B ROKER TRAINING AND REFER ENCE MANUAL

Transcription

1 Wells Farg Business Real Estate Financing Referral Prgram fr Mrtgage Brkers B ROKER TRAINING AND REFER ENCE MANUAL Cmmercial Real Estate Financing Made Simple Wells Farg Business Real Estate Financing Page 1

2 Wells Farg B usiness Real Estate Financing TA BLE OF C ONTENTS Intrductin Prduct Overview Cmpetitive Fees and Rates Quick Qualifying Checklist The Lan Prcess Hw the Brker is Paid Requirements fr Participating and Wells Farg Cntact Infrmatin Appendix I: Sample Rate Sheet Appendix II: Underwriting Guidelines Appendix III: Equity Terminlgy Appendix IV: Finding Leads Page 3 Page 4 Page 6 Page 8 Page 9 Page 11 Page 12 Page 13 Page 14 Page 18 Page 19 Wells Farg Business Real Estate Financing Page 2

3 Wells Farg B usiness Real Estate Financing I NTR OD UC TI ON First f all, Wells Farg Business Real Estate Financing wants t thank yu fr participating in this unique prgram fr mrtgage brkers. Wells Farg Express Equity and Wells Farg Express Refi represent a significant departure frm traditinal cmmercial real estate financing. They truly are Cmmercial Real Estate Financing Made Simple. WHY IS EXPRESS EQUITY IMPORTANT TO YOU? It s a whle new cmmercial lending incme stream that cmplements yur existing hme mrtgage incme. Cmmercial real estate lending is driven by individual business needs, NOT the trends f the residential real estate market. It s an easy additin t yur prtfli: Many f yur current hme mrtgage custmers wn cmmercial real estate as small business wners r investrs. Yu dn t need t be a cmmercial lan expert. Our turnkey prgram makes it easy t explre the cmmercial real estate field with n previus experience! The nly thing yu need t d is t cmplete and submit the applicatin fr yur brrwer. CUSTOMER COMMENTS Wells Farg Express Equity was cheap and fast. There were n upfrnt csts, s I saved thusands. At every step, the peple I dealt with were ready t rll... James Struck, The Struck Firm Ww. This is what I was waiting fr. Very straightfrward, a simple applicatin, n catches... this is it. Julie Hayden, CB Plumbing Fabulus! Fast and efficient, everything was handled ver the phne and via fax. Yu guys were great! Jack Daniels, Cal West Hldings Wells Farg Business Real Estate Financing Page 3

4 Wells Farg B usiness Real Estate Financing PR OD UC T OVERVIEW WELLS FARGO EXPRESS EQUITY & EXPRESS REFI PRODUCT OVERVIEW Target Tailred fr cmmercial, residential r investment real estate Owner-ccupied and investment prperties Widest eligibility f prperty types; even sme envirnmental risks are eligible Prduct Lan r line amunt: Frm $25,000 t $500,000 Secured by cmmercial real estate up t $2 millin in value Equity r Refinance ("Express Equity" r "Express Refi") Lans r evergreen (n need t re-qualify each year) 1 st r 2 nd lien psitin Fixed r adjustable rates Lwest cmbinatin f rate and fee (APR) in the market Underwriting Credit scred; risk-based pricing and risk-based LTV Credit apprval decisin typically in three days Prcess Easy, ne-page applicatin Stated incme (Sme investr exceptins may require minimal dcumentatin) Streamlined prcess savings passed t custmer Centralized Lan Center navigates the paperwrk fr the brkers Custmer Satisfactin Cnsistently ver 90% * As permitted by state law. Wells Farg Business Real Estate Financing Page 4

