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Volume 7: Issue 6 | Date: May 22, 2019

This letter is intended only for commercial real estate loan officers working for banks, credit unions, conduits, and hard money lenders. Today we’ll discuss look-back yields. We have lots of cute, clean jokes, some funny pics, and a hilarious video of kid fails!

Hey guys, if we make you chuckle today, won't you please-please-please refer a turndown this week to CommercialMortgage.com? Seriously, guys, this searchable portal is free, and it contains thousands of commercial lenders. You really are doing them a favor.


Joke Du Jour

One day, when a golfer was playing golf on a famous golf course in Mumbai, some tourists pointed and said, "Tiger Woods!! Tiger Woods!!” The golfer was feeling pretty cocky because he had indeed just hit a great shot… until a tiger came out of the woods.


Refer a Trust Deed Investor - Earn $250

Do you know a trust deed investor or an accredited investor who should be investing in first trust deeds? We’ll pay you a $250 referral fee the first time he invests. Go ahead and refer three or four different guys. Refer an investor here.


Cheap Commercial Mortgage Leads

This section should make you bridge lenders sit up and pay attention. There is no cheaper way for your hard money mortgage company to close more bridge loans than to buy leads and a listing on CommercialMortgage.com. You pay just $1,000 per YEAR (not per month!), and the designated loan officer will receive, on average, two to four commercial leads per week. Each lead will be exactly what your company wants to see - the right loan type (bridge loan or construction loan, etc.), the right loan amount, the right property type (apartment building or office building, etc.), in the right state, and with the right credit score.

Click HERE for details.


Dog Joke

My dog used to chase people on a bike a lot. It got so bad, finally I had to take his bike away.


- Today's Observation -

What are Look-Back Yields?

A look-back yield is typically computed when a high-cost lender is preparing his payoff demand on a commercial loan. The borrowers asks, "Hey, lender, I want to pay off your commercial loan. How much do I have to pay you?"

The commercial lender will look back at the loan origination points that he charged, the interest rate on the loan, the prepayment penalty, any exit fee, and the size of the balloon payment to make sure that he has earned a certain minimum annual return. This look-back yield is all agreed to in advance between the lender and the borrower, so there is no sneakiness here.

Why would a lender add a look-back yield requirement (minimum annual return) to a commercial loan?

Let's suppose a lender makes a commercial loan to a borrower who specializes in flipping rundown apartment building. It's a super-risky deal. The note rate was 8% interest. There were three loan origination points to the bridge lender, ten discount points to the bridge lender's mortgage fund, and a five-point exit fee. Since the term of this commercial loan was scheduled to be just two years, the lender expected to earn over 17% annually.

But a problem developed. The existing apartment tenants refused to move out, so the apartment builder flipper had to spend 18 months in court to finally evict them. Then he was finally able to start the two-year project of renovating and selling the building. Even though the flipper was 18 months late in paying off his balloon, the lender saw no point in foreclosing of him because the flipper was very competent, and he was moving as fast as he legally could.

When the loan finally paid off 18 months past maturity, the lender realized that he had gotten seriously shafted. During that extra 18 months, the lender had earned just 8%, which was the nominal rate, and not 17%. The nominal rate is the rate on the face of the note.

His yield was thereby diluted by the delay in the balloon payment to just 14.5%. Had the high-cost bridge lender included a minimum look-back yield provision, he would have earned the 17% that he was expecting. Read more on George's blog.

Click here for free training in commercial real estate finance.


Pigmy Joke

A hunter walking through the jungle found a huge dead elephant with a pigmy standing beside it. Amazed, he asked: "Did you kill that?” The pigmy said, "Yes.” The hunter asked, "How could a little bloke like you kill a huge beast like that?” "I killed it with my club.” The astonished hunter asked, "How big is your club?” The pigmy replied, "There's about 60 of us."


Or You Can Get Commercial Loan Leads For Free!

It’s important that you guys don’t get confused here. C-Loans, Inc. owns TWO different commercial mortgage portals that actually compete against each other. I often joke that it is my dream is to own every horse in the Kentucky Derby. Haha!

We’ve already talked about CommercialMortgage.com (“CMDC”) above. CMDC is our latest portal, and it uses an advertising model. A bank pays $1,000 per year to be listed on CMDC and to receive leads, and if the bank closes a deal, the bank does NOT owe C-Loans, Inc. even one penny.

