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Q&A With Kendra Rommel of CIVIC Financial Services

How would you describe current economic and real estate market conditions? Everyone is comparing the current financial and real estate situation to the mortgage meltdown of 2008. But today’s conditions are completely different. Yes, we may be facing an economic downturn, but previous downturns stemmed from a loss or depreciation of assets, while this market shift was sparked by a nationwide health crisis and resulting job losses. This market uncertainty caused Wall Street to pull back or cease purchasing loans they previously were acquiring at a premium from lenders like CIVIC. As a leading private money lender, however, CIVIC was well-positioned to weather this storm of uncertainty. We are well-capitalized and have very strong relationships with Wall Street. We remained aligned with our capital partners to ensure we could continue offering financing solutions needed in the marketplace. Our capacity to fund both bridge and rental loans is as strong as ever. Why does this affect the real estate investor market? Overnight, many lenders that built their business selling to institutional capital sources, REITs or hedge funds were forced to hold on to recent originations either on their balance sheet or on expensive warehouse lines. While this is fine in theory, many lenders didn’t have the liquidity available to do this, much less the liquidity needed to fund new originations. In addition, warehouse lenders also paused, reassessed their positions, and many in our industry faced margin calls that needed to be met in an extremely short period of time. Since many lenders didn’t have liquidity to meet the large margin calls, especially without the ability to turn their capital, what was initially just a health crisis became a liquidity issue. What does all this mean to real estate investors, lenders and loan originators? Lenders had to quickly decide whether they had to pause or pivot to remain in the game. Companies like CIVIC had to make adjustments such as lowering leverages, raising interest rates and placing some bumpers on our loan guidelines. CIVIC remains a very well capitalized company. Our loans are still performing today just like they did in January and February. How did your customers react to the pivot? The initial reaction was difficult, but we’ve adjusted a bit as Wall Street’s concerns and fears have abated. We have been 100% committed to our customers throughout the pandemic and have been focused on being consistent, trusted financial partners. In fact, we recently received the highest monthly Net Promoter Score in our company’s history, and today our pipeline is as strong as it has ever been. What is the biggest challenge CIVIC is experiencing today? I think the biggest challenge is the fact that, until we have a vaccine in place, there is no known end in sight. So we need to remain diligent and adaptable to be able to shift as needed. CIVIC is very well-positioned to do that. Have there recently been any positive developments? Yes. First and foremost, the real estate market continues to be robust. As a result, Wall Street has resumed interest in acquiring these products. Even more exciting is that the industry has adapted to the “new norm” of constant change and is thriving—whether it be working remotely and moving services to a virtual delivery model, or capitalizing quickly on new opportunities. What advice do you have to offer from this experience? As an Originator one of the most notable opportunities for our team has been the ability to create strategic partnerships that bring value to each other. None of us are exempt from the current or future economic setbacks. So it is imperative we link arms with great partners and recognize the opportunities we can still capture, as we are stronger together. I would also say that during tough times, the values you commit to as an organization become critical. I believe that CIVIC’s core values of being a great partner and acting with honor have given us a lift and will keep us strong as we navigate through unchartered waters in the coming months.

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Archrock Services to Auction Surplus Properties

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Auction firm Williams & Williams is set to auction several surplus real estate properties for energy midstream company Archrock Services on Sept. 29. Listings include warehouse, office space and land parcels. Additionally, the vacant residence in New Castle, Pennsylvania, will sell in an online-only auction at AuctionNetwork.com on Sept. 28-30. These auctions are being offered in conjunction with commercial broker JLL. The commercial properties include three land lots and two light industrial buildings in Victoria, Texas; an improved lot in Broussard, Louisiana; and office/warehouse/shop property in Belle Chasse, Louisiana. Public inspections of the buildings in Victoria, Texas, and Belle Chasse, Louisiana, are scheduled for Sept. 11 and Sept. 18 from 11 a.m.-2 p.m. The public inspection for the residence is New Castle is Sept. 13 from 1 p.m.-4 p.m.  The auctions are open to the public. No bidder deposit is required to participate. Online bidding is available simultaneously with the live auctions at AuctionNetwork.com. For a complete list of properties, sale times, locations and terms, please visit the auction website: https://www.williamsauction.com/ARCHROCK.