5 COMPARE EXPR ESS EQUITY & REFI TO TRADITIONAL COMMERCIAL REAL ESTATE LOANS PR OPER TY VALUATI ON APPLICATION FORM CLOSING COSTS AND LOAN FEES DECISION TURNAROUND ELIGIBLE PROPERTY TYPES WELLS FARGO EXPRESS EQUITY AND REFI Free Internal Valuatin perfrmed by Wells Farg At n cst t the brrwer Just ne page. Stated incme (Investrs may be required t prduce additinal dcumentatin) One time riginatin fee f just 1% f credit amunt (Envirnmentally sensitive prperties required t prvide insurance at their wn expense; Mrtgage filing tax fee is respnsibility f applicant in states where applicable.) Typically within three business days Mst prperty types with value up t $2 millin TYPICAL BUSINESS LOANS USING REAL ESTATE COLLATERAL Full MAI appraisal required, which culd cst as much as $5,000 As lng as 10 pages, ften requiring three years f financial statements and tw t three years f persnal financial recrds 1-2% f the credit amunt plus fees fr title insurance, recrding fees, attrney fees, envirnmental assessment and ther fees. Usually $7,000 r mre Often up t three weeks Strictly limited t ffice r retail r sme limited specializatin LIEN POS I TI ON First r secnd mrtgage First mrtgage nly Wells Farg Business Real Estate Financing Page 5

6 Wells Farg B usiness Real Estate Financing C OMPETITIVE FEES A ND RATES CLOSING FEES Minimal fees N appraisal fee, n title fee, n applicatin fee N cst t custmer if deal des nt clse A single 1% riginatin fee is charged at the clse f the lan Apprved envirnmental prperty: ne-time additinal fee (at clse) f $400-$1,200 HOW OUR FEES COMPAR E TO THE COMPETITION ON A $200,000 LINE OR LOAN TYPICAL SERVICES COMPETITOR FEES WELLS FARGO FEES APPRAISAL FEE $4,285 TITLE INSURANCE 1,255 UNDERWRITING FEE AND FLOOD CERTIFICATE 800 CREDIT REPORT 155 SETTLEMENT OR CLOSING FEE (1%) $2,000 $2,000 DOC PREP FEE 175 OTHER FEES (LEGAL, RECORDING, TAX) ENVIRONMENTAL INSPECTION FEE (IF REQUIRED) ENVIRONMENTAL INSURANCE (IF REQUIRED) 329 Mrtgage filing tax fee in states where applicable brrwer pays 4,000 + $400 $1,200 TOTAL $12,999 $2,000 + SAVE $5000 r mre with Wells Farg Business Real Estate Financing! Wells Farg Business Real Estate Financing Page 6

7 FEES DURING THE LIF E OF THE LOAN OR LINE Annual line-f-credit fees: LINE AMOUNT ANNUAL FEE Up t and including $50,000 $150 Up t and including $100,000 $250 Up t and including $250,000 $500 Up t and including $300,000 $625 Up t and including $350,000 $750 Up t and including $400,000 $875 Up t and including $450,000 $1000 Up t and including $500,000 $1125 Waived with significant usage ver the past 12 mnths Prepayment fees (fixed lans) 1% in Year 5 r later 2% in Years 3-4 3% in Years 1-2 Waived if replaced with anther Express Refi lan Hard prepayment fee: nt waived with sale f prperty Early clsure fees n lines and adjustable lans $750 if clsed within first three years. N fee after Year 3 Reduced fee if mved int anther BREF lan r line RATE OVERVIEW AND APR GUARANTEE Best cmbinatin f rate and fee in the market, guaranteed. We will match a cmparable cmpetitive ffer r pay $200 Rate depends n term, credit, lan amunt, lien psitin, adjustable vs. fixed Rates are quted at time f apprval and are lcked in See sample rate sheet in Appendix I Wells Farg Business Real Estate Financing Page 7

8 Wells Farg B usiness Real Estate Financing TA R GETI NG THE EXPRES S EQUITY A ND R EFI B OR R OWER QUICK QUALIFYING CHECKLIST Answer t these questins shuld be yes : Is the prperty valued at $2 millin r less? Is the lan r line f credit amunt $25,000 $500,000? Has the custmer wned the prperty mre than ne year? Has the custmer been in this business mre than tw years? Des the custmer have a credit scre f 680 r abve (may g as lw as 660 if a current Wells Farg custmer) Is the brrwer s annual incme mre than $50,000? Des the real estate securing the lan meet eligible prperty guidelines? (See Appendix II fr Guidelines) Is the LTV within the LTV-by-prperty type guidelines (Appendix II)? Is the applicatin cmplete and accurate? Annual sales and husehld incme is cmplete/reasnable Prperty value is a reasnable estimate Owner-ccupied % appears accurate All acknwledged liens are nted Wells Farg Business Real Estate Financing Page 8

