Getting a MLO to Understand

8 Replies

I'm hoping to get a little insight and/or suggestions dealing with MLO's.

I primarily do lease options & I've been contacting numerous loan officers/brokers explaining that I'd like to send potential clients their way & that I'd like for them to run an initial credit check to see if the tenant/buyer could qualify for a mortgage within 12-24 months if they took the necessary steps to clean up their credit.  For some reason, I haven't found any that's willing, which I don't understand because they could be getting a lot of clients.  Below is the actual email that I send them.  Any suggestions would be greatly appreciated.

"My name is Lonnie and I'm an investor specializing in lease options. My partner & I are looking for a loan officer in the area to send potential clients to, in return, you let us know if we can work with them.

What we do is enter into a lease option agreement with the seller with the right to sublease the property. We then find a tenant/buyer, if it's a sandwich lease option we install the tenant/buyer, take an option consideration from the buyer and down the road when  we settle the property we either assign our agreement with the seller to the tenant/buyer or we do a double close.

If we are going to wholesale the lease option from the start we enter into a lease option agreement with the seller and then assign that agreement to the tenant/buyer and collect an assignment fee.

What we would like for you to do is run an initial credit check on the tenant/buyer to see if they would qualify for a mortgage within a 12 to 24 month period if they acted to correct the issues on their credit. You can then work out an agreement with the tenant/buyer as to them being your client.

If this would be of interest to you, don't hesitate to contact me."

Drop all the lease-option talk, tell them you have a buyer you are working with and want to send them in to be qualified. Tell the buyer to apply for a mortgage and you may need a contract for them to go there.

If they qualify, then sell it. If they don't. then knowing where they are, ask the RMLO about assisting the applicant with a lease-option until they can qualify. The RMLO will already be involved with an applicant.

Don't use banks, those are regulated RMLOs with a job, find an independent mortgage broker in a mortgage company, they have the leeway to assist without banking regulations and liability issues.

There are RMLOs working with investors, but be very careful as they only need 20 hours of classes to get a license, what they suggest is not always compliant outside traditional lending. Good luck :)

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Mortgage brokers want buyers, not tenants, so approach them as I suggested, be prepared to sell as many out there think they won't qualify but can. If they can, then you could also approach the deal with a seller financed deal, you might carry it all or take a large second. You taking back a note may help on the risk assessment of the first lender, they may approve a 60-70% LTV with you carrying back 25 or 30%. In the event of default, you may be in a better position taking over the payments of a first from a seller financed second, check foreclosure rights in your state. Good luck :)

@Bill Gulley   I just wanted to say thank you.  I followed your advice to the "T" and found an awesome MLO that owns her own independent brokerage that's more than willing to help everyone I send her.  If they don't qualify right away, she offers a credit program to get them qualified.  Thanks again.

Great to hear, there are some out there! In fact, invite her to get on BP!

Not to change the subject, I'll get back to it, but I found a RMLO site, I think it was an education site. The forum members were RMLOs, most starting out it seemed, lots of complaints about how hard the exam was (LOL). I made a few comments there with a great receptive audience, but wasn't my forte, I've had to train loan officers before.

RMLOs are not trained in underwriting, weighing compensating factors, assessing credit histories or the crystal ball approach with stress testing for risks. These aspects are required to understand seller financed and other non-traditional transactions, knowing secondary market requirements isn't enough.

Beware of the marketing by RMLOs, we had one here that was advocating some scary stuff beyond his comprehension. So, my advice, is keep to your strategy and guide the RMLO toward your goal, don't get sidetracked into some fantastic system or ploy. That might be difficult as they have the last say with their seal, but you still need to know the financing side of non-traditional sales/leases.

That said, congrats on landing a good one, she may be a great asset to you, look to her experience in the business as a guide. Good luck :)