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Regional Spotlight: Portland, Maine

The Northeastern market remains competitive in 2020. As with every other U.S. city, Portland, Maine, entered summer 2020 pulled in many directions. Fortunately for Portland, as the most populous city in Maine with just over 66,000 residents (according to 2019 U.S. Census estimates), some of the tension in the market has been due to a competitive housing market and an economy that’s tentatively recovering. That economy, which has historically relied largely on the tourism and service sectors, may well turn out to be the sort of “diamond in the rough” that truly shines and grows in value under pressure. “Portland went through a big hospitality boom that led to a second-home boom in this market,” Fred Forsley, founder and owner of the local Shipyard Brewing Company and a real estate investor, said of the pre-coronavirus market and economy in the area. “Now, even more people are thinking about buying a condo in Portland and doing business here as well as vacationing here.” “We are experiencing an influx of buyers triggered by the need to get out of their current situation,” said Nancy Carleton, a managing broker at William Raveis Real Estate in Bath. Carleton said she is seeing buyers from most of New England and as far south as Pennsylvania. “People have discovered they can work from home and realized they may continue to work from home for the foreseeable future. That is freeing them up to buy more substantial properties as they plan on spending more time in Maine,” she said. Forsley, who developed eight residential condo units as part of a larger project near his brewery noted that many of his buyers spent about half their time in the Portland area and the other half in a major metropolitan area like New York City or Boston before the pandemic. However, with COVID-19 still ravaging many densely populated areas of the country, second-homeowners could well begin making more use of their vacation location. “[This spring] people definitely came to their second homes in Maine and then stayed to work remotely,” Forsley said. The result, in Portland at least, has been that development has continued wherever possible. At present, Forsley is involved in several development projects, including a waterfront site, high-end condos and the beer-themed Cambria “brewtel,” the first of its kind in Maine. Pandemic Partnerships Keep the Market Moving With Redfin describing the Portland market as “very competitive” at the end of July 2020, the city’s real estate market seems to be holding firm during the COVID-19 pandemic. “Homes sell for around list price and go pending in around 10 days,” Redfin agents reported, and June sales prices were up just over 8% year-over-year. Much of the competition for homes comes from outside the state, said agent Rebecca Kingsley. As an associate broker for the Hatcher Group of Keller Williams Realty, Kingsley specializes in helping clients from out of state. “If they are working remotely, why not bring that national dollar to Maine and be able to continue on with their Chicago salary?” she said. However, many local housing advocates are becoming concerned those out-of-market dollars could price Portland locals out of housing options. With a low inventory of available properties, the trend in rising prices seems unlikely to change direction any time soon. Maine Realtors Association president Tom Cole told the Portland Phoenix, “Maine’s for-sale inventory is down 19% compared to a year ago.” Inventory availability is unlikely to loosen up any time soon since so many Americans arenow actively considering moving out of denser urban areas into cities like those in Maine. One advantage for real estate investors looking to acquire properties in the area is the local planning board’s ongoing work during the pandemic. The determination to keep development moving represents a certain degree of hope for local homeowners wanting to acquire an affordable residence. Despite beginning virtual meetings in April, the city has still managed to approve about 150,000 square feet of construction ranging from residential developments to medical offices to utility projects. “At the beginning of the pandemic, we established a goal here in the city to support the continuation of city development approvals and ongoing construction activities while protecting public health,” said Greg Mitchell, Portland’s economic development director. The city pivoted quickly to remote services to keep developers actively working in the area. Local developers agreed to take on “the responsibility of public safety and the public health crisis” in exchange for continuing work. The result of this was that hundreds of local workers remained employed on job sites and many developers avoided breaking commitments made to investors. The city’s Port of Portland, the largest tonnage seaport in New England, has also remained open for most forms of cargo. As in most ports, cruise service has been suspended, but Maine ports are exploring options for permitting some cruise ships to dock in the area and possibly board a limited number of passengers. The presence of a large port like the Port of Portland provides additional economic insulation to the Portland area, since shipping, storage and related services are largely considered essential services and continue running during shutdowns. Portland’s Emerging Markets Could Stabilize a Service-Centered Economy While some of the nation’s highest-profile hospitality and service-industry markets are suffering record-breaking unemployment and economic meltdowns, Portland appears to be weathering the storm relatively well. Portland’s May unemployment rate, for example, was 10.3%, below the national average of 13.3% for the same period. Forsley credits job growth in biotech companies and the “nonseasonal” second-home market for much of the market’s stability. He explained that in Portland, Maine, second homes are not generally used solely along seasonal parameters, unlike many other northern vacation homes. Portland has also benefited from its state’s emerging life science and biotech markets and is home to many of the companies that are currently on the forefront of the worldwide effort to stop COVID-19. “Maine’s biomedical and life science companies are providing crucial tools in the global fight against COVID-19. High demand for

