Special Investor loans

[tricolorro 0]

This morning, the owner of the company I work for stated that according to RESPA, it is illegal to pay for referrals but not for leads!

 

Hi Andrew,

 

This is very interesting the distinction between referrals and leads.

I went to dictionary.com.

http://dictionary.reference.com/search?q=referral

 

Referral-To direct to a source for help or information.

 

Suprisingly, I couldn't find a definition for "Lead" in the context meant here so I went to smallbusinessdictionary.com and found it.

http://www.small-business-dictionary.org/d...t.asp?term=LEAD

 

LEAD -in business, information from a business associate advantageous to your business, such as a potential new customer. Sometimes called a business lead.

 

Okay, but what really creates the distiction between paying for Referrals and paying for Leads that does not violate RESPA rules?

 

Several loan originators are paying for leads on the internet from what we've been told.

 

 

Of course, you are right. Lending Tree and all the rest get paid for leads. I used to wonder how they got around RESPA. Now I'm thinking the distinction on paying for Referrals vs Leads is this.

 

A Referral fee is paid for a lead that results in a mortgage loan and is often based on the amount of the loan and perhaps points and fees THAT the borrower pays. This is what is prohibited under RESPA..

 

A Lead fee is usually smaller ($25?) and is paid whether or not a loan actually occurs and is NOT based on the amount of the loan or any points or fees paid. This is okay under RESPA.

 

Andrew, what do you think? Does this summary make sense?

 

Patrick

 

P.S.

we are all slammed and doing a lot of business out of our office.

 

What are you guys doing to be so busy? How do you get your leads? I'm not in the mortgage business (yet!) , just curious.

[Andrew Ikeda 0]

Hi Patrick,

 

I agree with your definitions. To me, a referral comes from someone you know or another professional in the industry and you may or may not share in some kind of referral fee or commission. The chances of getting the mortgage done are better than just a 'lead'.

Leads are just names and phone numbers given without any expectations or promises..

This is just my definition of these words.

There are people in this office who are getting leads off the internet. I've been told that there are people selling lists of people who are already qualified and ready to go but need financing now. There is a lot of skepticism but the one loan officer told me that she's gotten two or three applications from it already. It's not cheap...I dont recall exactly how much for what, only that it makes one think twice before taking the plunge into it.

 

We are busy because we work with non-conforming and sub-prime lenders as well as conforming and prime.

If you go to a bank and apply for a loan, you usually have to be 'perfect' or near perfect to get a loan with them....750 FICO, no mortgage lates, two months of reserves in the bank that have been 'seasoned' or in the bank for two months or more, two years of tax returns (for self employed), W-2's etc.

We work with lenders who will make exceptions. I helped a couple last month get into a 180,000 home. The husband had a 660 FICO and the wife had a 704 score. She is employed but he isnt. Normally a bank wont give them a second thought but with our 'creativity' we got them a loan..not a great one (7.49% interest) but there is no mortgage insurance and we got it done fairly quick (about 2 /12 weeks start to finish).

Another couple I financed last month also had an issue with the state of Oregon with child support. It showed on the credit report and no one was willing to finance them just over that. We had them go and pay off the $700+ and get a letter from the state to prove it which the underwriters then dismissed, but then they had no money for closing costs so we added that to the loan amount and got them to close with no money out of pocket. These are just some of the tricks I've learned.

 

Here at US Funding, we also do interest only loans, stated income, and we work with a lender that will do a 100% loan on non owner occupied properties up to a four plex, etc.

 

I have two note books with flyers from approximately 50 different lenders with niche programs...raw land, manufactured homes, one day out of bankruptcy, apartment complexes, 100% financing with 560 FICO scores, etc, etc...

 

I think that most other lenders besides banks only offer 30 year fixed loans and primarily work with between 10 -15 other lenders, which is why their volume may not be so great...??... just my guess.

 

Well, enough for now. Take care and best wishes.

 

Andrew