Mortgage Broker Fee Agreement and 90-minute Fee Collection Video Course
Aren't You Tired of Being Cheated and Lied to By Borrowers?
There is an old saying among horseman, "If you ain't been been thrown, you ain't riddin' very much." The same is unfortunately true for commercial mortgage brokerage. If you haven't been screwed out of at least four or five $10,000 commissions, you haven't been working as a commercial mortgage broker for very long.
The most obvious assault is the "commission-dectomy" You agree with the borrower on a one point fee. You work for months on the loan, shuttling the deal from lender to lender. You finally find a lender. You get to the close, and the borrower says, "You either take just one-quarter of a point, or you get nothing." You're starving, and you can't afford an attorney, so you take the 75% cut and limp home to lick your wounds.
But you get raped every year in other ways as well. The borrower agrees to a loan, you deliver, and he says, "Never mind." Or how about this one. You work for two months on a deal. You find a good lender. The lender issues a proposal. The borrower accepts it. And then he refuses to pay for the appraisal or refuses to supply his tax returns, making it impossible for your to deliver the loan.
It's enough to make a saint fantasize about murder. Anthills. Honey. Lots of tiny, painful bites...
In 1987 I realized I had a problem. I had charted out every anthill in a four county area, and my garage was stacked to the ceiling with honey. :-) Instead of going to jail, I decided to go to law school. For four long years I attended law school at night, while raising two kids in diapers and running a multi-million dollar company. I never missed a class in four years, and I briefed every case. Man, I was ticked. Not surprisingly I graduated with honors and passed the Bar on my first attempt. Then I never really practiced in the traditional sense. I am a commercial mortgage broker by profession and proud of it. I simply use my attorney's license to sue every borrower who lies to me or cheats me.
Unfortunately I am forced to sue a lot of borrowers, at least ten or twelve every year. That's not even counting the ten or so repudiating borrowers that I successfully "encourage" to go back down to escrow to sign off under the threat of a lawsuit. As a result of filing suit against forty or so borrowers, I have a gained a whole lot of experience in enforcing mortgage broker fee agreements.
The fee agreement form that I sell is the result of 23 years' worth of commercial mortgage experience. It is not so long that it scares away the borrower, yet it has enough meat in it to give you an excellent position at trial.
Here are some of the major features. First of all, the contract provides for arbitration under the Rules of the American Arbitration Association. When a borrower in a real estate transaction agrees to arbitrate, he waives certain rights. As a result, the arbitration clause must be carefully worded. A layman's homemade fee agreement would probably not survive a challenge by a skilled real estate attorney.
Second of all, the contract provides that the arbitration will take place in your backyard. Therefore if the borrower lives in the other part of the state, or even in another state, he will have to drag his attorney 400 miles at $200 per hour all the way to your hometown.
What about attorney's fees? It has been my experience that most arbitrators are fairly loosey-goosey about the rules of evidence in an arbitration. You speak to them and present your evidence pretty much like you were talking to Judge Wopner. You can represent yourself in most cases pretty reasonably, thereby saving yourself about $12,000 in attorney's fees. Since I envision you representing yourself, my fee agreement specifically precludes the award of attorney's fees. This means that if you lose, you will only be out-of-pocket about $800 for the arbitration costs, instead of the opposing side's $12,000 in attorney's fees.
If you try to use your own homemade fee agreement, and you don't get the arbitration language just right, you will be forced to litigate the case in civil court. You will need to hire an attorney for around $25,000 (because of discovery, civil court is much more expensive). Since you are only suing for $10,000 you will need to have an attorney's fee clause to recover your legal fees. But if you lose, the prevailing party gets to recover his attorney's fees, so you will have to pay the opposing sides' $25,000 in attorney's fees. Are you going to risk $50,000 to sue for $10,000? I don't think so. The moral is: "Don't try to use a homemade fee agreement".
Here's what our fee agreement does to the bad guys. The borrower will have to drag his attorney all the way across the state at $200 per hour. Even if the opposing attorney kicks your butt all over the courtroom, the defaulting borrower won't get his $12,000 in attorney's fees back. He would be better off to pay you your $10,000 than to pay $12,000 successfully defending your claim!
Included in the fee agreement is a provision whereby the borrower is responsible for your fee if a title problem kills your deal. In addition, if a borrower promises to deliver a subordination, but at the close, he can't deliver it, then the borrower still legally owes your fee.
The fee agreement gives you the authority to shop the package to lots of lenders. It also make it clear that you are an agent for the sole purpose of arranging the loan. You are not the borrower's general agent with a fiduciary duty for everything under the sun. In addition, this fee agreement clarifies that you are not liable for damages if the deal falls out.