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Understanding the Difference Between RIN and RON

E-closings are likely here to stay, so make sure you understand how they can be used. Typically, the closing process includes a variety of inperson tasks, culminating in the actual signing ceremony. To help keep real estate transactions moving forward during the coronavirus pandemic, the closing and title world had to consider alternatives to traditional inperson closings. E-closing seemed like a reasonable option during a time of physical distancing. States with remote online notary (RON) laws could rely on existing processes that governed how to complete closings online. For other states, there was a push to lobby state governors to allow remote notarizations and closings. By the end of March 2020, some state governors had issued executive orders (pursuant to their authority to issue emergency orders) allowing for the expansion of the definition of the term “in the presence of” to also mean “electronic presence.” That allowed notarizations and closings to take place online and without actual person-to-person physical contact—and in the absence of existing RON state law. A primary purpose of these state orders was to help the housing market continue to close transactions during the health emergency. E-Closing Variations Variations of the e-closing process include Paper Remote Online Notarization and In Person Electronic Notarization. Two other variations that are more prevalent are Remote Online Notary (RON), as mentioned previously, and Remote Ink Signed Notarization (RIN). It is important to understand how RON and RIN are similar and how they are different. The overriding similarity is that both rely on a shared audio-video, real-time connection. Imagine the closing attorney in their office and the borrower at their home, office or anywhere else they can access the internet. With both RON and RIN, the borrower and attorney meet in an online session to review the loan and closing documents and then execute the documents to evidence the completion of the transaction. There are a few significant differences too. First, RIN is temporary. The state authorizations are orders issued by the governors pursuant to their emergency orders. They last just for the duration of the emergency orders. In contrast, RON is permanent. They are the laws of respective states. As of summer 2020, there were about 25 states with some type of RON statute, with Missouri the most recent to enact a RON statute effective Aug. 28, 2020. Second, RIN results in what is commonly thought of as a “wet” signature. RON, though, is fully digital—the borrower signs by applying a digital signature or mark, as does the notary when applying their notary seal or certification. Third, with RIN, the notary must manually verify the borrower’s ID. The rules governing how this is accomplished can vary across jurisdictions, but ultimately it is a manual review process. With RON, most software uses automated ID verification and/or knowledge-based questions to authenticate the signor. Finally, RIN requires the customary pile of papers to print, organize into a package, send to the signor to sign, copy, ship to the lender and store in a file. Anyone with experience closing a real property transaction is familiar with all the paper. RON, however, is a fully digital process. Software and Hardware Needed Regardless of which e-closing process you use, you must obtain the specialized software and hardware necessary to complete it. The software connects the signor and closing attorney or notary and acts as an interface. There are a variety of RON software providers. A vital consideration when researching one to fit your needs is whether the company is approved by regulators and your underwriters. Another important point of analysis is whether and what changes or improvements they have made since onboarding other clients. Keep in mind that this is a very new industry, so you should expect changes and modifications. RIN providers don’t require a similar onboarding process as RON companies. The RIN process can be as simple as downloading software and registering online. Still, a similar important factor when choosing a RIN provider is whether the provider is approved by your title insurance company. Title insurance companies have different requirements; for example, whether the online closing should be recorded, or where and for how long the audio and visual data should be stored. It also is important to keep in mind that at a traditional closing all the consumer must do is show up. The paper, pens, coffee and everything else needed to complete the closing is supplied by the closing office. But for an e-closing, the signing party must have the necessary hardware. A desktop computer or laptop is required because most guidelines don’t allow smartphones or tablets. And the hardware must have a camera and microphone to allow for that shared audio/video connection. Keep in mind that not everyone knows whether their device has a camera or microphone or how to install drivers or otherwise enable the functions if there is a technological problem. It saves time to have a borrower test their device before the closing date. Where E-Closings Go From Here While a new process, e-closings seem here to stay. The number of states with RON statutes is rising each year, and real estate closing professionals in states that issued RIN orders in 2020 may have become accustomed to the e-closing process and push for full-blown RON statutes once the RIN orders expire. As more and more closings are completed online, it is vital to maintain loan document integrity. A RON signing is completely digital, with prompts along the way. For example, the signor can’t skip to a signature field on page 3 until pages 1 and 2 are completed. All required pages and signature fields are required to be completed in order to finalize or complete the signing. RIN still results in the traditional, blue-ink signature, and even experienced real estate professionals know the process sometimes results in a missed or incomplete signature. It also will be important to consider the roles realtors and loan officers will play in an e-closing. Typically, they rely on personal connections and customer

