

Green Fuels LLC Signs US $220 Million Deal to Fund Bio-Diesel

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Sun, 01 Jun 2008 22:42:58 -0500

NEW YORK - Jerome Gentolia has secured a $220 million deal for Indianapolis, Indiana based Green Fuels LLC. This is the fourth bio-fuel project that members of Green Fuels LLC's management team have been an integral part of, with three key executives having previously served as plant managers for other ethanol and bio-diesel plants.

The deal by Gentolia is in conjunction with a Wall Street based structured project finance company that will serve as investing Collateral Guarantor for Green Fuels and provide a direct contribution of cash-backed banknote instruments as full collateral backing for the complete financing package.

"The Green Fuels management team is sophisticated, experienced, and very successful at choosing, acquiring, permitting, and operating efficient bio-fuel plants. Beyond that, an important factor for us is that their primary feedstock is not used as food for humans or animals, thus not having an adverse impact on growing global food shortage issues, which is a growing concern with some methods of alternative energy production," said Gentolia.

"It is a business that we choose to be in and are proud to be a part of. America needs more cost-effective energy, reduced air pollutant emissions, and a reduction in the reliance on imported oil," said a Green Fuels LLC representative of their current plans to build 4 bio-diesel plants in Indiana and 1 in Illinois over the next few years, adding that "as technology changes - which is now rapidly occurring in this industry - new opportunities and methodologies to produce bio-fuels likely will emerge and we are open to pursuing those future possibilities, as well."

JMK Hospitality, Inc signs US $381 Million Deal to Fund Luxury Hotels in U.S. Mid-Atlantic

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Mon, 26 May 2008 16:02:52 -0500

NEW YORK - Jerome Gentolia has secured a $381 million deal for North Carolina based JMK Hospitality, Inc., which was formed to invest in and manage existing hotel properties, as well as to develop upscale properties, in the Mid-Atlantic region (NC, SC, GA, VA, WV) of the United States.

The deal by Gentolia, in conjunction with a Wall Street based structured project finance company which will serve as investing Collateral Guarantor for JMK and provide a direct contribution of cash-backed banknote instruments as full collateral backing for the complete financing package, will be utilized for acquisition and development of numerous luxury properties, capitalizing on the Mid-Atlantic Region's tremendous recent growth, marked by the increasing strength of it's tourism industry.

This burgeoning region, stretching from Virginia and West Virginia in the North to Georgia in the South, boasts 3 of the Top 10 Most Visited US States, according to the Travel Industry Association website. (http://www.tia.org/pressmedia/fast_fact_states.html)

"The management team behind JMK breeds a great deal of confidence," remarked Gentolia. "Co-Founders James Bazluki, Matthew D. Adams and Kimberly Scott each bring a wealth of general business, legal and hospitality-industry experience, and we have every reason to believe that they will achieve their business objectives. We want to be a part of what they're doing."

Finding Money For Your Project

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Thu, 20 Mar 2008 01:08:05 -0500

Here are 3 of the major sources of project financing:

Debt Financing: You can borrow money and incur debt that you need to repay.
Equity Participation: You can sell shares of your company to investors or equity players in exchange for money needed to fund your project.
Debt and Equity Combination: Elements of both Debt Financing and Equity Participation is present.

It is important to consider how much debt you want to take. You have to take into consideration projected income and see if you have the ability to pay. It is also important to elucidate how much equity you should sell.

The decision is often not made by you but by the investors or lenders based on what you qualify for. It is important to understand that you are competing for their money, not the other way around. Many project owners make a mistake thinking that Project Financing is like "Lending Tree" where investors are competing for your business. It is the other way around. These investors receive hundreds of projects a month and cherry pick the best project. They are not only looking for good project and good management. They are also looking for principals that are already committed and principals that will not give them a headache.

Again, you are competing for thier money. It is important to remember the Golden Rule of finance, "He Who has The Gold Makes The Rules".

CDO Structured Finance Conference in New York

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Tue, 18 Mar 2008 17:56:46 -0500

Last week I attended the CDO Structured Finance conference here in New York. Most of the big players of Structured Finance are in attendance joining the panel to disucss the future of CDO. Conclusion: Bleak...very bleak!

Anyway, I noticed that majority of these Asset Managers that buys CDO and MBS have no exposure to the mortgage industry. There's also plenty of blame that went around (asset managers, investors, secondary market, sub-prime banks, rating agencies, etc).

Some of the panelist are complaining about the lack of information of CDO portfolios especially sub-prime pools. They pointed that it does not have DTI information.

Well they wont find it in a lot of files. The NO DOC and NO RATIO loans does not have any DTI information to begin with. LOL!

It is safe to conclude that no one has a solution to the current problem and that the future is uncertain. Let's just hope that it gets better.

GLOBAL ECONOMICAL CRISIS

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Wed, 05 Mar 2008 22:53:09 -0600

'PRACTICES of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.' (Franklin D Roosevelt's First Inaugural Address, 1933)

Humanity is undergoing in the post-Cold War era an economic crisis of unprecedented scale leading to the rapid impoverishment of large sectors of the world population. The plunge of national currencies in virtually all major regions of the world has contributed to destabilising national economies while precipitating entire countries into abysmal poverty.

The crisis is not limited to South-East Asia or the former Soviet Union. The collapse in the standard of living is taking place abruptly and simultaneously in a large number of countries. This worldwide crisis of the late 20th century is more devastating than the Great Depression of the 1930s. It has far-reaching geo-political implications; economic dislocation has also been accompanied by the outbreak of regional conflicts, the fracturing of national societies and in some cases the destruction of entire countries. This is by far the most serious economic crisis in modern history.

The existence of a 'global financial crisis' is casually denied by the Western media, its social impacts are downplayed or distorted; international institutions, including the United Nations, deny the mounting tide of world poverty: 'The progress in reducing poverty over the [late] 20th century is remarkable and unprecedented....'¹ The 'consensus' is that the Western economy is 'healthy' and that 'market corrections' on Wall Street are largely attributable to the 'Asian flu' and to Russia's troubled 'transition to a free- market economy'.

Evolution of the global financial crisis

The plunge of Asia's currency markets (initiated in mid- 1997) was followed in October 1997 by the dramatic meltdown of major bourses around the world.

In the uncertain wake of Wall Street's temporary recovery in early 1998 - largely spurred by panic flight out of Japanese stocks - financial markets back-slided a few months later to reach a new dramatic turning point in August with the spectacular nose-dive of the Russian ruble. The Dow Jones plunged by 554 points on 31 August (its second largest decline in the history of the New York Stock Exchange) leading in the course of September to the dramatic meltdown of stock markets around the world. In a matter of a few weeks (from the Dow's 9,337 peak in mid-July), $2,300 billion of 'paper profits' had evaporated from the US stock market.²

The ruble's free-fall had spurred Moscow's largest commercial banks into bankruptcy, leading to the potential takeover of Russia's financial system by a handful of Western banks and brokerage houses. In turn, the crisis has created the danger of massive debt default to Moscow's Western creditors, including the Deutsche and Dresdner banks. Since the outset of Russia's macroeconomic reforms, following the first injection of IMF 'shock therapy' in 1992, some $500 billion worth of Russian assets - including plants of the military industrial complex, infrastructure and natural resources - have been confiscated (through the privatisation programmes and forced bankruptcies) and transferred into the hands of Western capitalists.³In the brutal aftermath of the Cold War, an entire economic and social system is being dismantled.

'Financial warfare'

The worldwide scramble to appropriate wealth through 'financial manipulation' is the driving force behind this crisis. It is also the source of economic turmoil and social devastation. In the words of renowned currency speculator and billionaire George Soros (who made $1.6 billion of speculative gains in the dramatic crash of the British pound in 1992), 'extending the market mechanism to all domains has the potential of destroying society'.⁴

This manipulation of market forces by powerful actors constitutes a form of financial and economic warfare. No need to recolonise lost territory or send in invading armies. In the late 20th century, the outright 'conquest of nations', meaning the control over productive assets, labour, natural resources and institutions, can be carried out in an impersonal fashion from the corporate boardroom: commands are dispatched from a computer terminal, or a cellphone. The relevant data are instantly relayed to major financial markets - often resulting in immediate disruptions in the functioning of national economies. 'Financial warfare' also applies to complex speculative instruments, including the gamut of derivative trade, forward foreign exchange transactions, currency options, hedge funds, index funds, etc. Speculative instruments have been used with the ultimate purpose of capturing financial wealth and acquiring control over productive assets. In the words of Malaysia's Prime Minister Mahathir Mohamad: 'This deliberate devaluation of the currency of a country by currency traders purely for profit is a serious denial of the rights of independent nations.'⁵

The appropriation of global wealth through this manipulation of market forces is routinely supported by the IMF's lethal macro-economic interventions which act almost concurrently in ruthlessly disrupting national economies all over the world. 'Financial warfare' knows no territorial boundaries; it does not limit its actions to besieging former enemies of the Cold War era. In Korea, Indonesia and Thailand, the vaults of the central banks were pillaged by institutional speculators while the monetary authorities sought in vain to prop up their ailing currencies. In 1997, more than $100 billion of Asia's hard currency reserves had been confiscated and transferred (in a matter of months) into private financial hands. In the wake of the currency devaluations, real earnings and employment plummeted virtually overnight, leading to mass poverty in countries which had in the post-war period registered significant economic and social progress.

