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Residential Department: From the Editor: December 2017


From the Editor

Renovation may be remodeling the construction industry

r_2017-12_FTELike a lot of Americans of a certain age, my wife and I have been looking at what to do with our home as our children move out. And, like many Americans, we have decided to remain in our house, which was built to provide enough space for multiple teenagers without the parents going crazy. That means it will be more house than we need very soon.

Even though we have equity built up in this house, we have decided not to sell it to another couple seeking more room for their family. Part of the reason behind this decision is that even though we could easily sell our house in this tight real estate market, we would have a hard time affording a comparable property — even a much smaller one — in the same market.

We have decided, like many aging baby boomers, that we are better off keeping our home and using the equity to renovate than to sell and downsize. This trend is great news for remodelers and mortgage originators equipped with renovation loan products. It puts more pressure on the residential construction industry, however, which has had trouble meeting the demand for new homes over the past few years because of issues such as a lack of labor and rising lumber prices.

This month, we take a closer look at the issues surrounding construction and development. Our lead article, by Paul Smoot of LendingOne, examines how originators can capture a portion of the fix-and-flip market by working with lenders that provide bridge loans. Turn to Page 35 for this article. If you want to make some inroads into construction lending, flip to Page 57 and read the article by Jim Colella of Guaranteed Rate about how to work with builders. Then, dig deeper into the financing side of home construction with the article by Robert Verrino of Florida Capital Bank that discusses the comeback of construction-to-permanent loans. Verrino’s article starts on Page 67.

For those originators intrigued by the emerging remodeling trend, we present a trio of renovation-loan articles that look at different aspects of this market. First, Kim Newby of Waterstone Mortgage Corp. shows you how renovation loans can provide an advantage over your competitors. Newbys’s article is on Page 52. Next, turn to Page 80 to read what Laura Brandao of American Financial Resources has to say about remodeling’s current popularity and the opportunities it provides. Finally, Jeff Lee and Dan Ventura of Fairway Independent Mortgage describe how to use renovation loans to open up possibilities in this tight housing market. Their article can be found on Page 124.

In addition to our construction coverage, this month we look at diverse topics such as money laundering, e-mortgages, zoning regulations and more. First, Jeff Kelly of OnCourse Learning describes how originators can help their companies and their lenders battle money laundering by keeping their eyes open. Kelly’s article begins on Page 87. Then, turn to the article by Vicki DiPasquale of Simplifile on Page 62 for some interesting insights into what is keeping the industry from fully embracing e-mortgages. Finally, Richard Garrie of United States Appraisals attempts to clear up confusion over the impact that zoning laws and permit regulations have on mortgage loan risk, especially for homes that have been renovated. Garrie’s article is on Page 74.

As we close the book on 2017, don’t forget that next month we will begin accepting submissions for Scotsman Guide’s Top Originators 2017. The submission period runs from Jan. 3-31, so don’t miss your chance to rank among the best mortgage originators in the nation. Go to for more information.


Will McDermott is managing editor for Ask a Lender. Reach him at or (800) 297-6061.

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