©2011 Cengage Learning Chapter 2: Source of Business By Dr. D. Grogan M.C. “Buzz” Chambers.

©2011 Cengage Learning

Chapter 2:Source of Business

By Dr. D. Grogan

M.C. “Buzz” Chambers


The purpose of this unit is to acquaint the learner with business operations and to generate business. The individual must know marketing, advertising and how to solicit prospective borrowers. An important aspect of advertising is to know the mandatory legal rules for advertising.

Preview


Contents Ch 2: Sources of Business 2.1 Getting started 2.2 Marketing 2.3 Advertising 2.4 Other Sources of Business

Referrals from Realtors Referrals from Other sources Referrals from the Public Testimonial

2.5 Types of Media Affiliation Billboards, benches, Buses Direct advertising Direct main advertising Internet Magazines News Releases Newspapers

2.5 Types of Media Office supplies Promotional materials Radio Realtors® Telemarketing Television Trade Shows Networking group

2.6 Advertising regulations Licensee advertising License number on business cards Advance Fee Advertising Regulation Z Advertising Disclosures Fair Housing Terminology


Student Learning Outcomes:1. Discuss marketing and advertising goals and image.

2. Identify the steps in the advertising process.

3. List the type of advertising media available for the mortgage loan broker.

4. Describe how advertising creates action.

5. Differentiate between various types of advertising.


2.1 Getting Started Many loan brokers come from

Real-estate related fields. Banking or financial institutions Real estate sales

The history of advertising has changed: Oral: Hand held sign to store windows, radio,

TV Print: Newspaper, magazines, photos Internet: virtual tours, web boards, email, home

pages, facebook, blogs


Advertising constraints

Marketing efforts & media are designed for consumer protection The Federal Trade Commission (FTC) rules Do not call/fax lists


Today Type the borrower’s credit information into the computer. Run the credit report on the spot. Determine credit rating. Pull up a list of loan types for which the borrower would qualify. Print a comparison of the various loan types, contrasting down payment,

monthly payment, ratios, closing costs such as points, and similar loan options.

Print the loan application (URLA 1003), which loan applicant and loan broker agree on for signatures and submittal to the lender.

Do a database computer search for comparables to support the requested loan-to-value (LTV).

Transmit by computer the comparable sales and 1003 to the lender for submission for loan documents.


2.2 Marketing Defined: any type of message that promotes

communication of a product, service, or idea.

What is a marketing plan? Internet sites:

http://marketplan.us/images/marketing_plan.pdf http://www.myownbusiness.org


The Five W’s:

Who is your target market?

What product do you have to offer?

Where are your clients

Why would anyone want to do business with your firm?

Why are they seeking the funds?

When does the client want to act?


Marketing Process

The step-by-step analysis of how to outline the objectives of your promotional campaign to gain results.

STEP 1: Select the goal a) list the desired end results

b) Goal setting must contain specific, measurable items


Marketing: Step 2 Establish your target market. List your:

a. personal successes & interests

b. strongest personality traits & characteristics

c. hobbies, pastimes, sports interests

d. level of education, interests and activities. Identify the competition Identify the specific area where you will

concentrate your business


Marketing: Step 3

Select the media for your target market. Internet search for how to develop a marketing

plan Decide the type of media Select a slogan and motto Design the messages Implement evaluation Determine the effectiveness


2.3 Advertising: AIDA

•Attention

•Interest

•Desire

•Action


Reasons for Advertising To get nearer to the customer To create interest and desire on the

part of the prospective applicant To educate consumers To familiarize the customer with your services To stress the exclusive features of your

services To fill the needs that change with styles and

customs


Reasons for Advertising

To assist newcomers To create good will To emphasize a name or slogan To bond with the business community To increase the relationship to a line of

products To introduce a new service To urge hesitating prospects to take action To meet with legal compliance criteria


2.4 Other Sources of Business

Referrals from REALTORS®

Referrals from other sources Real estate industry professionals CPA Attorney, courts

Referrals from the public Testimonials


2.5 TYPES OF MEDIA WRITTEN

Affiliations, Associations Billboards – Company identification Benches, Buses – Raise awareness Direct Mail Advertising – Specific individuals Internet-Web page plus much more Magazines – Established reader clientele News Releases – Loan agent name Newspapers – Information on loans Office Supplies (Letterhead, cards) Promotional Materials (Flyers, brochures)


2.5 TYPES OF MEDIA Realtor.com ORAL

Radio – Identifies audience Telemarketing-Identified individuals Television-Name recognition Trade Shows

Networking groups


2.6 Advertising Regulations Advertisement is defined by the California Department of Real

Estate (DRE). Advertisement is defined as a commercial message in any

medium that directly or indirectly promotes a transaction in the financing of real property.

It includes dissemination in any newspaper, circular, form letter, brochure or similar publication, display, sign, radio broadcast, or telecast. It concerns any use, terms, rates, conditions or amount of any loan, security, solvency, or stability of any person carrying on licensee activities.


Licensee Advertising The name of the office or employing broker

must be present in any advertising.