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Knowing the “Rules” Leads to Winning the Game

I was born outside of Chicago, but I spent most of my youth living between Argentina, Brazil and California. It was my time in Argentina, living with my grandparents, I remember the most. My grandfather was a bricklayer. He spent his life building homes and buildings all over Argentina. He was an amazing man. When he retired, he didn’t stop. There was always a project at the house, and he had a masterful way of getting me involved and giving me purpose. Whether it was running down the street to pick up fresh bread for lunch or helping him plan his next task, I was quickly made a part of the beautiful day-to-day ritual of living under their roof. Early Life Lessons When I was just eight years old, my grandfather had me mixing cement and fully immersed me in building a small second home on our property. He taught me his craft, about taking pride in your work, the discipline it takes to do a good job and, most importantly, the importance of strong values. My grandfather also instilled a love of sports in me. Before I started any sport, he would hand me the rule books and manuals. They would have me read these books from cover to cover to make sure I understood how the game was played before stepping onto the field. I learned not only the rules but also the importance of each position and the role they played on the team. Once I understood, I could put my energy to playing my best game. All of this has become key as I have advanced in my career within the mortgage industry. Every day I look back on my time in Argentina and realize how well these lessons of teamwork and discipline have served me as I’ve excelled in the title business. I also believe that my exposure to so many cultures and life experiences have helped me to better relate with people. There’s an art of conversation that comes from life experiences if you allow yourself to relate to others on a personal level. This is true of life and business. Watching and Learning My entry into the mortgage industry was not your typical path. I graduated from high school at 17 with the great skills and lessons my parents and grandparents taught me, a love of art that manifested itself in large format murals, but no real idea of what my future held. It wasn’t until I went to a job fair that I even knew that the mortgage and finance industry existed. I was lucky enough to get a job in the mailroom at one of the largest title insurance firms in the U.S. My manager, who I keep in touch with, saw potential in me that I didn’t see in myself. I remember delivering mail in the examination area, where the search examiners shared two computers. Some of my deliveries included microfiche films. I would watch searchers load and scan through them for information. I watched and learned, just as I had learned from my grandfather. Before I knew it, I had worked my way from the mailroom to a search examiner and then to a title assistant. I had found my place. To this day, I teach my children that if you see something that needs to be done, just take the initiative to learn how to do it. It will serve you well. It wasn’t until I had worked my way up to title officer and sales rep with another company that I experienced my first major career bump—the housing market crash of 2008. I had to start from scratch and rebuild my career, landing back at my first company as a search examiner. What I realized by coming back to searching was that seeing discrepancies in documents came very easily to me. It took me back to combing through those rulebooks as a kid and solving those puzzles. It allowed me to hone my craft and focus on the industry as a whole. When I look back on those early times scrolling through microfiche, I can’t help but be amazed by how much technology has advanced our industry. I went from searching just a few counties within our local area to doing transactions on the opposite coast. I feel fortunate to have been a witness to this dramatic change. It gave me a new focus and new skills and I, once again, immersed myself into learning “the new ways.” When I arrived at ServiceLink in 2012, the focus on technology became even more pronounced. In my current role, I manage ServiceLink’s Single Family Rental (SFR) Title and Close team. We work with investors and lenders to issue policies to insure everyone’s interests. I’m working with a team of extremely knowledgeable title experts who go beyond cookie-cutter answers to truly resolve issues, setting up a centralized title and close process for our customers. Our clients know they can count on us and that makes me delighted to be a part of this team. Can-Do Success Anyone who knows me will tell you: I’m driven by somebody telling me it can’t be done. Maybe it’s rooted in watching my grandfather methodically go about his projects and find a solution to any problem. I’ve also learned that any problem is better solved by a team. So, I’ve used my experiences of growing up in a variety of cultures to better understand people and relationships, especially within my professional life. I built and continue to manage my team like a page from any of those sports rulebooks I read as a kid. We define their position on the team and work together to support each other in those roles. It’s really quite simple … you have to understand the game and all the positions if you’re going to play it well.

