Hard Money Broker Fee Agreement
My name is George Blackburne, III; and in the last 38 years, I`ve probably gone to court and successfully obtained a judgment on more mortgage brokerage fees than any mortgage broker or lawyer in America. I am NOT belligerent. I`m just screwed a lot, and I managed to convince a skeptical judge or referee to decide, « Yup, you`ve been fooled again! » You`ll learn just as quickly that commercial borrowers don`t appreciate the value of your time. You will work for hours. and resign on your part without sufficient legal reason. Your attitude is, « Everyone knows you don`t owe your mortgage broker any fees unless the deal is made. » One of the most frequently asked questions we receive is, « What is the end cost of a hard money loan? » Everyone wants to know the cost of a loan and FCTD ensures that closing costs are discussed with borrowers. The real reason you need a fee agreement is to protect yourself from (1) borrower fraud and (2) unjustified borrower terminations. An important and painful lesson that almost all new commercial mortgage brokers have learned is to always require the borrower to have a signed fee agreement. Now that we know the definitions of the different heavy money closing costs, let`s put some numbers on paper to give you a good idea of what you might see if you took out a hard money loan. We will use a hypothetical bridge loan of $850,000, as this is the most common type of FCTD loan and the average amount of the FCTD loan between 2018 and 2019.
I teach a separate Mortgage Commercial Mortgage fee collection course for just $199, which comes with a typical fee arrangement. I strongly encourage you to follow this path. It can be a turning point in your career as a commercial mortgage broker. Commercial borrowers are menting all the time. You are lamenting that the destination property is in the contract. They are lamenting that they have the money to pay the acomptt. They are lamenting about the purchase price. When refinancing, they tell great stories about the value of their commercial property. They don`t have essential information about their past credit problems. They are lamenting, they are lamenting. If you have a fee agreement with them (a contract to arrange a business loan), you can sue them because they lied to you.
Below are the definitions of closing costs, which often appear on the final statements for hard money loans that fcTD pronounces: in addition to the closing costs of hard money, borrowers can expect to pay the standard securities and trust fees when closing a loan. Apparently, my fee agreement is working pretty well. You probably think that the purpose of the pricing agreement is to protect you from the borrower who refuses to pay your commission at the time of closing. This happens occasionally, but not very often. When most commercial mortgages are preparing for closing, most borrowers are exhausted, impatient, and eager to close the deal. The borrower does not want to take the risk of restarting the four-month application process by appearing dishonorable before the lender. Excuse me, but this is not one to four family loans used by themselves, with a personal, family or domestic purpose. Commercial loans are not subject to Reg Z. There is no legal right of withdrawal. If you cancel a commercial mortgage, you still owe its fees to your commercial mortgage broker in many cases. Before I get into the numbers themselves, I`d like to point out that each hard money loan has different completion costs. There is no « one-size-fits-all formula » for consumer credit, as is the case for self-used consumer credit.
The reason why the closing costs of hard money credits are so different is that there are six main sources of hard money financing (mortgage funds, real estate offices that also grant hard money loans, family offices, high net worth individuals, fixed funds and flip, multiple Lender Loans purchased by mortgage brokers), as I wrote last week in this blog post…