9 Wells Farg B usiness Real Estate Financing THE L OA N PR O C ES S HOW THE BREF LOAN CENTER HANDLES EVERYTHING FOR YOU Review qualifying checklist LOAN OFFICER BREF LOAN CTR. Applicatin Submit Receive Submit prperty insurance infrmatin (ptinal) Submit mrtgage statements (ptinal) Submit rent rll, if investr apt/ffice (r cnd bylaws, if ffice cnd) Call custmer fr missing/additinal infrmatin Pull credit and underwrite Make ffer t custmer/decline Order and prcess title, prperty valuatin, envirnmental, payff demands Handle any issues/exceptins that arise Dcs (Can be sent directly t brrwer) Arrange signing and return signed dcs Funding The BREF Lan Center handles mst things fr yu. (ptinal) Receive Prepare/send CONDITIONS REQUESTED BY BREF LOAN CENTER AFTER APP IS SUBMITTED: Mst Cmmn Stips (Cnditins) Recent mrtgage statement Prperty insurance declaratin Fr Investr/Apartment Owner Rent rll Real Estate tax schedule requested n an exceptin basis, when applicatin des nt initially appear t meet 1.2 Debt Service rati. Wells Farg Business Real Estate Financing Page 9

10 Occasinally Requested Shrt envirnmental questinnaire Cpy f prperty tax bill Articles f incrpratin; Schedule C; Partnership agreement Trust agreement Grant Deed/Quit-Claim Deed/Death Certificate/Recnveyance Deed Prcessing Timeline: Typically days fr clean deals Pssible delays may add 2 4 weeks Undisclsed liens Lw appraisals Private party payffs Cmmunicatin prblems Inaccurate r incmplete infrmatin n applicatin Wells Farg Business Real Estate Financing Page 10

11 HOW THE BROKER IS PAID BREF Lan Center sends check request t Wells Farg Accunts Payable t pay brker referral fee Applicatin shuld always include parent brker ID and mailing address W-9 must be filled ut and faxed t BREF prir t first applicatin (We need the brkerage s tax infrmatin, nt the individual lan fficer s) Sample brker cmpensatin calculatin, assuming: Lan: $200,000 Line: $200,000 LOAN EXAMPLE $200,000 Lan (50 bps) $1000 BROKER COMP LINE EXAMPLE $200,000 Line (40 bps) $800 BROKER COMP Wells Farg Business Real Estate Financing Page 11

12 Wells Farg B usiness Real Estate Financing IMPORTA NT I NF ORMATI ON Requirements fr Participating and Wells Farg Cntact Infrmatin: Attend this training. Submit the Brker Agreement. This will be ed t the attendee fllwing this training. It must be signed by an fficer f the brkerage. Fax back t Cmplete and fax W-9 alng with brker agreement. Mre infrmatin can be fund at: Scenari questins: Call Bbbi Butler at r Lisa Lankfrd at Prgram and scenari questins: Angie Birdwell at angie.h.birdwell@wellsfarg.cm Rate Sheet updates t be mailed ut t Accunt Executives weekly. Or request frm angie.h.birdwell@wellsfarg.cm. Wells Farg Business Real Estate Financing Page 12

