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.