Commercial Loans Blog

Referral Fees on Commercial Loans

Posted by George Blackburne on Fri, Sep 23, 2016

Referral_Fees-1.jpgAnyone who owns a web site that is related to real estate or which provides services to high net worth individuals (accountants, attorneys, insurance salesmen, financial planners, etc.) should pay close attention to this article.  It is perfectly legal for a commercial mortgage company to pay referral fees for commercial loans, and the recipient does not need to be licensed in any way.  Remember, I am an attorney.  Still doubt me?

"But George, I thought that referral fees were illegal?"

A little history will help.  Many decades ago real estate agents used to steer their home loan clients to particular lenders and to particular settlement companies (escrow companies, title companies, closing attorneys, etc.) in exchange for hefty kickbacks from from those companies.  The home loan lenders then would then charge these unsuspecting borrowers extra points or a higher interest rate.  The title companies would also charge these innocent, trusting folks extra high fees.

Finally in 1974 the Federal government stepped in and passed RESPA, which stands for the Real Estate Settlement Procedures Act, which made it illegal for a residential lender or a settlement provider to pay anything of value for a referral.  The power of the Federal government, however, is not unlimited.  For example, the Federal government could not order the citizens of any state to wear only white shirts and black shirts.


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Therefore RESPA only applies to transactions involving a federally-related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property. Residential property includes only one-to-four family dwellings; which, translated into English, means single family homes, condo's, duplexes, triplexes and fourplexes.  Mortgage loans, by definition, includes home purchase loans, refinances, lender approved assumptions, property improvement loans, equity lines of credit, and reverse mortgages.

But note: RESPA only applies to 1-4 family loans.  It does not apply to commercial property.

Now most states do not require a license to broker commercial real estate loans; but even those states that do require a license still allow commercial mortgage companies to pay referral fees, as long as the referral source is not quoting rates and terms and is not playing document fetcher.  It's fine to pay a referral fee for the name and telephone number of a prospective commercial borrower; however, the referral source cannot be running around playing unlicensed mortgage broker. 




Now that we have the legality issue settled, let me tell you a real life story.  By the way, a real life story told to a sales prospect is called a verbal proof story; so let me tell you a verbal proof story about referral fees.

About six years ago, a guy named Wayne owned some sort of real estate web site.  For all I know, Wayne could only have owned a tiny residential real estate brokerage in some small town in the boonies.  Or heck, he could have been a really smart financial planner.  Anyway, Wayne put a link on his website that read, Commercial Loans, and he pointed it to  He didn't even tell us about the link.  He didn't need to tell us.  He just did it.

Well, six year ago a very productive mortgage broker named Mario visited Wayne's website.  Mario saw the Commercial Loans link, clicked on it, discovered, and then entered a commercial loan.  The deal closed!

C-Loans, Inc. then went into its database of loan applciations, found the original digital application on this closed loan, saw printed at the bottom a link to Little Wayne's Bayou Tackle Shop and Real Estate Brokerage, looked up who owned the site, called Wayne, and then gave him the good news!  Wayne was paid an unexpected referral fee of 12.5 basis points, probably around $1,500.

Important note:  On deals larger than $5MM, our referral fee is slightly less (8.33 bps.) because we only earn 25 bps. ourselves. A basis point is 1/100th of one percent.  Therefore a half-point would be 50 bps.




But the story gets even better!  Mario turned out to be a hot agent, and he has already closed a total of 8 deals on C-Loans.  C-Loans pays its referral sources (hyperlink partners) on every subsequent closing as well, until the C-Loans user changes his email address.  After that it becomes economically infeasible for us to track the deals.

So far we have paid Cajun Wayne on 8 closings for a total of $17,798.75!  And the reason this came up is because Super Mario is poised to close his 9th deal for Wayne, a $935,000 commercial loan where Cajun Wayne will earn another $1,168.75 referral fee.  That will be a total of $18,967.50 - all for spending just ten minutes six years ago to put a link to on his website.

But watch out for the Hyperlink Police!  If you put more than one link to on your website, ten heavily-armed SWAT guys might kick down your door in the middle of night, drag you out of bed, hogtie you, tickle your wife, and then shoot your dog with a squirt gun!

Helloooo? I'm kidding here.  Do you want to make a little bit of referral fee money or a lot?  We once paid a guy named Alan Dunn a referral fee of $21,250 for the referral of a $17 million land development loan.  

I therefore urge you to put three links to C-Loans on every page on your website.  I would make a Commercial Loans tab at the top, a Commercial Mortgages navigation link along the left side, and a Commercial Mortgage Rates link at the bottom as a footer.  And not just on your home page.  Do it on your interior pages as well.

And remember, you do not have to notify us that you have created these links. is programmed to automatically capture the referring URL (website address) and to print it at the bottom on the application.


Earn a $21,250 Referral Fee  In Your Sleep


"But George, how do I know that you won't cheat me?"

Blackburne & Sons manages about $51 million in hard money commercial first mortgages for about 1,500 elderly investors.  On any given day, we might have $2 million or more sitting in our loan servicing trust acccounts.  We are audited every quarter, and we have been in business for over 36 years.

Do you regularly email a newsletter to your clients?  It is possible - and super smart - to put a similar link in your newsletter; but in this case you will need a special partnership code.  To get this partnership code, please call or email Mick Carlson at 574-855-6292.


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Continue to be on the lookout for the contact information of any banker making commercial real estate loans.  We'll trade you the contents of just one business card for a free directory of 2,000 commercial lenders.


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The ninth largest bank in the world joined this month.  Their minimum loan is $20 million!  OMGoodness.  Why did they join?  They want to use their ability to fund these huge loans as an entre to meet super-high-net-worth individuals, so they can sell them other services, like wealth management and trust servcies.

