Why Are THEY So Angry?
October 14, 2008 
16 Comments
I’m Making THEM Angry
As you know by now, Freddie Mac and Fannie Mae announced that they are virtually denying all loans to real estate investors. They have come up with a whole bunch of new ridiculous rules including:
- Eliminating stated income loans to self-employed borrowers
- Reducing the maximum number of properties you are allowed to have financed to 4
- Eliminating cash out refinances if you have owned the property for less than 6 months
- Eliminating refinances if you have the property titles in an LLC
If you’re an Insights subscriber, you (hopefully) know by now that I think these rules are complete crap.
As a result of this, I have been letting investors in on a secret that I have been using for years – portfolio loans.
The portfolio loan strategy is one that I feel so passionate about, I have been visiting the REI forums answering financing questions about the new rules and educating real estate investors about the alternatives that are out there to conventional loans.
In doing so, a couple of *very* interesting things have happened.
GB Mortgage Terminates My Broker Approval
First, I received a call from a lender that I have done business with for a couple of years, GB Mortgage. GB is a Fannie Mae lender meaning they underwrite to Fannie rules and sell their loans into the secondary market. GB told me that they were terminating my broker approval.
Apparently, an underwriter got bored while she was underwriting a file one of my loan officers submitted and she Googled me. She found my ebook, Mortgage Secrets for Real Estate Investors and the forums where I regularly post.
According to GB, they suspect that what I am teaching real estate investors is suspicious and in their words “we don’t think anyone should be teaching investors how to get loans.”
I Get Flamed By Mortgage Brokers on the Discussion Boards
The second thing that has happened is a *wave* of backlash from my fellow mortgage brokers around the country.
And they’re mad because I am spilling the beans on portfolio loans.
Here’s the scoop on portfolio lenders – they don’t work with mortgage brokers like other lenders do.
When I (used to) send loans to GB Mortgage, I would get wholesale rates and they would charge zero origination or other loan fees. I charged 1% origination, a processing fee and it was a good deal for all since the rates that I passed on to my investor clients were cheaper than what they could get by going to GB Mortgage directly.
Portfolio lenders don’t have “wholesale” channels to accept third party originations. Sure, I work with a some great portfolio lenders that I can refer you to but if I actually broker the loan, you will get charged DOUBLE origination and processing.
Not a good deal, in my opinion.
Well, brokers are very protective of their territory I guess because here is one example of a “battle of the brokers.” This guy was mad because I shared that one of my Portfolio Loan Blueprint customers got a term sheet offered to refinance her properties into LLC loans at 5.5%.
I wrote:
Mortgage brokers can’t broker portfolio loans for investors. They don’t have wholesale channels so if a “mortgage professional” claims they can broker portfolio loans chances are good they are not being truthful. Unless they have negotiated a master loan commitment with a local lender but even then I would proceed with caution because you will probably be paying double origination.
This is obviously a touchy subject for mortgage brokers since we are being shut out by the conventional lenders and can’t profit on portfolio loans. But the misconception that portfolio loans have higher rates than conventional loans is forcing a lot of investors to stay in conventional loans instead of considering a portfolio refi strategy that would once again make them “financeable” in the eyes of Fannie and Freddie.
And one of the angry brokers replied:
Susan, The above statement is partially untrue. I have brokered plenty of my customers to local banks for lines of credit as well as construction loans for investors. Many times the documentation that the bank requests is above the heads of the regular investor, and having a mortgage broker that is familiar with an executive summary, a profit and loss, and other documents can make things a whole lot easier. And you are correct in the fact that many times you will end up paying two points origination versus one point but because of the value of the service provided I have never had a customer complain about fees that I had previously disclosed.
Ei yi yi.
This broker just called us dumb and said we’d be fine paying double for him to “broker” our deal to a portfolio lender.
I don’t think so.
So, back to my (somewhat rhetorical) question: why are *they* so angry?
Because *they* are getting squeezed out and we real estate investors aren’t as dumb as *they* think we are.
I discovered your homepage by coincidence.
Very interesting posts and well written.
I will put your site on my blogroll.
Susan a black eye! EH! Wear it proudly if that’s what they think.
Heck give me one too!
When push comes to shove, the problematic always scream foul first!
Now give a good right cross. Or in this case hit em below the money belt!
Excellent information Susan. Thanks for sharing and empowering real estate investors everywhere.
Im having trouble finding portfolio lenders and i have found some hand money lenders that give rehab loans but your credit score has to be 640 or better and mine is below this and i have some good deals but cant do them because of this and cant find a portfolio lender need help
Most portfolio lenders and larger hard money rehab lenders will want a credit score higher than 640 if you’re an investor. I would go to your local real estate investment club and network to find a hard money lender that doesn’t worry about your credit score. Or you could raise money from private lenders. Good luck!
Hi Susan, Thanks for the heads up on portfolio loans! Don’t let those big babies (Fannie Mae/Mac & Loan Brokers) get you down! As far as I’m concerned, if I have any say in the matter, our company will never do business with them again! They can kiss my ASSets GOODBYE! Love your integrity and info keep it up! Best Regards, Abel G. Lopez, CEO MJA GROUP.
As a R.E. and Mortgage Broker I have come to the conclusion that about 80% of the Brokers and agents just don’t know what they are doing.
Susan, Thank you for presenting this information to us. I have found that Real Estate is changing every day and if it was not for you and others like you keeping us up to date we would certainly fall pray to a lot of garbage. I have found that many times you don’t know who you should be listening to. I find that looking at the information and then using my gut level thoughts have worked the best. I feel you are on target with this information. I thing too many of us worry to much about the money and not enough about relationships (people). I also believe that these brokers are being feed a line that our housing market is like it is because of investors.
I appreciate you making a stand. It will pay off in the end.
Susan, I hope you keep up the great work. All you are doing is telling the truth.
let’s not worry about the little fish just keep delivering the truth and we will all win. thanks CARL
refreshing!!!I’m new to you, your site and your style,but I like it! You exude confidence in your voice and presentation and that is good for me.
You call a spade a spade; I am now a follower.. I have two or three other gurus as favs. . . and you really have me thinking.
thanks so much.
rich
Susan, heard that the need for portfolio lenders was necessary back in May but that source didn’t give us enough “why” and definitely didn’t tell us how. Thank you so much for your blueprint, I just found you about a week ago and have already narrowed to a couple local contacts. As far as those other comments, JUST BLOW OFF THE BROKERS. Keep it up. Happy investing!
I have always tried to stay away from the shark-infested waters of the “gurus”…because my gut reaction is that most of them are liars….for once,I have read and listened to your information,and you sound like you are the real deal.My bullshit meter usually starts ringing when I see and hear a lot of the so-called “experts”talking about things that they don’t know.or they have never done it.I like your tenacity and your forthrightness..so far…but to be honest….I pray and hope you continue to stay true to the cause of the investors….hopefully..you’ll never set off…my bullshit meter
Is it your face I’ve seen on my computer screen (saver)? Live Long & Prosper
people who are wrong or the cause of the problem, are the fist ones to point the finger at someone else and acuse them of being wrong.Conventional lending,in my OPINION,is the reason why the realestate market is in the state it is in.CREATIVE financing is what we need.
Amen, brother!