13 Wells Farg Bank Business Real Estate Financing Interest Rate Guide: effective 7/11/2005 FICO RANGE: t Fixed: 5 yr lan - 5 yr amrtizatin 7.55% 8.29% 8.91% Fixed: 7 yr lan - 7 yr amrtizatin 7.59% 8.34% 8.96% Fixed: 10 yr lan - 10 yr amrtizatin 7.69% 8.44% 9.06% Fixed: 10 yr lan - 25 yr amrtizatin 7.80% 8.54% 9.16% Fixed: 15 yr lan - 15 yr amrtizatin 7.77% 8.53% 9.15% Adjustable: 5 Year Lan 7.70% 8.19% 8.81% Adjustable: 10, 15, 25 Year Lan 7.58% 8.09% 8.71% ** Line f Credit - spread ver prime 1.50% 2.75% 3.25% Fixed: 5 yr lan - 5 yr amrtizatin 7.24% 7.97% 8.58% Fixed: 7 yr lan - 7 yr amrtizatin 7.34% 8.08% 8.69% Fixed: 10 yr lan - 10 yr amrtizatin 7.52% 8.25% 8.86% Fixed: 10 yr lan - 25 yr amrtizatin 7.70% 8.45% 9.06% Fixed: 15 yr lan - 15 yr amrtizatin 7.69% 8.43% 9.04% Adjustable: 5 Year Lan 7.43% 7.91% 8.52% Adjustable: 10, 15, 25 Year Lan 7.52% 8.01% 8.62% ** Line f Credit - spread ver prime 1.25% 2.50% 3.00% Fixed: 5 yr lan - 5 yr amrtizatin 6.97% 7.71% 8.33% Fixed: 7 yr lan - 7 yr amrtizatin 7.12% 7.86% 8.48% Fixed: 10 yr lan - 10 yr amrtizatin 7.32% 8.05% 8.66% Fixed: 10 yr lan - 25 yr amrtizatin 7.50% 8.24% 8.85% Fixed: 15 yr lan - 15 yr amrtizatin 7.48% 8.21% 8.82% Adjustable: 5 Year Lan 7.17% 7.66% 8.28% Adjustable: 10, 15, 25 Year Lan 7.32% 7.80% 8.41% ** Line f Credit - spread ver prime 1.00% 2.25% 2.75% Fixed: 5 yr lan - 5 yr amrtizatin 6.52% 7.26% 7.88% Fixed: 7 yr lan - 7 yr amrtizatin 6.67% 7.41% 8.03% Fixed: 10 yr lan - 10 yr amrtizatin 6.87% 7.60% 8.21% Fixed: 10 yr lan - 25 yr amrtizatin 7.05% 7.79% 8.40% Fixed: 15 yr lan - 15 yr amrtizatin 7.03% 7.76% 8.37% Adjustable: 5 Year Lan 6.72% 7.21% 7.83% Adjustable: 10, 15, 25 Year Lan 6.87% 7.35% 7.96% ** Line f Credit - spread ver prime 0.75% 2.00% 2.50% ** based n Wells Farg Prime Rate 1st Lien Psitin Interest Rate (within 15 bp) * Lan amunt: $ 40,000 t $99,999 Lan amunt: $ 100,000 t $189,999 Lan Amunt: $ 190,000 t $250,000 Lan Amunt: ver $ 250,000 FOR A 2ND LIEN POSITION - ADD 50 bp TO ABOVE RATE PLEASE NOTE: Interest Rate varies depending n custmer's verall creditwrthness Actual Rate Determined at Time f Apprval Lines f credit will nt be apprved belw Prime Example f Mnthly Payment fr a $100,000 Lan Rate Amrtizatin Mnthly Pmt 9.00% 15 years $ 1, % 15 years $ 1, % 25 years $ % 25 years $ Fr Scenaris, call * Fr lan amunts under $40,000, rates are 40bp t 70bp higher. [rate sheet:vers2.0]

14 Appendix II WELLS FA R GO BUS I NES S R EAL ESTATE FINA NC I NG UNDER WR I TI NG GUIDELI NES A ND ELI GIBLE PR OPERTY TY PES Express Equity and Refi lans/lines are underwritten using a cmplex set f risk factrs. The mst critical factrs cnsidered are: Guarantr s credit rating Prperty Type Available Equity Cash Flw While the actual underwriting guidelines are prprietary t the BREF prgram, the fllwing guidelines will be helpful. LOAN TO VALUE: Risk based underwriting-apprved LTV is dependent n applicant's credit and prperty type. LTV/CLTV MATRIX Risk based underwriting-apprved LTV is dependent n applicant's credit and prperty type. POPULATION Standard, Owner Occupied MIN & MAX LTV (< = $250k) MAX LTV (> $250k) MINIMUM FICO 70% - 80% 70% - 75% 660 Multi Use 70% - 80% 70% - 75% Same as Standard, Owner Occupied Investr 65% - 75% 65% - 75% Custmer: 660 Nn-custmer: 680 Apartment Buildings (5+ Units) Special Purpse Prperties Residential (1-4 Units) 70% - 75% 70% - 75% Custmer: 660 Nn-custmer: % 50% Custmer: 660 Nn-custmer: 680 Refer t Standard, Owner Occupied r Investr depending n wnership Wells Farg Business Real Estate Financing Page 14