Our second portal, C-Loans.com, is our original portal. C-Loans.com has been phenomenally successful, boasting over 1,000 commercial loan closings totaling over $1 billion. We will list banks on C-Loans.com for free, and they will receive free leads by email, as well as calls and emails directly from borrowers.

If the bank closes a commercial loan, however, the bank owes to C-Loans.com a software licensing fee of between 25 to 50 bps (usually 37.5 bps.) In real life, all of our banks simply bump their normal loan fee from 1.0 points to 1.375 points, so C-Loans.com effectively costs the bank nothingPlease click here to get listed on C-Loans for free. (You must be a bona fide direct commercial lender servicing at least $20 million in commercial loans.)


Egg Joke

The golfer sliced a ball into a field of chickens, striking one of the hens and killing it instantly. He was understandably upset and sought out the farmer. “I’m sorry,” he said, “My terrible tee-shot hit one of your hens and killed it. Can I replace the hen?” “I don’t know about that,” replied the farmer, mulling it over. “How many eggs a day do you lay?” 


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Girlfriend Joke

As a man serviced an alarm system at a jewelry store recently, the saleswoman let him know that the store was having a 20 percent off sale. 

"I bet your girlfriend would love it if you bought her something," she suggested. 

"I don't have a girlfriend," he answered. 

"No girlfriend? Why not?" 

"My wife won't let me."


Won't You Please-Please-Please Refer Us Your Commercial Mortgage Turndowns?

If you have to turn down a commercial loan this week, you would really be helping your customer if you referred him to CommercialMortgage.com. The domain name is easy to remember.


Post Turtle Joke

While suturing a cut on the hand of a 75 year old rancher, whose hand was caught in the gate while working cattle, the doctor struck up a conversation with the old man. Eventually the topic got around to one of the political candidates.

The old rancher said, "Well, ya know, that candidate is a 'Post Turtle'."

Not being familiar with the term, the doctor asked him what a 'post turtle' was.

The old rancher said, "When you're driving down a country road you come across a fence post with a turtle balanced on top, that's a 'post turtle'."

The old rancher saw the puzzled look on the doctor's face so he continued to explain.

"You know they didn't get up there by themselves, they don't belong up there, they don't know what to do while they're up there, and you just wonder what kind of dummy put them up there to begin with."


Ever Wonder What a C-Loans Application Looks Like?


Whisper Joke

My sister had been ill, so I called to see how she was doing. My ten-year-old niece answered the phone. "Hello," she whispered. "Hi, Honey. How's your mother doing?" I asked. "She's sleeping," she answered, again in a whisper. "Did she go to the doctor?" I asked. "Yes. She got some medicine," my niece said softly. "Well, don't wake her. Just tell her I called. What are you doing, by the way?” Again in a soft whisper, she answered, "Practicing my trumpet."


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Honking Joke

As I drove into a parking lot, I noticed that a pickup truck with a dog sitting behind the wheel was rolling toward a female pedestrian. She seemed oblivious, so I hit my horn to get her attention.

She looked up just in time to jump out of the way of the truck's path, and the vehicle bumped harmlessly into the curb and stopped. I rushed to the woman's side to see if she was all right.

"I'm fine," she assured me,"but I hate to think what could have happened to me if that dog hadn't honked."


Would You Mind a $21,250 Referral Fee?

We once paid a $21,250 referral fee to a website owner named Alan Dunn for referring us a $17 million deal. Please click here for details.


Video - Hilarious Kid Fails


FREE Commercial Real Estate Finance Training

From an Industry Veteran and Attorney

The C-Loans Blog: info.c-loans.com

Every week we publish one or two new blog articles that train commercial brokers in commercial real estate finance. We try to have fun with it, including lots of funny pics. If you want access to this FREE training, subscribe to George's blog by clicking the button below.


Final Funny

On a beautiful sunny Saturday afternoon my buddy and I stood on the first tee of our Golf Club. He had just pulled out his driver when a young woman in a wedding dress came running up to him, crying. She slaps him in the face, turns, and runs away. My buddy turns to me and says calmly, "I don't know what her problem is. I distinctly told her only if it rained."

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Tom Blackburne

General Manager

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