Earlier this month, the Consumer Financial Protection Bureau’s qualified mortgage rule went into effect. This rule was created to help borrowers understand the cost of a mortgage and to protect them from the risky lending practices that contributed to the housing crisis. Many industry professionals are wary of this rule, contending that it will make it more difficult for some borrowers to qualify for loans and that the loans will cost more. Some borrowers also might have a tough time getting a non-qualified product, since lenders will be offered less legal protection if non-QM loans go south.
The effects of the QM rule remain to be seen, but for those mortgage brokers who do business in the residential market, it could be a good time to consider working with borrowers who need small commercial mortgages or commercial hard money loans. The commercial mortgage industry isn’t as tightly regulated as the residential industry and presents a great opportunity to increase your income. Here are a few tips on how to begin working in the small commercial mortgage industry.
- Look through the 1003s of clients you’ve helped obtain financing. Some of the borrowers you’ve helped obtain a residential mortgage are small business owners who might be seeking small commercial mortgage loans.
- Market yourself as a commercial broker. Add a line to your existing marketing materials stating that you can help your customers obtain financing for their businesses.
- Develop referral sources. Get to know bankers, lawyers, accountants and real estate agents in your community. They all have clients who are looking for small commercial mortgages.
- Go directly to the source. Think of a place in your community where there are a good number of commercial or mixed-use properties. Print up several dozen fliers and hand them out, or send out a mailer.
- Get to know small commercial lenders. In order to obtain financing for your new clients, you need to develop relationships with small commercial mortgage lenders. Research these lenders. Find out if they specialize in certain areas of the market and what they need to make a decision on a loan scenario.
While the QM rule might not have the negative effects some brokers and lenders fear, it’s never a bad idea to diversify your products. Offering small commercial mortgage loans is a great way to increase the number of loans you close and to boost your income. All you need to do is let your customers and referral sources know that you can provide borrowers with small commercial mortgages and get to know some small commercial lenders.
APEX Mortgage Corp. is a nationwide small commercial lender specializing in non-bankable clients. For more information about our programs call 800-262-2739 or visit www.apexmtg.com.