The financial scam in the foreign exchange market had destabilised national economies, thereby creating the preconditions for the subsequent plunder of the Asian countries' productive assets by so-called 'vulture foreign investors'.⁶In Thailand, 56 domestic banks and financial institutions were closed down on the orders of the IMF, and unemployment virtually doubled overnight.⁷Similarly in Korea, the IMF 'rescue operation' has unleashed a lethal chain of bankruptcies, leading to the outright liquidation of so-called 'troubled merchant banks'. In the wake of the IMF's 'mediation' (put in place in December 1997 after high-level consultations with the World's largest commercial and merchant banks), 'an average of more than 200 companies [were] shut down per day (...) 4,000 workers every day were driven out onto [the] streets as unemployed'.⁸ Resulting from the credit freeze and 'the instantaneous bank shut-down', some 15,000 bankruptcies are expected in 1998, including 90% of Korea's construction companies (with combined debts of $20 billion to domestic financial institutions).⁹South Korea's Parliament has been transformed into a 'rubber stamp'. Enabling legislation is enforced through 'financial blackmail': if the legislation is not speedily enacted according to the IMF's deadlines, the disbursements under the bailout will be suspended, with the danger of renewed currency speculation looming.

In turn, the IMF-sponsored 'exit programme' (i.e., forced bankruptcy) has deliberately contributed to fracturing the chaebols, which are now invited to establish 'strategic alliances with foreign firms' (meaning their eventual control by Western capital). With the devaluation, the cost of Korean labour had also tumbled: 'It's now cheaper to buy one of these [high- tech] companies than [to] buy a factory - and you get all the distribution, brand-name recognition and trained labour force free in the bargain....'¹⁰

The demise of central banking

In many regards, this worldwide crisis marks the demise of central banking, meaning the derogation of national economic sovereignty and the inability of the national State to control money creation on behalf of society. In other words, privately held money reserves in the hands of 'institutional speculators' far exceed the limited capabilities of the world's central banks. The latter acting individually or collectively are no longer able to fight the tide of speculative activity. Monetary policy is in the hands of private creditors who have the ability to freeze State budgets, paralyse the payments process, thwart the regular disbursement of wages to millions of workers (as in the former Soviet Union) and precipitate the collapse of production and social programmes. As the crisis deepens, speculative raids on central banks are extending into China, Latin America and the Middle East with devastating economic and social consequences.

This ongoing pillage of central bank reserves, however, is by no means limited to developing countries. It has also hit several Western countries including Canada and Australia where the monetary authorities have been incapable of stemming the slide of their national currencies. In Canada, billions of dollars were borrowed from private financiers to prop up central bank reserves in the wake of speculative assaults. In Japan - where the yen has tumbled to new lows - 'the Korean scenario' is viewed (according to economist Michael Hudson) as a 'dress rehearsal' for the takeover of Japan's financial sector by a handful of Western investment banks. The big players are Goldman Sachs, Morgan Stanley, Deutsche Morgan Grenfell, among others, who are buying up Japan's bad bank loans at less than 10% of their face value. In recent months, both US Secretary of the Treasury Robert Rubin and Secretary of State Madeleine K Albright have exerted political pressure on Tokyo, insisting 'on nothing less than an immediate disposal of Japan's bad bank loans - preferably to US and other foreign "vulture investors" at distress prices. To achieve their objectives, they are even pressuring Japan to rewrite its constitution, restructure its political system and cabinet and redesign its financial system.... Once foreign investors gain control of Japanese banks, these banks will move to take over Japanese industry...'¹¹

Creditors and speculators

The world's largest banks and brokerage houses are both creditors and institutional speculators. In the present context, they contribute (through their speculative assaults) to destabilising national currencies, thereby boosting the volume of dollar denominated debts. They then reappear as creditors with a view to collecting these debts. Finally, they are called in as 'policy advisers' or consultants in the IMF- World Bank-sponsored 'bankruptcy programmes' of which they are the ultimate beneficiaries. In Indonesia, for instance, amidst street rioting and in the wake of Suharto's resignation, the privatisation of key sectors of the Indonesian economy ordered by the IMF was entrusted to eight of the world's largest merchant banks, including Lehman Brothers, Credit Suisse-First Boston, Goldman Sachs and UBS/SBC Warburg Dillon Read.¹² The world's largest money managers set countries on fire and are then called in as firemen (under the IMF 'rescue plan') to extinguish the blaze. They ultimately decide which enterprises are to be closed down and which are to be auctioned off to foreign investors at bargain prices.

Who funds the IMF bailouts?

Under repeated speculative assaults, Asian central banks had entered into multi-billion-dollar contracts (in the forward foreign exchange market) in a vain attempt to protect their currency. With the total depletion of their hard currency reserves, the monetary authorities were forced to borrow large amounts of money under the IMF bailout agreement. Following a scheme devised during the Mexican crisis of 1994- 95, the bailout money, however, is not intended 'to rescue the country '; in fact the money never entered Korea, Thailand or Indonesia; it was earmarked to reimburse the 'institutional speculators', to ensure that they would be able to collect their multi-billion-dollar loot. In turn, the Asian tigers have been tamed by their financial masters. Transformed into lame ducks, they have been 'locked up' into servicing these massive dollar-denominated debts well into the third millennium.

But 'where did the money come from' to finance these multi- billion-dollar operations? Only a small portion of the money comes from IMF resources: starting with the 1995 Mexican bailout, G7 countries, including the US Treasury, were called upon to make large lump-sum contributions to these IMF- sponsored rescue operations, leading to significant hikes in the levels of public debt.¹³ Yet in an ironic twist, the issuing of US public debt to finance the bailouts is underwritten and guaranteed by the same group of Wall Street merchant banks involved in the speculative assaults.

In other words, those who guarantee the issuing of public debt (to finance the bailout) are those who will ultimately appropriate the loot (e.g., as creditors of Korea or Thailand) - i.e., they are the ultimate recipients of the bailout money (which essentially constitutes a 'safety net' for the institutional speculator). The vast amounts of money granted under the rescue packages are intended to enable the Asian countries to meet their debt obligations with those same financial institutions which contributed to precipitating the breakdown of their national currencies in the first place. As a result of this vicious circle, a handful of commercial banks and brokerage houses have enriched themselves beyond bounds; they have also increased their stranglehold over governments and politicians around the world.

Strong economic medicine

Since the 1994-95 Mexican crisis, the IMF has played a crucial role in shaping the 'financial environment' in which the global banks and money managers wage their speculative raids. The global banks are craving for access to inside information. Successful speculative attacks require the concurrent implementation on their behalf of 'strong economic medicine' under the IMF bailout agreements. The 'big six' Wall Street commercial banks (including Chase, Bank America, Citicorp and J P Morgan) and the 'big five' merchant banks (including Goldman Sachs, Lehman Brothers, Morgan Stanley and Salomon Smith Barney) were consulted on the clauses to be included in the bailout agreements. In the case of Korea's short-term debt, Wall Street's largest financial institutions were called in on Christmas Eve (24 December 1997) for high-level talks at the Federal Reserve Bank of New York.¹⁴

The global banks have a direct stake in the decline of national currencies.

In April 1997, barely two months before the onslaught of the Asian currency crisis, the Institute of International Finance (IIF), a Washington-based think-tank representing the interests of some 290 global banks and brokerage houses, had 'urged authorities in emerging markets to counter upward exchange rate pressures where needed...'¹⁵This request (communicated in a formal letter to the IMF) hints in no uncertain terms that the IMF should advocate an environment in which national currencies are allowed to slide.¹⁶

Indonesia was ordered by the IMF to unpeg its currency barely three months before the rupiah's dramatic plunge. In the words of American billionaire and presidential candidate Steve Forbes: 'Did the IMF help precipitate the crisis? This agency advocates openness and transparency for national economies, yet it rivals the CIA in cloaking its own operations. Did it, for instance, have secret conversations with Thailand, advocating the devaluation that instantly set off the catastrophic chain of events? Did IMF prescriptions exacerbate the illness? These countries' moneys were knocked down to absurdly low levels.'¹⁷

Deregulating capital movements

The international rules regulating the movements of money and capital (across international borders) contribute to shaping the 'financial battlefields' on which banks and speculators wage their deadly assaults. In their worldwide quest to appropriate economic and financial wealth, global banks and multinational corporations have actively pressured for the outright deregulation of international capital flows, including the movement of 'hot' and 'dirty' money.¹⁸ Caving in to these demands (after hasty consultations with G7 finance ministers), a formal verdict to deregulate capital movements was taken by the IMF Interim Committee in Washington in April 1998. The official communique stated that the IMF will proceed with the amendment of its Articles with a view to 'making the liberalisation of capital movements one of the purposes of the Fund and extending, as needed, the Fund's jurisdiction for this purpose'.¹⁹ The IMF managing director, Mr Michel Camdessus, nonetheless conceded in a dispassionate tone that 'a number of developing countries may come under speculative attacks after opening their capital account' while reiterating (ad nauseam) that this can be avoided by the adoption of 'sound macroeconomic policies and strong financial systems in member countries' (ie. the IMF's standard 'economic cure for disaster').²⁰

The IMF's resolve to deregulate capital movements was taken behind closed doors (conveniently removed from the public eye and with very little press coverage) barely two weeks before citizens' groups from around the world gathered in late April 1998 in mass demonstrations in Paris opposing the controversial Multilateral Agreement on Investment (MAI) under Organisation for Economic Cooperation and Development (OECD) auspices. This agreement would have granted entrenched rights to banks and multinational corporations overriding national laws on foreign investment as well as derogating the fundamental rights of citizens. The MAI constitutes an act of capitulation by democratic government to banks and multinational corporations.

