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©2011 Cengage Learning
The purpose of this unit is to acquaint the learner with business operations and to generate business. The individual must know marketing, advertising and how to solicit prospective borrowers. An important aspect of advertising is to know the mandatory legal rules for advertising.
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©2011 Cengage Learning
Contents Ch 2: Sources of Business 2.1 Getting started 2.2 Marketing 2.3 Advertising 2.4 Other Sources of Business
Referrals from Realtors Referrals from Other sources Referrals from the Public Testimonial
2.5 Types of Media Affiliation Billboards, benches, Buses Direct advertising Direct main advertising Internet Magazines News Releases Newspapers
2.5 Types of Media Office supplies Promotional materials Radio Realtors® Telemarketing Television Trade Shows Networking group
2.6 Advertising regulations Licensee advertising License number on business cards Advance Fee Advertising Regulation Z Advertising Disclosures Fair Housing Terminology
©2011 Cengage Learning
Student Learning Outcomes:1. Discuss marketing and advertising goals and image.
2. Identify the steps in the advertising process.
3. List the type of advertising media available for the mortgage loan broker.
4. Describe how advertising creates action.
5. Differentiate between various types of advertising.
©2011 Cengage Learning
2.1 Getting Started Many loan brokers come from
Real-estate related fields. Banking or financial institutions Real estate sales
The history of advertising has changed: Oral: Hand held sign to store windows, radio,
TV Print: Newspaper, magazines, photos Internet: virtual tours, web boards, email, home
pages, facebook, blogs
©2011 Cengage Learning
Advertising constraints
Marketing efforts & media are designed for consumer protection The Federal Trade Commission (FTC) rules Do not call/fax lists
©2011 Cengage Learning
Today Type the borrower’s credit information into the computer. Run the credit report on the spot. Determine credit rating. Pull up a list of loan types for which the borrower would qualify. Print a comparison of the various loan types, contrasting down payment,
monthly payment, ratios, closing costs such as points, and similar loan options.
Print the loan application (URLA 1003), which loan applicant and loan broker agree on for signatures and submittal to the lender.
Do a database computer search for comparables to support the requested loan-to-value (LTV).
Transmit by computer the comparable sales and 1003 to the lender for submission for loan documents.
©2011 Cengage Learning
2.2 Marketing Defined: any type of message that promotes
communication of a product, service, or idea.
What is a marketing plan? Internet sites:
http://marketplan.us/images/marketing_plan.pdf http://www.myownbusiness.org
©2011 Cengage Learning
The Five W’s:
Who is your target market?
What product do you have to offer?
Where are your clients
Why would anyone want to do business with your firm?
Why are they seeking the funds?
When does the client want to act?
©2011 Cengage Learning
Marketing Process
The step-by-step analysis of how to outline the objectives of your promotional campaign to gain results.
STEP 1: Select the goal a) list the desired end results
b) Goal setting must contain specific, measurable items
©2011 Cengage Learning
Marketing: Step 2 Establish your target market. List your:
a. personal successes & interests
b. strongest personality traits & characteristics
c. hobbies, pastimes, sports interests
d. level of education, interests and activities. Identify the competition Identify the specific area where you will
concentrate your business
©2011 Cengage Learning
Marketing: Step 3
Select the media for your target market. Internet search for how to develop a marketing
plan Decide the type of media Select a slogan and motto Design the messages Implement evaluation Determine the effectiveness
©2011 Cengage Learning
Reasons for Advertising To get nearer to the customer To create interest and desire on the
part of the prospective applicant To educate consumers To familiarize the customer with your services To stress the exclusive features of your
services To fill the needs that change with styles and
customs
©2011 Cengage Learning
Reasons for Advertising
To assist newcomers To create good will To emphasize a name or slogan To bond with the business community To increase the relationship to a line of
products To introduce a new service To urge hesitating prospects to take action To meet with legal compliance criteria
©2011 Cengage Learning
2.4 Other Sources of Business
Referrals from REALTORS®
Referrals from other sources Real estate industry professionals CPA Attorney, courts
Referrals from the public Testimonials
©2011 Cengage Learning
2.5 TYPES OF MEDIA WRITTEN
Affiliations, Associations Billboards – Company identification Benches, Buses – Raise awareness Direct Mail Advertising – Specific individuals Internet-Web page plus much more Magazines – Established reader clientele News Releases – Loan agent name Newspapers – Information on loans Office Supplies (Letterhead, cards) Promotional Materials (Flyers, brochures)
©2011 Cengage Learning
2.5 TYPES OF MEDIA Realtor.com ORAL
Radio – Identifies audience Telemarketing-Identified individuals Television-Name recognition Trade Shows
Networking groups
©2011 Cengage Learning
2.6 Advertising Regulations Advertisement is defined by the California Department of Real
Estate (DRE). Advertisement is defined as a commercial message in any
medium that directly or indirectly promotes a transaction in the financing of real property.
It includes dissemination in any newspaper, circular, form letter, brochure or similar publication, display, sign, radio broadcast, or telecast. It concerns any use, terms, rates, conditions or amount of any loan, security, solvency, or stability of any person carrying on licensee activities.