Hmmm.  Anybody remember me saying, "There is no easier way to meet high net worth investors than to be a commercial mortgage broker?"  Maybe I've said it TWENTY times.  Sorry.  I got excited.  But every commercial-investment property brokerage should have a one-man desk that arranges commercial financing, in order to meet TONS of filthy rich investors.


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Topics: referral fees

Back From the Big Commercial Loan Conference

Posted by George Blackburne on Sun, Sep 18, 2016

CREF_Conference.jpgMy oldest son, George IV, and I have recently returned from the biggest commercial loan conference of the year, the California Mortgage Banker's Association 19th Annual Western States Commercial Real Estate Finance ("CREF") Conference held every year in Las Vegas.  Among the Big Boys, this conference is known as the Western States CREF Conference.

If you are ever going to attend this conference, I urge you to come a day early and play in the annual golf outing.  This golf outing has always proved immensely productive for Blackburne & Sons and  This year a commercial mortgage fund making huge bridge loans ($5MM minimum) and a bank making some of the largest commercial construction loans in the country ($15MM minimum) both joined as a result of the friendships we developed playing golf together.  To me, that golf outing alone makes up one-third of the benefit of attending the entire conference.  If you are a decent golfer, this event is a must.  (Tom, my son, let's work on your golf game this year.  You'll accompany me next year to the Western States, and we'll play in this outing in different foursomes.)




The second most important event is the big cocktail party held the night before the opening session of the conference.  The drinks are free, and the conversations are much like speed dating.  Commercial lenders come with business cards, and they are in the mood to meet top-notch commercial loan brokers.  Interesting note:  The Great Recession killed off 85% of the commercial lenders on  We therefore had a big meeting at the office and kicked around ideas about how to find the hungriest commercial lenders in the country.  The lovely Angelica Gardner, our Executive Vice President (to you Star Trek fans, my Number 1), made the point, "The hungriest commercial lenders go to trade shows."  She was spot on!  Well done, Angelica.  At the cocktail party, banks and other commercial lenders joined C-Loans in droves.

Are you a highly successful commercial loan agent?  Are you extremely ambitious?  If so, you simply must attend the Western States Conference every year, and if you are a decent golfer, you simply must play in this golf outing.  The conference isn't cheap.  This year the Western States was held at the Wynn.  George and I each had one glass of house wine.  The bill?  $42 before tip.  Ouch!  So while the Western States is open to the public, in real life only the "Big Boys" attend - the top bankers and the most successful commercial loan brokers, the guys who regularly close loans of $5MM to $20MM.

It is important just to be seen at the Western States Conference.  It's almost like joining a fraternity that includes the most important bankers in commercial real estate finance.  "Hey Bob, this is Steve Henderson.  We met last year at the Western States.  I've got a deal I'd like to run by you.  Did I catch you at a good time?"  "Of course, Steve.  Good to hear from you," says the super-important commercial loan officer for the largest bank in America."  (Without the reminder about the Western States, such a heavyweight commercial loan officer would normally rush to kill your deal and get you off the phone).  "What have you got?"

By the way, did you catch my use of the polite inquiry, "Did I catch you at a good time?"  Those may be some of the most important and most magical words that you will ever learn in commercial real estate finance.  If a commercial real estate loan officer is busy, I guarantee you that he will quickly find a reason to kill your commercial loan, just to get you off the phone; and folks, God has never invented a commercial loan that didn't have at least one or two black hairs (flaws).




Now we have all been to mortgage conferences with thirty or so booths on the floor of a large convention room, where hungry lenders and service providers (appraisal companies, title companies, etc.) hawk their products.  The Western States Conference certainly had this.

But then there were the ritsy-looking private meeting rooms - complete with ice cold drinks and fresh fruit - set off to the side of the big convention floor where the top commercial loan officers for the biggest banks and the biggest life insurance companies in country meet only with invited guests.  The entrance to each one of these fancy meeting rooms is usually jealously guarded by an older ice queen, who clearly let's you know that you are not on the carefully-timed schedule.

George IV and I were invited to such a meeting, but this big fund lender had a cabana, instead of a meeting room.  Cabana?  What on earth is a cabana?  I learned at the show that a cabana is a very plush tent off to the side of the hotel swimming pool.  It took George and I an hour to find the right cabana, and it ended up being around the pool for the Encore Hotel and Casino, the sister property to the Wynn Hotel and Casino.  The temperature was 100 degrees, and we were both wearing dark blue wool suits, so after walking around and around each pool, we were sweating like pigs.  That being said, the Wynn is an expensive hotel, where only the very rich and the most successful people congregate.  The ladies around the pool didn't exactly hurt my eyes.  Hey, I'm just sayin'.

The launch of our new commercial mortgage portal,, was a smash hit.  It is a stunningly beautiful site, and I have to say that the site opened a lot of doors for us.  A full 80% of the lenders we invited to join ended up joining as commercial lenders.  We were pleasantly suprised when quite a few large balance lenders - lenders whose minimum commercial loan was $5 million or higher - chose to join C-Loans at the show.  One of these commercial lenders had a minimum loan size of $20 million!  If you happen to need a very large commercial loan...


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Over my past few blog articles, I have been beating the drum for you commercial brokers (salesmen of commercial-investment real estate) to open a small commercial loan brokerage desk in your commercial real estate offices.  I have told you guys repeatedly that there is no easier to meet high net worth individuals than to be a commercial loan broker.  Sound familiar?

Well, remember that big bank that joined C-Loans at the show whose minimum loan size was $20 million?  Do you know why they said they were joining?  They wanted to use their ability to make these enormous commercial real estate loans as an entre to meeting the wealthiest investors in the country!  Helloooo?  Did I call it or what?  :-)


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Topics: Western States Conference