The timing was right on course: while the approval of the MAI had been temporarily stalled, the proposed deregulation of foreign investment through a more expedient avenue had been officially launched: the amendment of the Articles would for all practical purposes derogate the powers of national governments to regulate foreign investment. It would also nullify the efforts of the worldwide citizens' campaign against the MAI: the deregulation of foreign investment would be achieved ('with a stroke of a pen') without the need for a cumbersome multilateral agreement under OECD or World Trade Organisation (WTO) auspices and without the legal hassle of a global investment treaty entrenched in international law.

Creating a global financial watchdog

As the aggressive scramble for global wealth unfolds and the financial crisis reaches dangerous heights, international banks and speculators are anxious to play a more direct role in shaping financial structures to their advantage as well as 'policing' country-level economic reforms. Free-market conservatives in the United States (associated with the Republican Party) have blamed the IMF for its reckless behaviour. Disregarding the IMF's intergovernmental status, they are demanding greater US control over the IMF. They have also hinted that the IMF should henceforth perform a more placid role (similar to that of the bond-rating agencies such as Moody's or Standard and Poor's) while consigning the financing of the multi-billion-dollar bailouts to the private banking sector.²¹

Discussed behind closed doors in April 1998, a more perceptive initiative (couched in softer language) was put forth by the world's largest banks and investment houses through their Washington mouthpiece (the Institute of International Finance). The banks' proposal consists in the creation of a 'Financial Watchdog' - a so-called 'Private Sector Advisory Council'- with a view to routinely supervising the activities of the IMF. 'The Institute [of International Finance], with its nearly universal membership of leading private financial firms, stands ready to work with the official community to advance this process.'²² Responding to the global banks' initiative, the IMF has called for concrete 'steps to strengthen private sector involvement' in crisis management - what might be interpreted as a 'power-sharing arrangement' between the IMF and the global banks.²³

The international banking community has also set up its own high-level 'Steering Committee on Emerging Markets Finance' integrated by some of the World's most powerful financiers, including William Rhodes, Vice Chairman of Citibank, and Sir David Walker, Chairman of Morgan Stanley. The hidden agenda behind these various initiatives is to gradually transform the IMF from its present status as an intergovernmental body into a full-fledged bureaucracy which more effectively serves the interests of the global banks. More importantly, the banks and speculators want access to the details of IMF negotiations with member governments, which will enable them to carefully position their assaults in financial markets both prior to and in the wake of an IMF bailout agreement.

The global banks (pointing to the need for 'transparency') have called upon 'the IMF to provide valuable insights [on its dealings with national governments] without revealing confidential information...' But what they really want is privileged inside information.²⁴

The ongoing financial crisis is not only conducive to the demise of national State institutions all over the world, it also consists in the step-by-step dismantling (and possible privatisation) of the post-war institutions established by the founding fathers at the Bretton Woods Conference in 1944. In striking contrast with the IMF's present-day destructive role, these institutions were intended by their architects to safeguard the stability of national economies. In the words of Henry Morgenthau, US Secretary of the Treasury, in his closing statement to the Conference (22 July 1944): 'We came here to work out methods which would do away with economic evils - the competitive currency devaluation and destructive impediments to trade - which preceded the present war. We have succeeded in this effort.'²⁵

Have we?

Developing World Affected By Financial Entanglement

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Wed, 05 Mar 2008 00:15:40 -0600

JUST as the world was recalling the 1997 Asian financial crisis on its 10th anniversary, evidence was accumulating that the global financial system was once again vulnerable. The extent of vulnerability was driven home by the simultaneous collapse of stock indices in the world's leading financial markets on 27 July, including those in so-called ‘emerging markets' in developing countries. What is disconcerting is that this synchronised collapse of markets was not the result of developments in each of the countries where these markets were located. Rather, the source of the problem was a crisis brewing in the housing finance market in the US, the ripple effects of which encouraged investors to pull out of markets globally.

Underlying these ripple effects is the financial entanglement which results from the layered financial structure, the ‘innovative' financial products and the inadequate financial regulation associated with the increasingly liberalised and globalised financial system in most countries. Few deny that the sub-prime housing loan market in the US - consisting of loans to borrowers with a poor credit record - is faced with a crisis, reflected in payment defaults and foreclosures. The problem lies in the way in which the preceding boom was triggered and kept going. Housing demand grew rapidly because of easy access to credit, with even borrowers with low creditworthiness scores, who would otherwise be considered incapable of servicing debt, being drawn into the credit net. These sub-prime borrowers were offered credit at higher rates of interest, which were sweetened by special treatment and unusual financing arrangements - little documentation or mere self-certification of income, no or little downpayment, extended repayment periods and structured payment schedules involving low interest rates in the initial phases which were ‘adjustable' and move sharply upwards when they are ‘reset' to reflect premia on market interest rates. All of these encouraged or even tempted high-risk borrowers to take on loans they could ill afford, either because they had not fully understood the repayment burden they were taking on or because they chose to conceal their actual incomes and take a bet on building wealth with debt in a market that was booming.

What needs to be understood, however, is that the problem is largely a supply-side creation driven by factors such as easy liquidity and lower interest rates. Utilising these circumstances, mortgage brokers attracted clients by relaxing income documentation requirements or offering grace periods with lower interest rates, on the completion of which higher rates kick in. As a result, the share of such sub-prime loans in all mortgages rose sharply. Estimates vary, but according to one by Inside Mortgage Finance quoted by the New York Times, sub-prime loans touched US$600 billion in 2006, or 20% of the total as compared with just 5% in 2001.

The increase in this type of credit occurred because of the complex nature of current-day finance that allows an array of agents to earn lucrative returns even while transferring the risk associated with the investments that offer those returns. Mortgage brokers seek out and find willing borrowers for a fee, taking on excess risk in search of volumes. Mortgage lenders finance these mortgages not with the intention of garnering the interest and amortisation flows associated with such lending, but because they can sell these mortgages to Wall Street banks.

The Wall Street banks buy these mortgages because they can bundle assets with varying returns to create securities or collateralised debt obligations, involving tranches with differing probabilities of default and differential protection against losses. They charge hefty fees for structuring these products and valuing them with complex mathematical models, before selling them to a range of investors such as banks, mutual funds, pension funds and insurance companies. These entities in turn can then create a portfolio involving varying degrees of risk and different streams of future cash flows linked to the original mortgage. To boot, there are firms like the unregulated hedge funds which make speculative investments in derivatives of various kinds in search of high returns for their high-net-worth investors. Needless to say, institutions at every level are not fully rid of risks but those risks are shared and rest in large measure with the final investors in the chain.

Turning Illiquid

This structure is relatively stable so long as defaults are a small proportion of the total. But as the share of sub-prime mortgages in the total rises and the proportion of defaults increases, the bottom of the barrel gives and all assets turn illiquid. Rising foreclosures affect property prices and salability adversely as foreclosed assets are put up for sale at a time when credit is squeezed because lenders turn wary. And securities built on these mortgages turn illiquid because there are few buyers for assets whose values are opaque since there is no ready market for them. The net result is a situation of a kind where a leading Wall Street bank like Bear Stearns has to declare that investments in two funds it created linked to mortgage-backed securities were worthless. The investors themselves have to sell off other assets to rebalance their portfolios, sending ripples into markets such as those in developing countries that have little to do with the US sub-prime market.

The problem is not restricted to the Wall Street banks. For example, in early August, the French bank BNP Paribas suspended withdrawals from three of its funds exposed to the mortgage-backed securities market. The bank reportedly attributed its decision to ‘the complete evaporation of liquidity in certain market segments', which constrained it from meeting withdrawal demands that could have turned into a run on the fund. Other cases included that of Dusseldorf-based IKB bank, which through offshore front company Rhineland Funding had invested as much as $17.5 billion in asset-backed securities. As the value of its assets fell, Rhineland had to call on a _12 billion line of credit that it had negotiated with a group of banks, including Deutsche Bank, besides IKB itself. Deutsche Bank decided to opt out of its promise to lend, resulting in the discovery that the fund had suffered huge losses and needed a bailout led by state-owned KfW. A similar plight reportedly afflicts a number of German Landesbanks as well. In sum, the effects of the sub-prime crisis are weakening distant segments of the global financial system, as a result of financial entanglement.

Entanglement also makes nonsense of the theory that a complex financial system with multiple institutions, securitization, proliferating instruments and global reach is safer because of the fact that it spreads risk. This was illustrated by the example of IKB referred to above. Banks wanting to reduce the risk they carry, resort to securitization to transfer this risk. But institutions created by the banks themselves, linked to them in today's more universalized banking system or leveraged with bank finance, often buy these instruments created to transfer risk. In the event, as The Economist (11 August 2007) recently put it, ‘banks (that) have shown risk out of the front door by selling loans, only... let it return through the back door.' This, it notes, is what exactly transpires in the relationship between the three major prime broking firms - Goldman Sachs, Morgan Stanley and Bear Stearns - that offer prime broking services, including loans, to highly leveraged institutions like hedge funds. The bailout of Long Term Capital Management in 1998 was necessitated because of entanglement of this kind involving all the leading merchant banks.

