Top 10 Broker Mistakes

When I started writing this article, I had in mind that it could be used to help residential mortgage brokers who broker commercial loans. Once I got the idea from my head to my Treo, I realized that it could just as well be addressed to residential loans as well.

10. When to use a bank and when not. You can translate this as "Know your lender & know their programs" Realize the limitations of every company. There are some deals that they have an appetite for and some deals they don't... No matter what your account rep says. Items like seasoning, cash out, property type, credit and so forth. Trying to push your deal down some lenders throat will only drive you, the lender and the borrower completely crazy. Know the obstacles of your deal... The time frame the borrower needs to close, their rate sensitivity, etc and try to find the best lender for their needs. In the commercial arena, banks tend to have the best rates, but they can be slow & difficult to deal with. Private lenders are usually the opposite. Ask a lot of questions of the borrower and the lender. Do some homework and you'll be a matchmaker before you know it.

9. Take a complete application - Don't leave out items that you think is unimportant or will make things more difficult. Let the underwriter make an accurate decision with accurate information. Leave off items on a 1003 is amateur at best and sometimes deceitful.

8. Don't leave stuff out - Give lenders, especially commercial underwriters the full picture. They should understand why the borrower is applying for the loan and how it will help them. Don't leave the underwriter scratching their head wondering what on earth is going on.

7. Know your deal... It has to make sense - Chances are a hotdog vendor or an older person on a small fixed income is not going to buy a 10,000 square foot, million dollar home. Ask questions and don't hang up with the borrower until the deal makes sense. If it doesn't make sense to you, it's not going to make sense to the underwriter. When they call you with questions, be sure to know the answers. A lot of "I don't know"s will not impress them.

6. Don't over promise - Be realistic with your borrowers. Ask for time frames of the lender, appraiser, title company, etc. And tell the borrower the truth. Even if they don't want to hear it, they'll be better off hearing in the beginning than the end. Take Tom Higgins's advice from the G-dfather movie. "... Bad news should be heard immediately"

5. Don't charge too much - This goes without saying. This business is built on volume & referrals. A quick pay day will put money into your pocket today, but won't let you build a future. Any seasoned L.O. will tell you "Don't go for the throat." Currently there are no regulations or predatory lending in commercial loans. Charging reasonable fees will keep it that way.

4. Know when to give up - There are times when we all must pick up our marbles and go home. You should know what deals are doable and what aren't. Don't waste borrower's time and money hoping for a miracle. There are times when deals just need to be walked away from.

3. Always tell the truth - This should go without saying, but unfortunately it doesn't. You're only as good as your word. There is never an excuse or reason to lie. I know how customers can be, but lying to them will only get them off your back for a little while. Sooner or later, they'll figure the truth out and when they do, you can say goodbye. Lenders will also lose respect and get fed up with you very quickly.

2. Don't guess at what the customer wants - Customers are very simple. Ask what they want and they'll tell you. Never assume. We all know the saying that when you assume it makes you the first three letters of the word. Customers have different wants and needs. Believe it or not, it's not always the best interest rate, lowest payment or most cash. They might be what you would want if you were in their shoes, but you're not them. Speed, repayment terms or simplicity might be the most important thing to them. Talk to them about what they want, and then find the program that fits the bill.

1. Can the customer pay the loan back? Sound stupid? Maybe. However, how many times have you asked yourself or the customer that? The lending industry only works when lenders lend money and borrowers pay it back. If we focus too much on the first part of the equation and not enough on the second, watch out. If they keep paying back, it means happy customers, happy lenders and a happy future.

Ari Miller is Vice President of Gelt Financial Corporation, a private portfolio lender in Pennsylvania that specializes in small commercial & investor rehab. loans. Gelt lends in PA, NJ, DE, MD, FL & NYC You can contact Ari at (215) 357-4955 ext. 275 or
email: AriMiller@GeltFinancial.com . To learn more about Gelt Financial, go to their website www.GeltFinancial.com.