Eliminate Time-Wasters

By Dan Harkey

Recognize that time is a precious, limited, and non-renewable resource; once gone or wasted, it is gone forever. Resources designed to magnify the value of time include hiring assistants to handle delegated activities and technology-based programs, including hardware and software programs. This recognition empowers you to control your time and resources, leading to more efficient and productive work.

Planning the use of time and the relative importance of each daily activity has occurred for thousands of years.? Organizing daily actions and choices, whether personal planning or technology-driven, allows us to accomplish more by essentially leveraging our time. ?This process, rooted in individual accountability and self-sufficiency, empowers us to take control of our time and resources.

I'd like you to look at every deal expecting to handle issues, solve problems, close the loan, and earn a fee. By proactively working towards removing delays, setbacks, excuses, barriers, and misrepresentations, you are not just managing the loan process but empowering yourself and taking control of your professional journey.

Problems to work through: You may recognize some of the songs, rock and roll groups, and other references:

·????? I can’t get any satisfaction:

A loan broker calls or emails about a loan request but needs to gain knowledge about the proposed loan transaction.? The broker offers no information about the borrower’s qualifications or relevant details about the security property.

Why do some mortgage brokers merely transport a file with no inquiry?? The loan broker's role is not just to pass on the package but to collect the data and reasonably assess all the material facts with the idea of full disclosure. This means providing all relevant information about the borrower's qualifications and the security property. Upholding this principle of full disclosure is a fundamental aspect of a loan broker's role and a mark of responsibility and trustworthiness.

·????? ??Hang on, sloppy:

Sorting through a sloppy loan package submission takes time and effort. The borrower’s loan broker is eager to complete the loan, so they may accept a minimally completed loan application without complete financial data.

As a loan broker or agent, it's crucial to ensure the accuracy and completeness of the loan application to avoid potential issues down the line. Incomplete applications can lead to significant problems, and it's your responsibility to prevent them. Knowing these potential pitfalls enables you to navigate the loan closing process more effectively.?

·????? The borrower was infatuated with inflated valuations:

Is time spent sorting out Pie-In-The-Sky property valuations? ?A few borrowers have illusions of grandeur when suggesting the value conclusion of their collateral property.

A few appraisers will complete an appraisal with inaccurate data, including dissimilar comps, improper adjustments, mismatching data, and plain, messy quality.? The funding lender may pull a property profile and go online to analyze comparable(s) and value conclusions, only to be disappointed.? A borrower’s broker should have done this upfront, which would save time and aggravation.

·????? ?Money for nothing and profits for free:

A borrower has little or no skin in the game. Many borrowers purchase a property with little or no down payment. The new owner then borrows rehab money from a fix-and-flip lender to improve the property.

When they come to you, their loan request is intended to refinance the purchase money first loan and have the rehab debt rolled into one new replacement loan.? The borrower owns the property but has no capital at risk and could walk away as the market goes down.?

·????? Foolish games:

A loan request based on future rather than current property valuation and current equity is a 'foolish game' that some borrowers play. Future value is speculative and cannot be relied upon. For instance, a borrower might overestimate the future value of their property to secure a larger loan. This approach can lead to unrealistic loan amounts and potential defaults. ?The idea that a property will increase in value cannot be relied upon unless the lender’s business model is to make loans based on hypothetical future value, such as construction and fix and flip loans.? The business model is acceptable if the risks are priced into the loan. However, if the future value is overestimated, it can lead to a situation where the borrower cannot repay the loan, leading to potential defaults and loss for the lender.

A real estate loan secured by a lien on the property is usually funded based on current protective equity.? The market value less the lien(s) equals the value of the protective equity.? A loan request that does not contain significant protective equity at the origination will leave the lender at risk of the borrower defaults:

·????? ?Supercilious and obnoxious fruit cakes:

Pushy and condescending borrowers!? Some people love to show disrespect by pretending they know how the business works, but you don’t. For instance, they might dismiss your expertise or demand special treatment.? The term “supercilious’ comes to mind.? They behave as if they are better than you and that your opinions, beliefs, or ideas are not necessary.? They feel you are beneath or of lesser quality because they have more experience than you.? They may have little or no experience, but you have 10 to 50 years in the trenches.? ?The opposite side of the arrogance and supercilious coin is always insecurity.? “Of course, you don’t need any documents- this is hard money-don’t you understand the business?”

It's crucial to remember that treating everyone you meet with dignity and respect is not just a courtesy; it's a professional standard. Unprofessional behavior, such as belittling others or dismissing their expertise, undermines the trust and cooperation essential for successful loan transactions and reflects poorly on the individual. By maintaining professionalism and open communication, you foster an environment of respect and collaboration, making everyone involved feel more respected and valued.

·????? Silence is not golden:

The borrowers go from interested in obtaining the loan to wishy-washy, silent, and too dark. This behavior can lead to delays and misunderstandings, potentially derailing the loan process. They do not return phone calls and seemingly disregard the service provider’s time value. The quicker this loan goes on hold (or in the trash bin), the less time is wasted. Processing and underwriting staff should focus on transactions most likely to close.

·????? The Grateful Dead:

This situation is called 'The Grateful Dead' in the context of loan transactions. It's a situation where the loan broker should have known that the transaction was unfeasible and should never have presented it but still pressures the funding broker to approve and fund the loan. If the loan defaults, this can lead to wasted time and resources, potential reputational damage, and financial loss.

In most cases, saying “no” to a loan broker who should have known the transaction was a loser and should never have been presented is problematic. The loan transaction, borrower, and collateral property have no chance of success. Still, the loan agent pressures the funding broker to perform supernatural miracles to approve and fund this (POS) loan. Most mortgage brokers are highly professional and always submit complete packages with full disclosure in mind. They understand the bifurcation of being a good fiduciary for the borrower and maintaining a professional approach while dealing with the lender. Seek out those professionals to work with and make a mental note of the others.

Please share this article with friends and associates.

Thank you

Dan Harkey

Educator & Private Money Finance Consultant

949 533 8315 [email protected]

Visit www.danharkey.com

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