Investments by banks, pension funds and mutual funds are driven by the search for high and quick returns in a world of excess liquidity. In deciding to make investments on structured products intermediated at different levels, these institutions, ill-equipped to judge the true value and risk of these assets, rely on rating agencies. But these ratings have turned out to be unreliable and pro-cyclical, serving as erroneous and belatedly corrected signals. Noting that ‘in a matter of weeks thousands of portions of sub-prime debt issued as recently as 2005 and 2006 have had their ratings slashed', The Economist (11 August 2007) argued that investors should not have trusted the original ratings because ‘the rating agencies were earning huge fees for providing favorable judgments'. What is more, even when there is no deception involved, rating agencies themselves are not equipped to assess these products and rely on information and models provided by the creators of the products themselves. Once an asset is rated there is much reluctance to downgrade it, because it would raise doubts about related ratings as well as trigger a sell-off that affects prices of related securities that may warrant further downgrades.

Emerging Market Exposure

The problem is that if these factors result in the accumulation of doubtful assets by investors such as banks, pension funds and mutual funds, any downturn spreads the effects into markets where these institutions have made unrelated investments. In fact, institutions overexposed to complex structured products whose valuation is difficult are saddled with relatively illiquid assets. If any development leads to liquidity problems they are forced to sell off their most liquid assets such as shares bought in booming emerging markets. The effect that this can have on those markets would be all the greater the larger is the exposure of these institutions in these markets.

Unfortunately this is precisely what has been happening in most emerging markets including those in Asia. There has been an acceleration of financial flows to developing countries during recent years when as a group they have been characterized by rising surpluses on their current account. Net private debt and equity flows to developing countries rose from a little less than $170 billion in 2002 to close to $647 billion in 2006, an almost four-fold increase over a four-year period. While net private equity flows, which rose from $163 billion to $419 billion, dominated the surge, net private debt flows too increased rapidly. Bond issues rose from $10.4 billion to $49.3 billion and borrowing from international banks from $2.3 billion to a huge $112.2 billion. And, net short-term debt, outflows of which tend to trigger financial crises, rose from around $0.5 billion in 2002 to $72 billion in 2006.

What is more, there is a high degree of concentration of these flows to developing countries, implying excess exposure in a few countries. Ten countries (out of 135) accounted for 60% of all borrowing during 2002-04, and that proportion has risen subsequently to touch three-fourths in 2006. In the portfolio equity market, flows to developing countries were directed at acquiring a share in equity either through the secondary market or by buying into initial public offers (IPOs). IPOs dominated in 2006, accounting for $53 billion of the $96 billion inflow. But here too there were signs of concentration. Four of the 10 largest IPOs were by Chinese companies, accounting for two-thirds of total IPO value. Another three of those 10 were by Russian companies, accounting for an additional 22% of IPO value.

Despite this rapid rise in emerging-market exposure, with that exposure being excessively concentrated in a few countries, the market is still overtly optimistic. Ratings upgrades dominate downgrades in the bond market. And bond market spreads are at unusual lows. This optimism indicates that risk assessments are pro-cyclical, underestimating risk when investments are booming, and overestimating risk when markets turn downwards. But two consequences are the herding of investors in developing-country markets and their willingness to invest a larger volume of money in risky, unrated instruments. When liquidity problems arise, even for reasons unrelated to these markets themselves or the countries in which they are located, these investments are quickly unwound precisely because those markets are still liquid, and a collapse of the kind seen in end-July ensues. It hardly bears stating that a collapse that is in the form of a mere ‘correction' can soon turn into a full-fledged crisis.

There is another reason why such a danger exists. Surges in capital flows to developing countries tend to increase the incentives to invest in these markets. Consider the case of India. Foreign direct investment into India rose sharply between 2005 and 2006 from $6.7 billion to $16.9 billion or by more than $10 billion. Much of this is in the form of new equity inflows, often from private equity firms, that acquire for speculative purposes stock in even unlisted companies that is in excess of 10% of their total share capital. As a result these speculative flows get recorded as foreign direct investment. Moreover, flows defined as portfolio flows (less than 10% of equity) declined only marginally from $12.2 to $10.6 billion.

Another change in recent times seems to be a huge increase in commercial borrowing by private-sector firms. With caps on external commercial borrowing relaxed and interest rates ruling higher in the domestic market, Indian firms seem to be taking the syndicated-loan route to borrow money abroad at relatively lower interest rates to finance their operations, investments and acquisitions. Net medium-term and long-term borrowing increased from $1 billion in 2005 to $13 billion in 2006, or by a huge $12 billion.

A consequence of these flows is excess availability of foreign exchange, since India's current-account deficit is relatively small because of remittances from overseas workers and exports of software and IT-enabled services. In the event, among the many indicators of India's post-reform economic success is one that is proving an embarrassment: swelling foreign-exchange reserves. Over the year ending 4 May 2007, these reserves rose by close to $42 billion to touch $204 billion. Two-thirds of this 26% increase in reserves occurred over the first four months of this year.

This galloping rise in reserve levels reflects the effort being made by the Reserve Bank of India (RBI) - India's central bank - to mop up the large inflow of foreign exchange into the country. By filling the gap between the demand for foreign exchange and its availability within the country, the central bank has in the past ensured a degree of stability of the rupee.

However, more recently the rupee has been gaining in strength, despite the RBI's efforts as reflected in the sharp increase in reserves. This occurs not because the RBI has not made an effort to prevent such appreciation. The RBI has indeed been intervening vigorously in foreign-exchange markets, resulting in a sharp increase in the reserve of foreign-exchange assets it holds. The problem seems to be that the inflow of foreign exchange into India has been so massive that it has not been matched by even this enhanced intervention by the central bank, resulting in an excess supply of foreign currencies and a consequent appreciation of the rupee.

Rupee appreciation incentives foreign investment, inasmuch as investors not merely benefit from the high rupee returns available in India's hitherto booming stock market, but gain in dollar terms because of rupee appreciation, if such appreciation persists till they sell their assets and convert their rupee receipts into foreign exchange for repatriation. This encourages carry trades by speculative investors who borrow in markets characterized by depreciating currencies and invest in markets with appreciating currencies in search of high returns. Conventionally, it was argued that anomalies of this kind would be self-correcting. A country with an appreciating currency would experience a widening of its current-account deficit, increasing the risk of investing in that currency. But in a world where excess liquidity and the proliferation of speculative investors has reduced risk aversion, these corrections do not come soon enough and can be dramatic when they do. There are many examples of this, including, in particular, crisis-prone Turkey.

High Risk

There are a number of implications of these tendencies that have at their core the phenomenon of financial entanglement. To start with, the risk associated with the current surge in capital flows to developing countries can be and is much greater than was true during previous episodes involving a similar surge. Moreover, the surge is accompanied by the growing acquisition of assets in developing countries outside the stock market with objectives that are largely speculative, so that a sell-off, if it occurs, would be far more widespread. And the persistence of the herd instinct has meant that the surge in fixed and portfolio investment flows has resulted in a revival of credit flows that is unbridled since it is accompanied by risk-mitigation techniques that transfer risk to those who are least equipped to assess them. Unfortunately, all of this occurs in an environment in which the target of both investment and debt flows is the private sector, which makes it difficult for governments that have liberalized financial regulation to control such flows.

One consequence of this large and concentrated flow of capital is that when assets have to be retrenched by financial firms because of developments in any component of their portfolio, a few emerging markets can become the sites of that sell-off. This partly explains why stock exchanges in emerging markets have turned bearish and volatile in recent weeks, primarily because of the ripple effects of the sub-prime mortgage crisis in the US. Investors incurring losses in those markets are reordering their global portfolios to meet immediate commitments, resulting in a sell-off that has global repercussions. This is not because all, or even most, of these investors are directly involved in mortgage financing. Rather, it is because of their investments in assets - derivatives or collateralized debt obligations - linked to sub-prime mortgages.

There are many lessons that are once again being driven home by these developments that are of particular significance for developing countries that are rapidly liberalizing their financial systems. First, excess liquidity in a loosely controlled financial system provides the basis for speculative and unsound financial practices, such as excessive sub-prime lending that increases fragility.

Second, such practices are encouraged by the ‘financial innovation' that liberalization triggers, which increases the number of layers of intermediation and allows firms to transfer risk. As a result, those who create risky ‘products' in the first instance are less worried about the risk involved than they should be.

Third, as the product moves up the financial chain, investors are less sure about the risk and value of these products than they should be, rendering even low-risk, first-stage tranches prone to value loss. Fourth, this inadequate knowledge appears to be true even of the rating agencies on whose ratings investors rely, resulting in erroneous ratings and belated rating downgrades. This implies that as and when a rating downgrade does occur, the asset turns worthless, since there is nobody willing to buy into the asset.

