Private Lending Topic - I have received a number of email questions recently on very similar issues and thought I would address them as a group versus individual emails. The questions are broken down into general areas and include things to do and things not to do. The Don’ts include advertising on Craig’s List and the use of the word “Guarantee”. The Do’s include what are the best marketing methods. My comments on each are below….

Don’ts

Private Lending Advertising on Craig List - I do not recommend that you advertise on Craig List. It is too public and there are state and federal watchdogs looking for people who may be violating securities rules. I have said on many occasions that I do not recommend any advertising that is on a national scale including your own web site. This kind of advertising will get you into trouble with securities regulators and may be considered a securities offering to the public.

I know this from personal experience. Several years ago a person responded to my Craig’s List ad requesting information about my investment program. After several emails, the individual said he was ready to invest and I directed him to my title company to prepare the appropriate documents. Strangely, I never heard from the individual again after that.

A short time later, I received a “cease and desist” letter from the Pennsylvania Securities and Exchange. The letter had several direct quotes from the emails I had exchanged with this individual. The State did not fine me, but asked that I never advertise on Craig’s List or on my web site. Needless to say, I am complying.

Private Lending Guarantee - Do not use the word “guarantee” in any form in any of your advertising. Do not use the word “guarantee” or ever imply that somehow your investments are “guaranteed”. This is a sure fire way of attracting the attention of the wrong people. You may say your investments are secured by real estate, which is accurate, but do not use the word guaranteed.

Do’s

For Private Lending contacts you should schedule at least one breakfast meeting per week - This simple advice might be the best and almost certain way to attract large amounts of capital. Schedule a breakfast meeting every week with someone who has extra cash available and is interested in your lending program. You will not get everyone to invest, but the chances are you will get enough to support a reasonable real estate buying business. At these meetings, be sure to ask the person for the name of at least one other person they know who might be interested in your programs.

Hand out 5 to 10 business cards per week - Again, this simple but very powerful advice will ensure that you have plenty of people on your prospect list. These are the people you have breakfast meetings or schedule a group meeting with. Everyone you come in contact with may be a potential lender. Do not overlook people just because they do not fit the perfect profile. You would be shocked that people that you would never think of as investors may become one of your best clients.

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In the late 1980s and early 1990s we had the junk bonds and the S & L Scandals and now we have a crisis in the sub-prime lending banking sub-sector. During the height of the real-estate bubble too many loans were being made to folks who had marginal or less than marginal credit. Loans were made well above the actual equity value. Now the equity in many folk’s homes has dropped by 20% or more, where does that leave the lenders?

Well, it leaves the borrowers upside down in equity and for new home buyers it means more incentive to simply walk-away from their debt, vacate and/or wait for a long-eviction process. These factors will cause the sometimes less than ethical sub-prime lenders severe financial problem. Some economists and analysts will say, what did they expect; they deserve it? Others have said it is a sleazy industry, that sub-prime market.

No matter what you think about the situation or why it happened, there will be an economic fall-out to all this. More foreclosures, more sub-prime lender bankruptcies, more loans being recalled and more personal bankruptcies, thus a ripple affect in our economy. It will also cause a lengthening to the time of real estate value recoveries and that prolonged recovery will also impede positive advances in consumer confidence levels, which is an important economic indicator as well.

I certainly hope this article is of interest and that is has propelled thought. The goal is simple; to help you in your quest to be the best in 2007. I thank you for reading my many articles on diverse subjects, which interest you.

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A jumbo mortgage is a home loan that exceeds the limits set by Fannie
Mae and Freddie Mac.

How jumbo loans are different?
What differentiates jumbo mortgage loans is the amount of the loan. At present, loan amounts are higher than the $ 417,000 is generally considered jumbo mortgages. This determination is made by comparing the standards of the industry average for housing loans which are governed by the two largest secondary mortgage lenders Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac to set industry standards of “adjustment lending” Home loans beyond the maximum are considered jumbo mortgages. These two agencies cap the number of loans they will buy (that is where the figure of 417,000 U.S. dollars comes from). Larger loans are financed by other investors such as banks and insurance companies. Note that the figure set to qualify the differs jumbo mortgages by location, so the limit is higher in Hawaii and Alaska (and in some other states). In most of the U.S. jumbo mortgages are over $ 417K.

Terms available - 15 Year Fixed, 30 year fixed, variable or 30 Year
Jumbo Mortgages

The conditions of the jumbo mortgages vary in a manner similar to other types of housing loans. Buyers can choose between variable rates, as well as 3 / 1 or 5 / 1 Arms, 15-30 years of a jumbo mortgage, or a 15 or 30 years fixed jumbo mortgagerate.

If a 15 or 30 years fixed jumbo mortgage or an adjustable rate is best for you depends on your plans and situation.

A 30-year fixed jumbo mortgage is best for the whole plan to own the house for a long time. With this type of mortgage rates do not rise, but never go down, either - which stays the same for the life of the loan. This is good because the payment is predictable, and can not quickly increase if interest rates do. On the other hand, the 30-year fixed jumbo mortgage rate is higher because lenders know they can not charge more than the original rate.

The lowest rate jumbo mortgage is typically a 30-year adjustable rate jumbo mortgage. Lenders realize their potential to benefit from increases in rates over time, and they are willing to lend to a lower rate in the beginning. Although, the lowest rate will not last. A variable 30-year jumbo mortgage rate is fixed for 3 to 5 years and then adjusted annually based on an index. Even small increases could mean significantly higher monthly mortgage payments.

Go with a 30-year adjustable rate jumbo mortgage works well when a buyer plans to move within 3 to 5 years fixed term. For a buyer more concerned with smaller initial payments, or likely to refinance in the near future, the variable 30-year jumbo mortgage rate is better than the 30-year fixed jumbo mortgage. Why pay the high interest rate fixed when the buyer knows it is not its long-term plan?

All products jumbo mortgage - 15 years, variable 30 years or 30 years of fixed jumbo mortgage - have their benefits. A mortgage lender confidence with experience in finance jumbo mortgages is a buyer’s best resource for determining which product is right for them.

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