15 PROPERTY ELIGIBILITY: Maximum prperty value: $2 millin All standard prperty types, and many nn-traditinal prperty types, are eligible fr Express Equity and Express Refi cmmercial lan prducts, including: Office Industrial Warehuses Retail Mixed-use Special Purpse Multi-family (5+) residential* Investment Prperties Residential (1-4) has recently been added t the prgram* Sme envirnmentally risky prperties (when insured by ur Envirnmental Insurance Prgram). *Requires HMDA disclsures Mst Cmmn Eligible Special Purpse Prperties (Max 50% LTV) Aut repair Aut sales Gas Statins <10 yrs ld* Minimart Self-strage Fast Fd Restaurant Daycare r Preschl Cnvalescent Hme Nursery (Hrticulture)* Health Club r Gym Theatre *Will require envirnment insurance prgram. See Envirnmental sectin belw. Wells Farg Business Real Estate Financing Page 15

16 Nn-eligible prperty types include: Nn-Prfit Organizatins Agricultural/Frestry/Orchards/Farms Dry Cleaning Plants Chemical Plants Fertilizer Manufacturing Gvernment/Military Time Share Prperties Vacant/Undevelped Land Mbile Hme/RV Parks Aut Wrecking/Aut Salvage Yards Gas Statins > 10 years ld Hspitality (htels, mtels, B & B) Texas: Cmmercial prperty wners having a persnal residence situated n, r adjacent t, the cllateral prperty ENVIRONMENTAL PROPERTIES The current and past use f a prperty may influence its acceptability fr a lan. Generally, the fllwing current and past uses may raise a flag: Autmtive Pht develper Gas statin/fueling facility Fd Prcessing Cmmercial printer Hspitals r labratries Transprtatin (taxis, buses, trucking) Winery The wner f these and sme ther prperty types will be asked t fill ut a envirnmental survey. Areas f particular cncern include, but are nt limited t: The presence f abve grund r undergrund strage tanks either nw r in the past The current r past presence r regulated substances at the site Knwn envirnmental cntaminatin at the site Wells Farg Business Real Estate Financing Page 16

17 An envirnmental lan insurance plicy may be required befre a lan can be accepted. Fees fr Envirnmental Assessment and Prtectin Plicies can range frm just ver $400 fr a lw risk prperty t $1200 fr a high-risk prperty. (These are ne-time csts.) These rates vary depending n the length and amunt f the lan. Wells Farg Business Real Estate Financing Page 17

18 Appendix III EQUITY TERMI NOLOGY A ND CALC ULATI ONS Wells Farg Business Real Estate Financing prfessinals may use slightly different terminlgy when referring t available equity than what is used in residential mrtgage brkerages. Here are sme terms t be familiar with: LTV The term LTV is used interchangeably fr LTV (n 1sts) and CLTV (n 2nds) Calculating LTV Fr Refi/1sts: Maximum lan amunt = (Prperty Value x Apprved LTV) Wells Farg Business Real Estate Financing Page 18

19 Appendix IV FINDI NG LEADS FOR C OMMER C IAL REAL ESTATE FI NA NC I NG Here are sme tried-and-true methds fr digging ut thse cmmercial lan pprtunities: Lk in yur clsed file drawers. Check the 1003 Schedule f Prperties Owned fr business real estate, 5+ multi-family, and ther investr prperties. Lk in newspaper ads and yellw pages fr types f businesses that wuld be hused in Eligible Prperty Types listed in yur training guide (multi-family, retail, mixed use, small ffice buildings, aut repair, minimart, self-strage, fast fd, daycare r preschl, cnvalescent hme, health club, gym, r theatre). Obtain lists frm yur lcal title cmpany, as yu might d fr residential lead. Check in with yur referral netwrks, particularly real estate agents, accuntants and attrneys. Let yur realtr cntacts knw that yu have access t small cmmercial real estate financing. Many existing cmmercial lans are shrt-term and/r hard mney lans. When making new cmmercial cntacts, ask abut the nature, term, and rate f their existing lans. Walk the streets f yur cmmunity. Opprtunities are everywhere Wells Farg Bank, N.A. All rights reserved. Member FDIC. Wells Farg Business Real Estate Financing Page 19