LOAN BUYERS OR AGGREGATORS: Loan buyers acquire loans from the groups above and generally have relationships established with entities that can turn the loans into bonds (securitization) or other capital sourc- es that will pay more for the loan than they paid to purchase it (spread).
Here are two questions to quickly size up any lender with whom you might be discussing a loan: 1 Are you an Agency Lender, Direct Private Lender or Mortgage Broker? the underwriting and exception approvals in-house? (If no, this could be a sign they are really a correspondent lender.) There is no right or wrong answer to either of these questions as there are pros and cons to each lender type. These answers will help you know the general capabilities of the lender on the other end of the phone and allow you to determine if you have the best fit in a financing partner. • 2 If Direct Private Lender, do you complete 100 percent of
business entity (LLC, Corp, LP). This limits a borrower’s ability to protect their other assets. Agency loans can be a good option for those wishing to “house hack,” meaning living in one of the units, where private lenders will not allow that. NON-QM (QUALIFIED MORTGAGE) LENDERS: These lenders generally have a history in making agency mort- gages (Fannie Mae/Freddie Mac). They have several programs for investors including full doc, bank statement, and now DSCR-based loans. They typically are a bit more robust and rigid with documenta- tion and verification requirements. Many of these lenders specialize in one property per loan and do not offer blanket or portfolio loans as of the date of this article. Their pricing is good, but sometimes lag the private lending market in terms of underwriting guidelines such as maximum LTVs, pricing, property seasoning, etc.
investment property lending space. Brokers generally have a broad range of products available and shop the market for the best overall options. For many direct lenders, brokers make up more than 50 per- cent of all the loans they originate. Brokers take on the sales, mar- keting, and some of the paperwork processes from the direct lender in exchange for wholesale pricing that then is marked up to a retail price and offered to the borrower. Many times, the pricing will be similar or slightly above what the lender would charge a borrower if they came directly to the lender. Brokers can quickly analyze the details of a loan request and rule out certain lend- ers and products. They speed up the shopping process and help borrow- ers avoid unknown bear traps in the lender’s guidelines and documenta- tion processes, which could create negative surprises. Brokers can range from a one-person organiza- tion working in one local market to dozens of employees with a nation- wide lending capability. For context, there is one other par- ticipant that is not a lender that will be contacting you directly but is an important part of the loan origination food chain.
Damon A. Riehl, Founder and CEO, has 35+ Years of lending experience in a broad array of asset classes, including commercial and residential mortgage,
home equity, consumer, small business, and construction lending. Additionally, he has extensive experience in the areas of lending business startups. He has held leadership roles with some of the largest banks and lenders in the world. Some of those include: Head of Commercial Lending for Ocwen Mortgage Servicing, Head of Unsecured Lending for Citibank NA, Global Mortgage Leader for GE Capital, Head of Construction Products at Fannie Mae. Damon has built six de novo lending platforms and is now using that knowledge to build and grow Investment Property Loan Exchange.
COMMERCIAL MORTGAGE BROKERS:
Brokers are not lenders; however, they serve an important role in the
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