Need a mortgage? Call your accountant

By: BEN ABELSON

Peter McGuire, principal in Port Jefferson Station-based McGuire & Co., isn't just a CPA to his clients - he's also a mortgage broker.

Several years ago, McGuire was looking for a way to expand the services of his accounting firm when Melville-based Vertical Lend, an

area mortgage lender, came calling with a concept that would tie in his firm as an affiliate and allow him to sell mortgages using their products.

Vertical Lend, which has about 2,400 such affiliations across the country, charges only a $300 fee for registration in its program, and provides training and marketing materials to its affiliates.

The affiliate network, said Vertical Lend CEO and President David Peskin, hinges on the level of trust that already exists between accountants and their clients to increase sales of the company's various mortgage products.

"We are enabling financial planners, accountants and tax preparers to tap into their existing customer base and offer additional services to their clients," he said.

While it's generally very difficult for financial planners and accountants to obtain a mortgage-broker license on their own, Vertical Lend's affiliation network streamlines the entire procedure. Financial professionals that work with the company are compensated for every loan processed through Vertical Lend without their clients paying any additional costs, Peskin said.

"Every year since we started, we've pretty much grown in production and volume," he said, explaining that the program arose out of his own experience as a broker with Melville-based Mortgage Warehouse, Vertical Lend's sister company founded in 1995.

"When I was writing loans, I'd write it for my client and they'd say, 'This looks good, just let me take it to my accountant to look over.'"

At the time, however, accountants were forbidden by federal law from offering mortgages to their clients. When the Glass-Steagall Act, a piece of Depression-era legislation intended to separate the roles of bankers and financial planners, was repealed in 1999, accountants were allowed to receive compensation for several new services - including the sale of mortgages. Peskin jumped at the opportunity to launch Vertical Lend.

According to McGuire, this latest value-added service for accountants and financial planners has caught the eye of many of his clients.

"There's a lot of people who are leery of the whole mortgage industry, and we seem to have a trust built with the clients, and that's what we go for."

McGuire said when a client expresses interest in a new mortgage, he simply submits (with the client's permission) an online 'mini-app,' containing a variety of pertinent financial information to Vertical Lend. The company responds to this initial request with the terms it's willing to offer, and from there McGuire fills out a typical mortgage application and forwards all of the required documents - which he already has on file - to Vertical Lend.

There's relatively little effort required on his client's part, McGuire said, although most clients generally want to hold three-way discussion with McGuire and his Vertical Lend representative.

Marketing the products to clients can be one difficulty, McGuire noted, as many still remain unaware that he offers the service.

Additionally, those clients he only sees at tax time tend to go elsewhere for their mortgages simply because his services aren't at the forefront of their thoughts.

Given all this, he still manages to sell about one mortgage a month to his clients, and says he "hasn't had one complaint from a client yet on the loan process."

Jim Preston, who operates a traditional accounting practice in Cutchogue, first developed a relationship with Vertical Lend after meeting Peskin at New York State Society of CPAs meeting more than three years ago. In that time, he added, he's set up about 30 mortgages for his clients.

"They're pleased because the process works. We already have access to the information so they just have to give authorization to use that information. Not everyone is familiar with language for refinancing or the documentation, so we're able to help them out."

"People want to take the anxiety out of the application process," he added.

Alan Weiner, senior tax partner at Melville-based Holtz Rubenstein & Co., noted the expansion of roles for accountants has primarily been motivated by outside influences - and that accountants need to tread carefully when they expand the services they offer.

"It's these outside industries that have discovered that the CPA is the entree to his clients. CPAs are highly respected by their clients, and if the CPA suggests something, the client is more likely to buy into it."

It's important, he added, for accountants providing mortgage services to keep their clients abreast of all of their opportunities.

"The difficulty that I have with this is that accountants are trusted and relied upon by their clients, and normally a client expects an objective opinion from the accountant, no matter what he asks ... if a client needs a mortgage and the accountant only presents the company that he has an affiliation with, then I don't think the accountant has done something in the best interest of the client."

"I think disclosure is important."