Real estate licensees must disclosure their DRE license identification number on all solicitation materials intended to be a first point of contact with consumers.

Materials include business cards, stationary, advertising flyers.


Advance Fee Advertising The advertising and the agreement must be

submitted for not later than five days before the publication or use of the material.

It must be in not less than 10-point type.

All moneys collected from a borrower, including appraisal and credit fees, are trust funds and must be handled accordingly.


Regulation Z Disclosures:1. If the ad states a finance charge rate, it must state

the annual percentage rate (APR).

2. The ad must NOT state any rate, other than the simple annual rate or periodic rate applied to the unpaid balance.

3. If the annual percentage rate may be increased after the transaction is consummated, the ad must state that fact.

4. Other terms in the ad may trigger additional disclosures


APR applies:1. The amount or percentage of any down payment

2. The number of payments or period of repayment

3. The amount of any payment

4. The amount of any finance charge

If any of above triggered, then must disclose:

1. The amount or percentage of the down payment

2. The terms of repayment

3. The annual percentage rate (must use the exact term)

4. The amount of any increase in annual percentage rate after the transaction is consummated


Fair Housing Terminology

HUD has indicated that the following is not acceptable:

Race: black, white Asian, Latino Religion: temple, synagogue, church Marital status: single, married Groups: senior citizens, students


MLBLOAN

SERVICES

Rehabilitation / Remodeling Loans

FHA/HUD 203d Loan

3% Down – Owner15% Down – Investor1-4 Unit Properties OK!No Limit on the numberof FHA loans you presently have!

FHA DIRECT LENDER(800) 555-1212

Remodel AD


CLASSIFIED ADS

LENDER’S BARGAINSNO LOAN FEE * EASY TERMS

As low as 3% down gets you 7 ½ %For your new home loan. $300 gets you

the disclosure money, or, $500 to getyou 0% down on $120k!

Call me now! Salesperson Sam (800) 555-1212

1. DRE Broker name must be shown

2. RE Commissioner approves Advance Fee Advertising


CLASSIFIED ADSMLB LOAN SERVICES

Use our years of experience

To pre-qualify your buyers

80% E.Z. qualifiers

95% LTV to $250,000

80/10/10 to $650,000

We are expanding

Seeking Experienced Loan Agents

With Real Estate License

(800) 555-1212

W.T. Allen, President

333 Apple St Anywhere, CA 99999

This ad is an example ofadvertising that containsthe loan amounts and percentages. However, thead does not quote interestrates nor fees but merelystates LTV and maximumloan amounts.


LEADER AD

GIVE YOUR BUYERS A HEAD START TOHOME OWNERSHIP

7.00%10.00% APR

INITIAL QUALIFYING/PAYMENT RATEONLY

1.00POINT

NO UP FRONTPMI COST

10% DOWN90% LOAN

AFFORDABLEPAYMENT

ADJUSTMENT

9.00%HIGHEST

LOAN RATE72 HOUR

UNDERWRITINGAPPROVAL


Regulation Z

Disclosures:Loan terms and costs1. Down payment2. Installment payments3. Finance charge expressed as APR 4. Points5. Finder’s fee(s)6. Number of installments7. Period of repayment


PREPARATION AD

MLB LOAN SERVICESPRESENTS

THE BIG LOAN

A fixed rate jumbo loan with competitive rates,large loan limits, and a variety of processing styles.

Loan amounts to $2,000,00010 to 30 year terms in 5 year increments

LTV’s as high as 90%Ratios as high as 33/38

Temporary and permanent buy downs availableNo income (quick) processing available

Call you local MLB Broker Services representative for current rates.


SPECIFIC LOAN AD

ATTENTION PERS MEMBERS!Are you trying to buy a home but short on the down payment?

Let PERS 100% FINANCING help you!(95% PERS Fixed Rate 1st Loan + 5% Personal Loan)CALL MLB LOAN SERVICES at (800) 555-1212PERS (Public Employees’ Retirement System) offers:

Competitive interest rates60-day rate lock with float down feature

Limited fees


NAME RECOGNITION AD

GMACYour Affordable Housing Lender

1-800-555-GMAC

Committed to making the dream of homeowner a reality!

Fair Housing: Requires uniform, consistent and fair treatment for all prospective borrowers


CLASSIFIED ADS

BUY YOUR LOAN or CREATE A NEW LOANDiscount & sell your note for CASH today.Or, apply for new financing. We do both!Guaranteed highest return at lowest cost.

95% conventional financing.No payment over $500 a month over 5 year period.

Call Salesman Sam NOW! At (800) 555-1212

1. Cannot use “guarantee”

2. APR requirement

3. Term/payment triggers

4. Broker disclosure

Courts held that misleading ads violate the law

©2011 Cengage Learning Chapter 2: Source of Business By Dr. D. Grogan M.C. “Buzz” Chambers.

Documents

advertising process

history of advertising

advertising goals

various types of advertising

cengage learning chapter

cengage learning contents

various loan types

list of loan types