What is Real Estate Finance?

What is real estate finance?

Real estate finance is a sub domain of the Finance industry.

What is finance?

Finance is the science of funds management, or the allocation of assets and liabilities over time under conditions of certainty and uncertainty. (source: wikipedia)

Other definitions include:

Money or other liquid resources of a government, business, group, or individual.

(source: Merriam-Webster)

Where does real estate fit in?

Real estate finance is the arrangement of capital to acquire property including land or buildings.

Is this debt or equity?

Real estate may be financed in many ways. Some people or corporations have surplus cash and acquire real estate by deploying their own stored cash reserves, or by liquidating existing assets (equity). Another way to acquire real estate is borrow money from third parties such as banks, lenders or private investors (debt).

IIREF focuses on educating individuals to work in careers with businesses that are primarily in finance from a debt perspective. Namely, those companies that are in the business of lending funds to individuals or corporations in order to acquire real estate or refinance existing real estate. These types of companies are often referred to as:

Mortgage Bankers

Mortgage Brokers

Mortgage Lenders

Loan Corporations

Mortgage Investment Corporations

and many more

What are the components of the real estate finance industry?

It is generally accepted that the real estate finance industry is comprised of five components:

Origination - the process of identifying a real estate finance transaction.

Underwriting - the process of evaluating a real estate finance transaction.

Servicing - the process of managing a real estate finance transaction for collections, default, enforcement, legal, redemption, maturity or other administrative non-origination/non-underwriting activity.

Compliance & Reporting - the process of ensuring that all facets of a real estate mortgage transaction are in accordance with regulatory requirements and/or legislation; including the submission of periodic reports to registrars, as required.

Information Technology - the process of designing, building, managing and maintaining computer-based hardware and software solutions in order to effect the business of real estate finance.

What type of jobs are available for those who seek a career in real estate finance?

There are many different jobs you might have within your career in the real estate finance industry. Job names and descriptions for persons working in any one of the five components of the real estate finance industry, differ from company to company but the actual work is the same. Job titles include:

Originator

Mortgage broker

Underwriter

Compliance Officer

Internal Auditor

Quality Manager

Loan Processor

Collections Officer

Default Administrator

Mortgage Trainer

Loan Closer

Loan Officers

Appraiser

Property Inspector

Property Manager

Business Development Officer

Sales Caller

and many more

Career Path

There are no singular career paths in the real estate finance industry. An example of one career path for credit underwriters, and suggested time in the job, looks like this:

Assistant Underwriter Trainee - 2 years

Assistant Underwriter - 3 years

Underwriter - 4 years

Senior Underwriter - 3 years

Office Underwriter - 2 years

Executive Underwriter - 7 years or more