What’s your broker’s code of ethics? This is our’s!
“The 10 things we don’t do….!”
Our “BEST PRACTICES” and “CODE OF ETHICS”
is best summed up in our list of the
“10 THINGS WE DON’T DO – NEVER HAVE, NEVER WILL”.
We believe these 10 things are a firm foundation for our company, and before you invest with any mortgage broker who is offering trust deed investments, you should find out what their “Best Practices” are. The answers could possibly save you some time, money, and aggravation in the future.
1. We DON’T withhold critical information from our investors.
In fact, we don’t withhold ANY information from our investors. Since it is your investment and your money, you will always have access to anything in the file upon request.
2. We DON’t put more than 5 investors per loan (but we really only put 1).
It was that way when we did loans in the hundreds of thousands of dollars, and it is that way while we are doing very small loans. We don’t do funds. Funds serve a useful purpose, and they make loans in the high millions, but that’s not our business. We put individuals into trust deeds, and that’s all we do, and 99% of the time, it is just one investor. If you have a friend or a relative that wants to go on with you, that’s okay. But no STRANGERS!
3. If you want to invest with another person, we won’t put you into a deal together unless you know the other investor.
And you must both agree on the way you want to handle loans. Yes, we’ve actually had investors go to lunch with each other and get to know each other before they did the loan together. But usually there is only one investor per loan, whether it is $20K or $200K. That gives you more control in case you have to make a decision on something that affects your investment.
That means that if you do have to foreclose, you will own the real estate all to yourself in the end.
And that is a better position to be in:
one investor = all the profit.
4. We don’t service our own loans.
We’re not saying that’s the right way to do it, but it’s our way. We learned it in college accounting classes to keep a separation between those who make the decisions and those who handle the money. When you fund the loan, your wire goes straight into the title company account, then the borrower makes his monthly payment to a loan servicing company (not owned by our company and totally arm’s length), and your payoff funds are coordinated through the title company and servicing company. We’ve been using the same servicing companies since 1995 and the borrower pays all of the fees – there is no charge to you, unless you start the foreclosure and finish through to the end and own the property. Otherwise the borrower must pay you back if you initiate foreclosure.
5. We don’t lend to ourselves.
Again, not saying that’s the right way or the wrong way either, it’s just that we don’t see how we can be unbiased about critical issues if we are the borrower on the loan. However, in situations where the mortgage broker or investor has had to step in and become an owner to keep the project on track, then that is a benefit to the investors and we agree with that course of action. But to just lend to ourselves so that we can buy and develop our own projects, puts us into a non-arm’s length situation, and we prefer to stay away from that.
6. We don’t manage real estate without the proper licenses and permits.
NRS 645 is very clear – it is a violation of law for any person or company to manage real estate for another unless he/she has a real estate license and a property management permit. And if we do happen to manage your real estate owned properties because you foreclosed on one of our trust deeds, then we manage it for free!!!! And we have a real estate license and the firm I work for has a property management license.
7. We don’t charge our investors anything
for any service, most particularly with regard to the foreclosure process, the REO process, or any property management processes. We do not believe in charging investors fees based on the old loan amount when the property has been foreclosed on, and when there is no income on the property. We do have a real estate license, and if retained by our investors to sell the property, we will take our sales commission as is usual and customary in the state of Nevada.
8. We don’t usually order an appraisal. That might seem contrary to logic, but
we use the Multiple Listing Service and Automated Valuation Models to analyze the comparable sales and we have investors buying and selling real estate every day. We’ve lived in Las Vegas for over 30 years, and we are fairly accurate at estimating what an appraisal is going to come in at on most types of real estate. Our investors are also very experienced trust deed investors and they know values. And on a purchase, we are pretty sure that we’ve never seen a buyer willingly pay too much for a property when they are putting down 40% of the purchase price. Buyers will make sure they are getting the best deal possible. Additionally, we analyze the cash flow on the property and we determine debt service ratios and cash on cash returns. If there isn’t enough money to pay the loan payment, pay the bills, and leave some left over for the borrower at the end of the month, then the loan amount is too high. We’ll use an appraisal if one has already been done, or we’ll order one if there is too much uncertainty on a loan, but for the most part, there is no need.
9. We DON’T ignore our phone calls or our emails.
We answer them. That goes for our real estate activities also (Corinne has a Nevada real estate license and is a Realtor).
10. We DON’T close a loan unless one of the us have met the borrowers
face to face. It’s our rule that we have to shake the borrower’s hand. We may have closed one or two loans long distance, but we still met the borrower the first time he/she came into town.
And, we DON’T close a loan unless one of us has physically inspected the property inside and out.
And we attend every signing. that’s a few more than 10, but you get the idea
Maybe some of these are on the list because we’ve seen other broker’s with practices that we didn’t like, and we wanted to make sure that people knew that we didn’t do business the same way they do. These practices have been developed over 17 years in a very exciting, and yet risky business, and these practices are meant to minimize that risk. We’ve learned a lot in those 17 years, and the the 14 years before that, and we think that our record speaks for iteself. We have the lowest foreclosure ratio in the state, and the lowest payment delinquency, and the highest on-time payment record, and we can prove it!
CALL US TODAY AT 702-214-4700 AND WE’LL BE HAPPY TO ANSWER ANY QUESTIONS!!
OR EMAIL US AT LOAN@LENDVEGAS.COM