THINK OUTSIDE THE BUN
Originating Non-Mortgage Business Loans
We are now in the fourth month of a brand new year, 2007. For some in the real estate and or mortgage broker industry, whether we sell homes or originate residential and/or commercial mortgages, a new year means that we have, well, become older, grayer and heavier. Whether all of these apply or not, the real question we should be asking ourselves is "Have we become any wiser?"
Wiser you ask? Yes, and, as Joan Rivers would always ask, "Can we talk?" If you as a residential realtor and or mortgage broker are continuing to rely on the dwindling, if not already depleted refinance market, or are feeling the squeeze of increased competition among other residential mortgage brokers, then yes, we need to talk. If you are a commercial realtor or mortgage broker starting to see your market share decline by the increasing number of residential brokers who have taken the step over into the commercial arena , then, yes my friend, we need to talk as well. So, let's talk! And in so doing we will come face to face with some hard facts.
During the fourth quarter of 2006 originations dropped 48 percent, leaving the market over saturated with brokers competing for fewer transactions. In response to a stronger and growing economy the Federal Reserve Board continues to raise short-term interest rates. The 2007 Mortgage Bankers Association projections indicates a 22% decrease in overall originations and a 35% decrease in refinancing activity compared to 2005. As origination and refinancing activity continues their downward trend from the third quarter 2003 historical high, the forward thinking professional residential and commercial mortgage brokers continue to seek other streams of income which will be both financially rewarding and helpful in serving their clients.
My previous article mentioned there are several different types of non-mortgage related loans that both the professional residential mortgage broker and their commercial mortgage broker counterpart can employ to increase and enhance their personal production, but more importantly, and at the same time serve their business clients.
Some of the various vehicles employed to originate non-mortgage business loans include unsecured working capital through lines of credit and/or term loans (at bank rates and terms), accounts receivable financing, inventory and purchase order financing; equipment leasing and equipment sale and lease back as well as special programs for medical practices, doctors and other professionals.
I indicated in my previous article "Among all of the non-mortgage business loan programs, my personal favorite is the unsecured working capital program, which provides either a line of credit and/or term loan to the business. Over the many years we have successfully used this program to assist, enhance and close numerous residential and commercial real estate acquisitions and refinances."
At this point you may very well be thinking to yourself, "How is this possible?" Or, "Can you please give me an example of how this might assist one of my business clients!"
Thank you for asking! First and foremost, using unsecured working capital, either in the form of a line of credit or a term loan is possible, ethical and equally importantly, lawful. These funds are made possible through several well known and some not so well known, but, heavily regulated, financial institutions.
Let's say you have a business client, who has a two plus year old business, with a personal credit score of 660 or higher. Your client can even go "full doc" and is aggressively seeking to purchase another, or even refinance their current property. You go through the obligatory steps of pulling credit and completing the 1003. Everything looks great, but you realize after numerous conversations they will never be able to close, even on a refinance, because they are short of cash. Now what are you going to do? If you are not originating non-mortgage business loans your deal is dead! However, if you are a forward thinking mortgage broker you can now close this deal because you have access to among other programs, unsecured working capital.
In closing, let me ask this question; "How many deals have you lost in the past because your business client was short of cash and couldn't close?" Now let me ask another question; "How many of these same deals would you close if you were able to assist these very same business clients obtain unsecured working capital?"
Now is the time to "Think outside the bun!"
Mitchell Chapman is the Executive Director of National Business Finance, a business-consulting firm, who provides alternative financial solutions for small businesses. National Business Finance also specializes in $0 down, 100% residential and commercial construction financing with up to 20% equity available at closing.
For additional information contact 954-495-4791, or via e-mail at: Mitch@nationalbusinessfinance.com
You can also browse online at: http://www.nationalbusinessfinance.com/
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