The fee agreement also protects you if you are in the process of delivering the loan and the borrower cancels. This is by far your single biggest risk. Finally, the agreement protects you against the borrower sneaking back to the lender behind your back.
It took a lot of work to pack all of these provisions onto the front and back of a single sheet of letter-size paper and in such a manner that will not scare off the borrower. The agreement is carefully modeled to track the standard residential listing form. If a question should ever arise, simply show the borrower the similarity in wording between our Loan Broker Listing and the standard residential listing he must sign every time he lists his house for sale.
Remember, I am not some head-in-the-clouds attorney drafting some ten page listing form that will scare off every borrower. I know that even the best agreement is worthless if the borrower is too intimidated to sign it. That's why my agreement is carefully crafted to come across as light and airy and standard and no big deal - until the no good S.O.B. lies to you or tries to cancel on you. Then this airy little agreement suddenly grows barbs.
A signed agreement is also the law in California. Recently enacted Civil Code Section 1520(g) states that any agreement to procure a loan in excess of $100,000 secured by other than a one-to-four family dwelling is unenforceable unless it is in writing. Other states are likely to follow California's lead and impute such a requirement by case law.
If you attempt to practice commercial mortgage brokerage without a professionally prepared fee agreement, you are also going to look like a rookie to both your borrower and your lender. There is no such thing as an experienced commercial mortgage broker who doesn't use a signed fee agreement on every deal. It's a painful lesson that every new broker learns before too long.
I've got some bad news for you. You are going to die. Despite your best hopes, God is not going to make a special exception in your case. In addition, if you should ever buy a horse and ride it a lot, you are going to be thrown often. And if try to broker commercial mortgage loans without getting a signed fee agreement on every deal, you will be screwed so often that you will look like a piece of Swiss cheese. You will work on loan after loan, get them approved, only to have the borrower cancel on you at the last moment when he hears a slightly lower quote from the liar down the street. It will drive you mad, if it doesn't kill you. Sad but true story: Tom O'Keefe, a buddy of mine, died on the phone when escrow called him to say that his borrower had just cancelled.
How many times have I snarled at my lovely wife or at one of my precious little sons because I came home from work so outraged by a cancellation? Well, no more. Now I simply fill out a one page form in pen (I don't even bother to type it!) entitled Demand for Arbitration and fax it to the repudiating borrower. Then I call him up and say, "Guess what, Jack. You've just been sued. That fax is the legal equivalent of a summons and complaint in civil court. And because this is arbitration, I will see you at a hearing in just six weeks, not three years. You will have to fly halfway across the state, and please be sure to bring your attorney at $200 per hour. Please spend $12,000 defending my $10,000 suit. But guess what, Mr. Borrower? Even if you drop-kick me all over the courtroom, you won't get your $12,000 in attorney's fees back. Now, do you want to withdraw your cancellation?"
Can you tell I've done this before? I haven't worked on a loan without a signed fee agreement for 20 years. I'll bet I have saved $1 million in loan fees over the past ten years alone by forcing repudiating borrowers to accept my loans. There is a whole lot more money to be made in commercial mortgage brokerage than in residential mortgage brokerage. Many commercial mortgage brokers net over a half-million dollars per year. It's a classy profession with the opportunity to meet and rub shoulders everyday with multi-millionaires. But you cannot succeed without a good fee agreement. Don't lose another $10,000 commission. Order your fee agreement today.
The fee agreement comes with a 90 minute video tape where I explain in detail how to actually enforce one of my agreements. Never bluff. If the borrower says, "Go ahead and sue me," I'll show you how to initiate the arbitration with 30 minutes. As they say, "Don't get mad. Get even."
The cost of this fee agreement and fee collection training course in just $199. You'll make that back ten-fold in your first two months of brokering commercial loans. To order a copy of this fee agreement, simply e-mail to us a note expressing your request for a fee agreement. Please include your name, company, address, telephone number, and fax number. Also include your Visa, Mastercard or American Express credit card information, the name on the account, the account number and the expiration date. You can also call your order into Alicia Gandy at 916-338-3232 or fax it in to her at 916-338-2328. Click here for details on our Combo Package.
Or mail your check for $199 plus $8 for shipping and handling to:
Blackburne & Brown Mortgage Company, Inc.
4811 Chippendale Drive, Suite 101
Sacramento, California 95841
Telephone: (916) 338-3232
Fax: (916) 338-2328