Fifth, new forms of self-regulation appear to be poor substitutes for more rigorous control, since the current crisis originates in a country whose financial sector is considered the most sophisticated, well regulated and transparent and serves as a model for others reforming their financial sectors. And finally, financial globalisation and entanglement imply that countries that have more open and integrated financial systems are prone to contagion effects, even if the virus originates in remote locations and markets. These are lessons that must inform policy in these so-called emerging markets.

Financial Crisis and Deregulation

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Fri, 29 Feb 2008 01:28:54 -0600

It would be nice to write off the current crisis on Wall Street and global financial markets as something that only matters to the investor class.

Unfortunately, the effects are already being felt in the lower-income communities around the United States. Worst-case scenarios for what spins out from the US mortgage meltdown are truly frightening - a severe world recession is a distinct possibility.

Whether such worst-case scenarios can be averted, or softened - and preventing the recurrence of similar crises in the future - depends on abandoning the laissez-faire financial regulatory regime entrenched over the last decade.

The current crisis is predictable (and predicted) result of a massive U.S. Housing bubble, which itself can be traced in part to global economic imbalances that could have been prevented.

At least five distinct regulatory failures led to the current crisis.

•1. Failure to Manage the U.S. Trade Deficit - The housing bubble (as well as the surge in leveraged buyouts of publicly traded companies ("private equity") was fueled by cheap credit - low interest rates. One reason for the cheap credit was influx of capital into the United States from China. China's capital surplus was the mirror image of the U.S. trade deficit - U.S. corporations were sending lots of dollars to China in exchange for the cheap stuff sold to U.S. consumers.

•2. Failure to Intervene to Pop the Housing Bubble - Along with an influx of capital, Federal Reserve policy kept interest rates very low. There were good reasons for the Fed Policy, but that did not mean the Fed was helpless to prevent housing bubble. As economists Dean Baker and Mark Weisbrot of the Center for Economic and Policy Research insisted at the time, Federal Reserve Chair Alan Greenspan simply by identifying the bubble - and adjusting public perception of the future of the housing market - could have prevented or at least contained the bubble. He declined, and even denied the existence of a bubble.

•3. Financial Deregulation and Unchecked Financial "Innovation." - A key reason that mortgages were made available so widely and with such little review of recipients' qualifications was a shift in which institutions hold the mortgages. Traditionally, banks and non-bank mortgage lenders made loans, but then sold to others. Investment banks packaged lots of mortgage loans into "Collateralized Debt Obligations" (CDOs) and then sold them on Wall Street, with a promise of a steady stream of revenue from interest payments. These operations were pretty much unregulated. Despite the supposed sophistication of the investors involved, no one took account of how shoddy the loans were or - more fundamentally - the certainty that huge numbers would go bad if and when the housing bubble popped.

•4. Private Regulatory Failure - It was the job of ratings agencies (like Standard and poor's, and Moody's) to assess the CDOs and give investors guidance on how risky they were. They failed totally, likely in part because they wanted to maintain good relations with the investment banks issuing the CDOs.

•5. No Controls Over Predatory Lenders - The toxic stew of financial deregulation and housing bubble created circumstances in which aggressive lenders were nearly certain to abuse vulnerable borrowers. The terms of your loan don't matter, they effectively purred to borrowers, so long as the value of your house is going up. They duped borrowers into condition they could not possibly satisfy, making the current rash of foreclosures on subprime loans inevitable. Effective regulation of lending practices could have prevented the abusive loans, but none was to be found.

Unfortunately the consequences of the mortgage meltdown go far beyond the foreclosure epidemic, as horrible a toll as this is taking. The entanglement of the financial sector with mortgage instruments, and the ripple effects of the housing bubble, have made lenders uncertain of who even among large corporations and financial institutions is credit worthy. The resulting credit crunch endangers the functioning of the global economy. Less acute, but probably more profound, the popping of the housing bubble is driving down home prices. U.S. consumer demand over the last five years has been driven by consumers borrowing against the increased value of their homes; with housing values falling, that process is working in reverse. The depressed housing market is also ravaging the construction sector, a nontrivial portion of the U.S. economy. A serious recession looms as real possibility.

Mitigating these harms and preventing the worst now depends on active and interventionist government - a government stimulus plan, aggressive efforts to force lenders to adjust mortgage terms and let people stay in their homes, new standards of transparency and regulation for high finance. The coming months will tell whether any lessons have been learned.

Robert Weissman

ARE YOU KIDDING ME! ...PART 2

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Sat, 25 Aug 2007 16:41:23 -0500

I just saw this post (see below) on one of the mortgage forum boards. Are you kidding me? Haven't this guy learned anything about the sub-prime demise? Does he know that giving loans with scenario like this is the reason why we have close to 2 million foreclosures this year alone.

Why would this guy even consider pulling this one off? Second liens on a negative amortization loan? Are you kidding me! To top it off this is a Stated Income and Stated Asset.

I know they exist before, but don't even try asking if it is still available! Gee Whiz! They should'nt have been created in the first place.

This is the post on the board:

ANY LENDERS STILL DOING SECONDS BEHIND NEG AMS?

Was hoping to find a lender doing 2nds behind a neg am. Not sure if the product exists anymore. If so... please leave contact info and I'll get a hold of you. Thanks much...
Stats:
CA
SISA
88%
432000 LA
488000 Appraisal
686 FICO
Owner Occ
SFR

ARE YOU KIDDING ME!...PART 1

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Sat, 25 Aug 2007 16:28:36 -0500

I just saw a post on one popular scenario forum asking if there is a bank that pays 5 points broker compensation. I said to myself "You've gotta be kidding me!". Now who is the hell would like to work with an LO who charges 5 points to a client? Asking the question in the first place is criminal enough!

I understand that brokers don't work for free and we should be compensated for our hard work. But 5 points? This guy is a crook! How about Section 32 my friend?

AFFORDABLE HOUSING VS HIGH-END HOMES

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Mon, 13 Aug 2007 22:40:12 -0500

Recently commercial private investors have more appetite on affordable housing developments than high-end home developments. Exit strategies have to be continually revisited and revised in accordance to the market because of the sluggish sales and increasing inventory due to foreclosures.

The sub-prime demise and increasing foreclosures rendered stringent guidelines making it more arduous to qualify for a loan. Guidelines now require more down payment, higher FICO scores, and traditional documentation. There is now more focus on risk management and repayment which is scanty a year ago.

During the Real Estate boom the emphasis was leaning towards buying "bigger" and "more expensive" by using hybrid programs and low documentation programs as a tool.

Although the new changes might be a nuisance it is necessary to heal the market.

RENEGADE LENDING

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Sat, 04 Aug 2007 22:45:24 -0500

Brokers are intermediary between borrowers and lenders.

Brokers should explain and educate borrowers what the lender requirement and guidelines so they can meet them, NOT the other way around. However, somewhere between the "refi-boom" and before the sub-prime demise the industry took a 180 degree turn. Borrowers took control and start demanding 100% financing, 6% seller concessions, negative amortization loans, high LTV even on sub-prime borrowers, heck there are even 125% financing available. FICO requirement dropped to 500 from 620. Guidelines have changed to meet the borrower's appetite during the growing real estate boom with little emphasis on repayment and risk management.

Hundreds of new programs spawned with hardcore "outside the box" (or should I say "way way outside the box") guidelines. The industry became tactless and softened their guidelines to close more loans and meet the robust real estate growth. Like a lamb in a lion's den brokers and borrowers feasted on these new programs.

Everything came to a grinding halt early this year with the sub-prime demise. Lenders once again went back to the basic of repayment and risk management. The floodgate that was opened 5 years ago is now bottlenecked by strict guidelines. The practice of renegade lending is over.

COMMERCIAL REAL ESTATE INVESTING 101

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Tue, 24 Jul 2007 22:44:04 -0500

Finding an office building with high occupancy rate is not the only factor to consider it a good investment.

Know the market and research the market.
Where is the market going on the area where property is located?
What is the vacancy rate on the surrounding areas?
Are the current tenants financially sound or are they on the verge of bankruptcy?
How long are their lease agreements?
Are there other office buildings being built or about to be built on the already high vacancy area?

CD/MTN "NO INTEREST" STRUCTURED COLLATERAL PROGRAM. HOW DOES IT WORK?

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Tue, 19 Jun 2007 23:23:53 -0500

The "No Interest Structured Collateral Loan Program", commonly called the "CD/MTN Program", is an established system of structured financing that uses traditional banking mechanisms as its fundamental components. The result is a stable structure that procures 100% monetary instrument collateral for international project financing. Using a well calculated and balanced approach, the program provides highly competitive benefits and profits to all participants.

A CD (Certificate of Deposit)/MTN (Medium Tem Note) is merely a financial instrument that is backed by cash, and is freely transferable. The general structure of using a CD/MTN as a collateral instrument has existed for 50 years. Naturally, there are many firms and brokers who have used or attempted to use CD/MTN instruments as collateral in one way or another. Some professional firms have been successful, but many inexperienced intermediary brokers have failed.

Given the problems that can arise from these types of loans you need to work with firms that have the experience and success records to complete these type's of funding.

The "Program" itself is a structure, or mechanism, of structuring third party collateral into the loan or funding package for project financing. Since this structure must be implemented through a series of complex legal contracts between multiple participants in the transaction, the CD/MTN Program must be managed by a licensed law firm.