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The Art of the German Schmear

This simple technique is an affordable and easy option for updating older homes. Most people tend to look at repairs as do-it-yourself projects, especially when DIY is the most cost-effective approach to achieving a certain look. Updating interiors and exteriors is a common strategy for ridding the dated look of an older home or for spicing up a newer home. One simple way to achieve this appeal is by using a technique called the German smear. A German smear is a cost-effective way to give a fresh look to dated, boring brick. Options and Advantages Unlike a paint surface, a German smear is maintenance free, but it is also permanent. German smear comes with options such as a light smear to a medium to heavy texture. There are color options as well. Most often, you see smears that have no color additive but use the standard buff and ivory buff colors to accent the additional trim, doors and shutter colors. This is the same for the interior smears to accent any interior paint scheme. Going with buff mortar is more in line with a beige look, whereas an ivory buff gives you a white appearance, one some would describe as a whitewash. To achieve a uniform look, it’s highly recommended that you prep and complete the process within the same day. If the project requires an additional day, it’s best to complete corner to corner instead of starting and stopping in the middle of a wall. That’s because weather plays a big role with the curing process. If you want a medium to heavy texture and then decide you would like to change to a light smear, then time is of the essence. Your timeframe is limited due to the curing process of the mortar. Remember, a German smear is permanent. So, start with a light coat (thin mixture), then possibly tighten the mixture (thick coat) to satisfy your taste. You may like some brick colors in your wall, but you really may not like the majority of them. The advantage is that you can have the brick you like smeared and wiped for a thinner appeal so the brick can come through. Applications for Foundations A German smear is also a great option for homes that have foundation issues. When foundations are repaired, usually the mortar and the brick are cracked. Some people simply paint over the damage, leaving the cracks visible even through the paint. Not all visible cracks in brick are immediate signs of structural or foundation issues; some can be caused by normal settlement. A common problem after foundation repairs are made is how to repair the cracks. No one really has the answer to repairing brick and mortar defects besides replacement or tuck pointing. A German smear would be an option because the smear would match the existing non-repaired areas. The areas where foundations typically fail are around a large body of water or if the home is built on a clay-based pad. A house with a repaired foundation doesn’t mean it’s in bad condition; it may even be better because it has gone the limit already and is more stable than before the issues were visible. There is really no life span for a German smear, but it can last for years. And, a German smear that has become darkened or discolored due to location and weather issues can always be fixed by adding a new thin coat to recreate that curb appeal you desire. How-To Tips Follow these simple tips to get started: Before starting the German smear process, wash the brick free of dirt and grime. It does not have to dry before you begin the application process. It is easier to work with a dampened brick than a totally dry brick. This will also help you achieve the desired look before the mortar has time to dry, which usually begins within 20-30 minutes. Begin with a ratio of 70% mortar to 30% water, and then proceed to the coverage you desire. The 70/30 ratio will give you a pancake batter texture. Use a sponge for interior small projects that require the lighter coat. Use a trowel for the heavy texture look. Use a car-wash-style brush with medium flexible bristles for the transparent look (haze). Use a wire brush to re-move any heavy buildup that is not desired.  

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