©2011 Cengage Learning
Licensee Advertising The name of the office or employing broker
must be present in any advertising.
Real estate licensees must disclosure their DRE license identification number on all solicitation materials intended to be a first point of contact with consumers.
Materials include business cards, stationary, advertising flyers.
©2011 Cengage Learning
Advance Fee Advertising The advertising and the agreement must be
submitted for not later than five days before the publication or use of the material.
It must be in not less than 10-point type.
All moneys collected from a borrower, including appraisal and credit fees, are trust funds and must be handled accordingly.
©2011 Cengage Learning
Regulation Z Disclosures:1. If the ad states a finance charge rate, it must state
the annual percentage rate (APR).
2. The ad must NOT state any rate, other than the simple annual rate or periodic rate applied to the unpaid balance.
3. If the annual percentage rate may be increased after the transaction is consummated, the ad must state that fact.
4. Other terms in the ad may trigger additional disclosures
©2011 Cengage Learning
APR applies:1. The amount or percentage of any down payment
2. The number of payments or period of repayment
3. The amount of any payment
4. The amount of any finance charge
If any of above triggered, then must disclose:
1. The amount or percentage of the down payment
2. The terms of repayment
3. The annual percentage rate (must use the exact term)
4. The amount of any increase in annual percentage rate after the transaction is consummated
©2011 Cengage Learning
Fair Housing Terminology
HUD has indicated that the following is not acceptable:
Race: black, white Asian, Latino Religion: temple, synagogue, church Marital status: single, married Groups: senior citizens, students
©2011 Cengage Learning
MLBLOAN
SERVICES
Rehabilitation / Remodeling Loans
FHA/HUD 203d Loan
3% Down – Owner15% Down – Investor1-4 Unit Properties OK!No Limit on the numberof FHA loans you presently have!
FHA DIRECT LENDER(800) 555-1212
Remodel AD
©2011 Cengage Learning
CLASSIFIED ADS
LENDER’S BARGAINSNO LOAN FEE * EASY TERMS
As low as 3% down gets you 7 ½ %For your new home loan. $300 gets you
the disclosure money, or, $500 to getyou 0% down on $120k!
Call me now! Salesperson Sam (800) 555-1212
1. DRE Broker name must be shown
2. RE Commissioner approves Advance Fee Advertising
©2011 Cengage Learning
CLASSIFIED ADSMLB LOAN SERVICES
Use our years of experience
To pre-qualify your buyers
80% E.Z. qualifiers
95% LTV to $250,000
80/10/10 to $650,000
We are expanding
Seeking Experienced Loan Agents
With Real Estate License
(800) 555-1212
W.T. Allen, President
333 Apple St Anywhere, CA 99999
This ad is an example ofadvertising that containsthe loan amounts and percentages. However, thead does not quote interestrates nor fees but merelystates LTV and maximumloan amounts.
©2011 Cengage Learning
LEADER AD
GIVE YOUR BUYERS A HEAD START TOHOME OWNERSHIP
7.00%10.00% APR
INITIAL QUALIFYING/PAYMENT RATEONLY
1.00POINT
NO UP FRONTPMI COST
10% DOWN90% LOAN
AFFORDABLEPAYMENT
ADJUSTMENT
9.00%HIGHEST
LOAN RATE72 HOUR
UNDERWRITINGAPPROVAL
©2011 Cengage Learning
Regulation Z
Disclosures:Loan terms and costs1. Down payment2. Installment payments3. Finance charge expressed as APR 4. Points5. Finder’s fee(s)6. Number of installments7. Period of repayment
©2011 Cengage Learning
PREPARATION AD
MLB LOAN SERVICESPRESENTS
THE BIG LOAN
A fixed rate jumbo loan with competitive rates,large loan limits, and a variety of processing styles.
Loan amounts to $2,000,00010 to 30 year terms in 5 year increments
LTV’s as high as 90%Ratios as high as 33/38
Temporary and permanent buy downs availableNo income (quick) processing available
Call you local MLB Broker Services representative for current rates.
©2011 Cengage Learning
SPECIFIC LOAN AD
ATTENTION PERS MEMBERS!Are you trying to buy a home but short on the down payment?
Let PERS 100% FINANCING help you!(95% PERS Fixed Rate 1st Loan + 5% Personal Loan)CALL MLB LOAN SERVICES at (800) 555-1212PERS (Public Employees’ Retirement System) offers:
Competitive interest rates60-day rate lock with float down feature
Limited fees
©2011 Cengage Learning
NAME RECOGNITION AD
GMACYour Affordable Housing Lender
1-800-555-GMAC
Committed to making the dream of homeowner a reality!
Fair Housing: Requires uniform, consistent and fair treatment for all prospective borrowers
©2011 Cengage Learning
CLASSIFIED ADS
BUY YOUR LOAN or CREATE A NEW LOANDiscount & sell your note for CASH today.Or, apply for new financing. We do both!Guaranteed highest return at lowest cost.
95% conventional financing.No payment over $500 a month over 5 year period.
Call Salesman Sam NOW! At (800) 555-1212
1. Cannot use “guarantee”
2. APR requirement
3. Term/payment triggers
4. Broker disclosure
Courts held that misleading ads violate the law