The particular group of Collateral Providers and their investors who we work with have specialized in this system for over 20 years. The collateral providers and investors are required by contract to participate in the program for a minimum of 5 years, so it is a well established system with reliable participants.

The "No Interest Structured Collateral Loan Program" is one of the fastest systems for structured capital loans, using collateral from a third party investor. Because the investor provides collateral by means of a "deposit" to purchase a "certificate of deposit" (CD) or MTN, the investor is called a "Depositor". The end result of the structured transaction is the equivalent of an "interest free" loan (from the point of view of the client) in most cases, where the Client repays only a discounted amount of Capital, with minimal risk and maximum benefit to both the bank and the company.

The primary function of the structure is to procure collateral provided from a third party at a "discount", and arrange for it to be paid for by the Borrower Company from the loan funds at the time of closing. The result of the structure is that Borrower receives a net amount of capital that it needs to implement its project at a cost lower than a traditional loan, the Depositor receives immediate repayment of the collateral plus profits, and the bank receives full collateral backing of the total principal amount of the loan.

The ability of the structure to reliably generate a "win-win-win" transaction for all participants is made possible by the fact that the CD/MTN instrument used as collateral doubles in value over a 10 year period. This increase in value from maturity of the CD/MTN makes it possible to provide real and tangible benefits for all parties to the transaction.

All other expenses related to structuring the loan and procuring the collateral are added to the amount of the loan, to ensure that they are paid from the loan at closing.

Depositors are multinational corporations and consortiums of trusts and pension funds, which have billions of dollars in liquid assets. They have contractual and legal obligations to make these funds work for maximum profits. For such capital sources, direct investment in projects is too "high risk", too "low return", and too much time to wait. Accordingly, they categorically refuse to finance actual projects or invest funds directly, as a matter of principle and policy.

Instead, Depositors accomplish their goals through purchasing collateral for use in structured loan transactions. Within about 24 hours, with no risk whatsoever, the Depositor receives 50% of its money back in "cash", plus the "interest certificates" of the CD/MTN as repayment of the other 50%, which Depositor then sells to a pre-arranged "exit purchaser" for a profit.

DESCRIPTION OF PARTICIPANTS

• Applicant Company - provides a fully prepared investment project that qualifies for financing, applies for structured collateral financing through the Program Manager, and signs the necessary contracts with other parties to the transaction.

• Program Manager - manages a flow of qualified investment projects from Applicant Companies, maintains contractual relations with a group of Collateral Providers, and maintains working relations with a group of participating Funding Banks. The Program Manager is not a participant in the transaction, but coordinates and facilitates all stages of structuring the transaction.

• Collateral Provider - maintains contractual relations with groups of Depositors and Purchasers, and maintains working relations with a group of participating Issuing Banks. Works directly with Issuing Banks on behalf of Depositors, and directly with Funding Banks on behalf of Applicant Companies.

• Depositor - purchases the CD/MTN as a financial instrument for use as collateral, by making a deposit into the Issuing Bank, to guarantee the loan to Applicant Company from the Funding Bank. The Depositor is usually a pension fund, trust, investment fund, credit union, or a major multinational corporation. (Sometimes the Collateral Provider itself elects to be the Depositor.)

• Purchaser - purchases the right of trust ownership of the "Interest" component of the CD/MTN instrument at a discount from the Depositor. He thereby becomes the assigned beneficiary of the interest stream generated by the deposit. The Purchaser is usually a government pension fund or private trust. (Sometimes this participant is not needed, as the Depositor may prefer to remain the beneficiary owner to receive increased profits over time.)

• Issuing Bank - receives the monetary deposit from Depositor, issues the CD/MTN containing both "Primary" and "Interest" components, and registers the owners, trustees and beneficiaries of both components of the CD/MTN instrument as a result of the transactions. This must be an A rated bank.

Funding Bank - receives the "Primary" component of the CD/MTN as a monetary collateral instrument, issues a loan to the Applicant Company backed by the CD/MTN, and distributes the loan funds in accordance with instructions of the Applicant Company. This can also be an investment fund, credit union or alternative bank without an A rating, as long as they accept the collateral and have sufficient reserves to finance the project. (In most cases, the Funding Bank is the same entity as the Issuing Bank.)

FUNDAMENTAL COMPONENTS OF THE TRANSACTION

The following is an overview of the fundamental components of the financing transaction:

1. Client requests the Capital Amount necessary for implementing the Project, and submits an application through the Program Manager. The Program Manager then verifies all financial factors and calculates the required total amount of the CD/MTN loan, to ensure that the "Net Capital" paid to Client from the structured loan is equal to the Capital Amount needed for the project.

2. Depositor purchases a CD/MTN from Issuing Bank in an amount equal to 200% of Capital Amount.

3. Depositor, as owner of the CD/MTN, assigns this financial instrument to Funding Bank as 100% Collateral on the Loan to Client.

4. Funding Bank issues to Client a loan in an amount equal to 200% of the necessary Capital Amount, and equal to 100% of the purchase price of the CD/MTN.

5. Client gives Escrow instructions to Funding Bank. In accordance with these instructions, Funding Bank performs the following:

A. Pays 7.0% of Loan Amount to Collateral Provider as closing costs, which includes all expenses and fees incurred for procurement of the collateral. (Tax deductible as legal & professional services.) Collateral Provider has recovered all expenses plus compensation, and exits, such that Client does not owe them anything, and has no remaining obligations.

B. Pays up to 0.5% of the Loan to Funding Bank (or third parties) to cover any potential closing costs, if any. (Tax deductible as financing costs.)

C. Pays 50% of the Loan (equal to 50% of the purchase cost of the CD/MTN) to Depositor, consisting of 50% repayment for the provided collateral. (Tax deductible as repayment of investment.)

D. Assigns the "Interest" component of the CD/MTN instrument to Depositor as beneficiary, consisting of the second 50% repayment for the provided collateral (in the form of contractual assignment in repayment of investment, registered by the Issuing Bank). (Tax deductible as repayment of investment.) Depositor takes possession of a Derivative Certificate of Interest on the CD/MTN, has now recovered 100% of its investment plus profits, and exits, such that Client does not owe them anything, and has no remaining obligations.

6. Depositor usually sells the "Interest" component of the CD/MTN instrument to Purchaser. The interest stream matures to 100% of the value of the original monetary deposit, which is equal to the Loan Amount. Since Depositor already received 50% direct repayment from Client, it can recover the remainder of its investment funds by selling its beneficiary rights to the "Interest" component for 52% of maturity value or slightly more. This results in immediate and full repayment of investment, plus a commission of at least 2%. The Purchaser is purchasing monetary funds at almost half their value, and in 10 years will cash the financial instrument for its full maturity value.

7. Client has purchased the CD by payment of half of the Loan Amount and by assignment of the "Interest" component, and has become the full owner of the originally issued CD/MTN stripped of the interest stream, and thus owns the "Primary" depositary component of the CD/MTN.

8. Client assigns the "Primary" component of the CD/MTN to Funding Bank as 100% cash Collateral on the total Loan Amount, equal to 200% of the Capital Amount.

9. Client receives at least 42.5% of the Loan Amount, which equals 100% of the Requested Capital Amount for implementation of the project.

10. Client has already agreed with Funding Bank in advance that after 10 years, the collateral instrument is automatically converted to a repayment instrument, and thus becomes property owned by the Funding Bank. Accordingly, until the moment of conversion Funding Bank is the "assigned beneficiary in repayment" of the "Primary" depositary component.

11. Funding Bank independently cashes the CD/MTN at the end of 10 years, and all funds from cashing are applied to fully repay the Principal of the Loan. (Tax deductible as repayment of principal on the loan.) The beneficiary right to cash the CD/MTN was previously registered by the Issuing Bank, which performed its obligations, and then both Funding Bank and Issuing Bank exit.

12. In practice, Client has already repaid the Principal of the Loan from the beginning, as a result of the structured transaction. Thus, Client pays to Funding Bank only annual interest on the Loan during the 10 year period. (Tax deductible as interest payments.)

13. From the Client's point of view, the "interest only" payments are equivalent to fixed annual payments returning the amount of Capital received during the 10 year period. For this reason the loan is sometimes called "no interest". Everything else is taken care of as a result of the structures and mechanisms of the financing transaction.

14. All contracts between all parties for all components of the transaction are prepared in advance and signed simultaneously, and their signing constitutes the actual implementation of the transaction. Thus the transaction is instantly completed, with no risk to any of the parties or participants.

CD PROGRAM HIGHLIGHTS

• Loan Sizes: $10 Million to $2 Billion

• Bank issues a loan to Client for 100% of CD/MTN Amount (Equal to 200% of the requested Capital Amount for the Project) (7% of the 200% covers closing costs)

• Example: Loan Amount requested for the Project is $10M. The actual amount the payments are based on is $20M.

• Payments are made over a 10 year period based on the actual loan amount @ 200%

• Interest is Libor plus 1 - 2% (Average rate of interest is 6.5%)

• Closing time is 6-10 months

• All types of projects are eligible

• Non-Recourse Loan

• For "Construction Loans" and other projects that require a long start-up period before launching, deferments are standard, ranging from 1.5 - 3 years. During the period of deferment, the Borrower/Company does not have to pay any interest or minimum payments. While most projects are capable of repaying the loan (of any amount) in full within 3-4 years after launching, the standard practice is to loan for 10 years.

• No penalties for early pre-payment at any stage.

• Principal is Self-Liquidating (See CD/MTN Program Funding Summary Above)

• The Amount paid back over the 10 year period works out to be equal to the Loan Amount requested ($10 M) in our scenario above. If the Loan Amount requested were $100 M, the amount paid back over 10 years would be $100 M. (Note the difference between the CD Program and a traditional method of funding where principal and interest payments are made)

NEW 100% COMMERCIAL FINANCING PROGRAMS

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Tue, 19 Jun 2007 22:53:14 -0500

New products that I offer:

A. 100% financing, CD Collateral Program (+10M): Pay only interest 1-2 point plus prime for 10 Year loan with a 0% - 15% equity participation. Another company who leverages assets to fund projects.

• Executive Summery

• • Business plan

• • Pro-Forma

• • POF of the $150,000

B. IPO/IR Services:

This is the ideal for technology based businesses, Energy, Bio Diesel, Ethanol, etc., and/or a sold company looking to raise capital via an IPO. The IPO company, once approved will handle every aspect of taking the company public via an IPO. They will strategically maximize a network of stockbrokers, institutional investors, foreign stock fund managers, securities analysts and sophisticated investors by employing a combination of powerful touch points to raise awareness of each client's profile and brand.

In short, they will do it all for the company. No up-front fees involved. They even have key CEO's, CFO's, from Fortune 500 companies in place, if necessary to strengthen the companies personal. They can raise 3 to 30 million within a couple of months and raise 200 to 300 million to 1B and more thereafter.

NEW COMMERCIAL LENDING PRODUCTS (UPDATE)

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Mon, 11 Jun 2007 20:12:43 -0500

New Commercial Products! Land Development (Commercial or Residential), Golf Course, Restaurant, Resorts, Casino most property types considered.

CD PROGRAM HIGHLIGHTS (collateralized by CD)

Loan Sizes: $10 Million to $2 Billion
Loan Amount is 107% of the requested loan amount (7% covers closing costs)
Example: Loan request is $10M x 107% = $10.7M. The actual loan amount is $10.7M. This amount is what the interest payments are based on.
Interest is paid over a 10 year based on the actual loan amount
Interest is Libor plus 1 - 2%
Upto 15% Equity Participation
All types of projects are eligible
Non-Recourse Loan
For "Construction Loans" and other projects that require a long start-up period before launching, deferments are standard, ranging from 1.5 to 3 years. During the period of deferment, the Borrower/Company does not have to pay any interest or minimum payments. While most projects are capable of repaying the loan (of any amount) in full within 3-4 years after launching, the standard practice is to loan for 10 years.
No penalties for early pre-payment at any stage.
Principal is Self-Liquidating. This is an interest only loan

HOW TO MOVE FORWARD

1. Client supplies the Business Plan on the project. ( showing precise use of proceed, proforma and etc. )

2. Fee Agreement shall be prepared and signed by the client.

3. Client supplies a Proof of Funds Letter from their Bank showing proceeds of $55,000.00

GAS STATION FINANCING

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Mon, 11 Jun 2007 14:50:54 -0500

Many are asking what requirements and paperwork are needed to finance a Gas Station. Commercial Lending is all about cash-flow! The better the cash-flow is the better your chances of getting financed.

There are 2 options. You can go Full Documentation; meaning you are going to disclose Income Tax Returns and we'll use the data from your ITR and the operating expense to calculate the DCR (Debt to Coverage Ratio). However, most business owners are using "creative taxation". And "creative taxation" requires a "creative financing", the solution; NO Documentation Loan. The problem with a NO DOC loan is it lowers the amount of financing. you can ONLY get to 60-65% LTV. It also requires a higher credit score. You can finance up to 85%-90% on a FULL DOC loan and credit score is not much of a factor depending on the cash flow.

Lenders usually require 3 years ITR and a YTD P & L for a FULL DOC loan.

Find out how old is the gas tank, capacity of the tank and the contents of the tank. Ask for Phase 1 Environmental Report. A new phase 1 environmental report is usually not required for newer gas tanks (less than 10 years).

Ask if there is a convenience store, automotive repair and other amenities. Oh by the way did I tell you that most gas stations make the bulk of their income from the convenience store and not from the gas sales.

Ask how many gallons are pumped every month, what is the profit margin per gallon? Ask if it is a flagged gas station or not.

Some lenders are going to use appraisal value based on "improved land only" others will base on the value of the Real Estate and business. Borrowers should at least have some Management experience in the industry.

Are You Investing On Your Clients?...Part 2

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Mon, 11 Jun 2007 13:25:38 -0500

Do you invest on your clients? One good way of investing is by sponsoring a "house warming party" for purchase mortgages. What is a $300-$400 catering if you made $4,000-$5000 on the closing?

At the "house warming party" I usually propose a toast before the meal congratulating the new homeowners and by reminding everyone (by introducing myself) that I am the Mortgage Professional responsible for bringing them into their new home. This is also a good way to build relationship with their Real Estate Agent by inviting them in such events to get more exposure. After the party you now have a more personal relationship with both the borrower and their Real Estate Agent.

Sometimes I even help my clients "register" their house warming parties, and I have become quite an expert on it. After the party you can assure that you are now their mortgage consultant for life.

Just to tell you how successful these parties have been, I have become a Godfather to a few of my clients' children because of the good relationship that got forged from the parties. Talk about building friendship!

Are You Investing On Your Clients?

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Mon, 11 Jun 2007 08:18:03 -0500

I just got a call from an old client. His sister is buying a house and he made sure that she calls me to take care of her loan. This is the 5^th referral I got from this client. I do not do residential loans anymore so I promised him that I will refer his sister to a very reputable LO and I myself will oversee everything. It's been a while since I traded residential to commercial lending but I will not abandon my old clients who still call me regularly to help them with their residential mortgage.

Why did I get this phone call? Because I invested time and money with this client. I did his purchase mortgage years ago and I remember him complaining about the how old the washer and dryer in the house. So I decided to invest after closing the deal. I bought him a new washer and dryer! I figured what is a few hundred dollars investment compared to the thousands I made on this deal.

He told me that he remember me every time he does his laundry. Because of this one act I've become a trusted friend and mortgage advisor.

Looking for more ideas on how to invest in clients? Subscribe to my blog! This is just Part 1 of 10. I have more articles to come!

MY REAL ESTATE AGENT

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Tue, 05 Jun 2007 07:50:07 -0500

This Sunday my Real Estate Agent, Frances Sabot of Houlihan Lawrence, Mahopac New York, showed me some homes and I might say she did I good job handling herself. I specifically ask to see "mother and daughter" homes and that is exactly what she showed me and they are all within my price range as well.

She's extremely patient with us and very informative and honest. She walked an extra mile for us to make sure we see as much homes as we can in one day.

I will surely recommend her. Are looking for a home in Westchester New York? If you are she's you gal!

I hope I will be moving to a new home before the end of the year!

ARE YOU GUILTY OF LOAN STEERING?

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Mon, 04 Jun 2007 21:57:35 -0500

Are you asking the right questions from your borrowers? Do you keep their best interest in mind or are you just concern in making money and close the deal with total disregard to the borrower's purpose and goal?

We have to remember that we are offering service and solution. If you are only concern in closing loans it adulterates the purpose of offering a solution and service. The service becomes a disservice and solution becomes a quandary.

Many mortgage professionals sell loan products (not a solution) even if it is unsuitable to the borrower. They sell very short term ARM products even if the borrowers ask for a 30 fixed program. They steer them away from what is best for them to a product that can make them more money. Two to three years ago Option Arm products are selling like hot cakes. Do you think it is because that these products are sold to the correct borrowers or is it all about loan steering to make more commissions? Option Arms usually pay a hefty yield spread (2 pts at the back). And guess how you make more points at the back?....by giving them a higher margin! That's right! The higher the margin the higher your yield spread premiums, the higher the true rate you give your client. But some mortgage professionals failed to disclose the true rate, they sell the minimum payment instead. This is a blatant deception!

Do you think these very same mortgage professionals will have the same success selling a higher rate 2-3 points Yield Spread on a 30 Year fixed program or regular ARM product? I don't think so! That's because you cannot use the minimum payment as a sales tool because it does not exist with these programs. This is the motivation of some mortgage professionals with regards to selling Option Arms. It's all about the money and not what is right.

I am astounded that the lenders themselves pay big money to promote such behavior on their sales seminars. They even invite known sales gurus to sell this particular product and not the service or solution.

If you have a client who is 63 years old and about to retire 2 years from now, are you going to offer them an Option ARM or a short term ARM rather than a 30 years fixed? You know that they will have fixed income as soon as they retire and most probably will not see anymore increase in income. You also know that they will probably live in their home for the rest of their golden years and will most probably not refinance anymore. I am surprised to find out that there are quite a number of borrowers in this situation that got suckered into Option Arm or regular ARM. It really does not make sense!

I am just puzzled why lenders offer bigger yield spread premiums on dangerous exotic programs than conservative programs. How come there is more incentive to sell the wrong product?

So what are you going to do? Are you going to sell a solution? Are you going to do what is right? Let's make the mortgage industry a respectable industry like it was a decade ago. It's up to us to make a difference.

More blogs about this topics on links below:

http://activerain.com/blogsview/81020/ARM-FORECLOSURE-STATISTIC-IT

STOP COMPARING RESIDENTIAL TO COMMERCIAL LENDING

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Sun, 03 Jun 2007 13:49:44 -0500

I am getting frustrated of brokers treating commercial lending like residential. They will give me a very complicated scenario (like a Residential Development, Resort, Golf Course, etc) and demand a rate immediately without even submitting a single paperwork. This is not something you can just shop easily by throwing a scenario. The factors that affects the pricing in commercial lending is different than the residential and every deal is different, there are different property tiers and different variables to consider.

Brokers also demand a low rate that they cannot get anywhere in this earth or universe, and give threats that they will take their business to another lender if we could not get them the rate they expect.

They claim they can get better rates somewhere else, but six months down the road they will call me again for the same transaction that has not closed. They eventually lose the client for their arrogant ignorance.

If you are new in commercial lending, listen to the Account Executives, learn as much as you can from them. Get your education with the right people who have years and years of experience in the commercial field. Ask for help from the lender's representatives, they are here to help you. Remember AEs get paid when loan closes so they'll do everything they can to educate new broker accounts.

If you are a Residential Lender and are about to take the plunge in the Commercial realm, educate yourself thoroughly and stop comparing this new endeavor to residential. And remember we AEs and Lenders are here to help you with your education. You are our lifeblood.

NEW 100% FINANCING PROGRAMS FOR LAND DEVELOPMENT, GOLF COURSE AND RESORT DEALS

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Sun, 03 Jun 2007 01:44:39 -0500

100% FINANCING (GOLD PLUS PROGRAM)
FOR $50 MILLION OVER TRANSACTIONS
CAN FUND 100% OF THE LOAN UP FRONT AND PLACED IN AN ESCROW ACCOUNT IN AS LITTLE AS 30 DAYS.
THE LTV IS NO MORE THAN 70% OF THE COMPLETED APPRAISAL VALUE
THE ONLY CLOSING COST IS 10% CASH OF THE TOTAL LOAN AMOUNT TO BE PAID AT FUNDING (10% cash down will be used to secure the loan with insurance policies from AAA rated insurance carriers).
THE LOAN IS A NON-RECOURSE LOAN
WE DO ALL PROPERTY TYPES WORLD WIDE
RATES ARE FROM 1%-3.75% OVER THE TRUE PRIME

100% JOINT VENTURE PROJECT FINANCING PLATFORM

(PLATINUM PLUS PROGRAM)

NO INTEREST, NO DEBT ACCRUED, NO PAYMENTS, AND NO PAY BACK.
THIS IS 100% FUNDING WITH JOINT VENTURE TAKING 40-50% OF THE EQUITY.
AFTER APPROVAL THERE IS A $80,000 FEE (this is to cover Due Diligence, Audit Company and etc.).
THERE IS NO UPFRONT COST PRIOR TO APPROVAL
IF FOR SOME UNFORSEEN REASON THE APPORVAL IS REVOKED THE FEE IS REFUNDABLE.
FUNDING WILL TAKE PLACE IS 60 DAYS
DRAW SCHEDULE OF FUNDS TAKING PLACE EVERY 60 DAYS (if construction needs a shorter time frame, draw amounts can be increased or structured for a project).
NOTE: This is project based not buyer/borrower based; there is no need to show large amounts of assets or liquidities. It is straight forward and simple (if the project makes sense it will work).

THE PROBLEM WITH STATED INCOME!

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Wed, 23 May 2007 10:42:01 -0500

Originally Stated Income is created for the Self-Employed and Cash base tip jobs like (Waiters, Bartenders, Hair dressers, etc). However it evolved during the "Refi Boom" and that's when the abuse started. It no longer became a stated income, it became a liar loan instead.

Underwriters started using Salary.com as a base of comparison for stated income W2 earners. But when do we really use Salary.com and when do we not use it?

Someone who moved to a new job who expects a lot of future overtime may be a good candidate. If you use his current YTD earning to compute DTI it will not take into account the overtime income therefore you take the average income of his job description to qualify him. Salary.com is very detailed; it will give you the median income of a job description per zip code. However, is there proof that an overtime income will take place? Will the borrower take advantage of the overtime to boost his income later?

Other perfect candidates are stockbrokers. They usually get a huge bonus at the end of the year. Again if you calculate income based on YTD on the first quarter of the year you are not getting the bonus income. If this is the borrower's first year as a stockbroker his last 2 years W2 will obviously not show proof of the bonus.

I am also surprised to see a lot of people who keeps money under the bed mattress. There is no paper trail of bank deposits to qualify for a bank statement program. This happens more often that you think!

What appalls me is that they use Stated Income not because of expected future income, hard to document income or irregular income. They use it to qualify borrowers even if it is obvious that they do not make such income. Every time I have a new client, I usually ask for their old mortgage documents (from their former LO) to get a better picture of their mortgage history and how their current mortgage was packaged. I remember seeing a babysitter got qualified (Stated Income) for a $650,000 loan. I can't help but scratch my head. It is a Stated Income loan not a NO DOC. Her score is not that high to qualify her for a NO DOC.

This client responded to my ARM campaign and would like to refinance because she could barely make the $4950 mortgage payment and her ARM is also about to expire adding an additional $750 to her current mortgage. She does not have equity on her property since she bought the home less than 2 years ago at 100% with a 6% seller concession. Oh by the way, the appraisal was also inflated to qualify them for the extra 6% concession. I know this lady is going down the path of foreclosure. It is only a matter of time.

And getting back to NO DOC, let's say she has a 750 score and have enough equity for a 90% LTV loan. Is it fair to give her the loan? She qualifies for a NO DOC loan, the score is high and it meets the 90% LTV requirement! (by the way this was 2 years ago when such programs are still available). Let's say with a NO DOC loan her new payment will be $4250 which is lower than what she is paying right now, however you know that she only makes around $3,000 a month, she is single mom and does not get any income from a husband, she lives alone, no parents or other relative helps her with the mortgage. Do you think it is fair for you to give her a loan with the knowledge that she will lose her home eventually because she can't afford it? Can you live with it?

Do you have stories similar to this? I would like to hear from you!

IRATE BORROWER

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Sat, 28 Apr 2007 01:29:04 -0500

I remember one time I got an angry call from my borrower threatening to walk out of the refinance process just because the appraiser put "Townhome" on the appraisal report. HE angrily contested that it is a "Split Colonial". Who cares! It has no bearing on the loan. WE met the value so what's the problem? It will not change the term, rate, the closing, anything! And I have nothing to do with the appraiser.

BLOOD IS THICKER THAN THE MORTGAGE PROFESSIONAL

JEROME GENTOLIA (UNIVESAL HOLDING LTD- UNILION GROUP) — Fri, 27 Apr 2007 23:56:58 -0500

When I was in Residential Lending I have this client who responded to my ARM letter campaign. He has a current rate of 6.5% that is about to expire the following month to a new rate of 9.5%. His monthly payment will go up $750. With no increase or new source of income it is imperative for him to act immediately and refinance his home before the ARM expires. I explained to him that the current margin of his mortgage is 6.5%, and at that time the 6 month LIBOR index is 4.57% (adding both is a total of 11.07%), however he has an initial cap increase of 9.5%. It will however adjust every six months until it hits the max rate of 12%. Whew! What a loan! I explained to him the inevitability of the rate increase and payment. WE reviewed my new proposal (also a 6.5% rate) but a 30 year fixed program since he told me specifically that he has no intention of refinancing in the near future. The rate I gave him is par pricing, I charged a point (a great rate considering his credit profile). I explained to him his new loan, all the disclosures and GFE. He signed them afterwards and we scheduled an appraisal for the following day. I ordered title a few hours later. The loan is about $620K, a pretty sizable commission for me.

I left happy thinking that this will be one of those easy deals. I was dead wrong. The following day he called me to cancel the appraisal and to put his deal on hold because his brother told him that his rate and mortgage payment will not increase that much, since his (brother) mortgage didn't. I told him to fax me a copy of his brother's mortgage documents so I can explain why his brother's mortgage did not go up the way his ARM will. His brother has an original rate of 6.25% with a margin of only 2.25%. When his ARM expired (based on my calculations) the index was 4.2%. Therefore his rate only jumped to a 6.45%. I explained to him again the math. That his margin is 6.5% not 2.25% and that he should not compare his rate increase to his brother's loan because of the big difference in margins. 2.25% is not 6.65% it's that simple! Plus the index is higher as well. After educating him about ARM mortgage he still did not listen to the math and somehow hoped that his brother's words will bring him a miracle. Oh by the way his current bank also notified him of the increase, but still not convicing enough.

The following month he received his mortgage statement and walla! All my numbers are dead on! To cut the story short he gave me a call and we closed the deal afterwards. The following year his own brother gave me a call to refinance his ARM to a fixed. Oh by the way, since I did more work, I added an additional 50 bps to my point and made more money.

Family may mean well! But why listen to someone who fixes car for a living? Why call a mortgage consultant if you rather listen to your mechanic brother. I wouldn't go to a mortgage broker is my car is broken! I wonder how many closing his brother did? I have tons thoughout my carreer.

Want to read more CRAZY BORROWER stories, subscribe to my blog! More to come!