Business Services Industry
The growth of the mortgage banker in commercial lending
Real Estate Weekly, May 21, 1997 by Michael Landau
Many of the traditional lenders of the Eighties were severely hurt by the downturn in both the multi-family and commercial sectors. As a result, many of those lenders have either ceased lending altogether or have severely changed the terms and/or vehicle through which they will lend.
Fortunately, a new band of lenders has risen to the challenge of financing the real estate community. The make-up of this group is diverse and specialized, with the majority of them focussing on a narrow sector. For example, there are numerous Wall Street conduits which focus on credit or semi-credit deals with loan sizes over $30 million, while others specialize in small commercial deals in the $150,000 to $1 million range.
There are life companies whose forte is lending to strip "power" malls and there are those who concentrate on lending to health care facilities. A number of the commercial banks have created conduits of their own, and established unique guidelines in an attempt to distinguish themselves from the next guy. Numerous Real Estate Investment Trusts (REITs), are now lending against different forms of real estate and are competing with life companies and pension funds for product.
The bottom line is that there is far more money available than there is product. The Wall Street finns are vigorously competing with each other, cumulatively setting themselves goals that are probably unachievable, thus setting up the unlucky losers for a potential fall. The average closure rate of submitted loans to many of the conduits is below 10 percent.
These changes have resulted in a growing trend which will shape the future of commercial lending. The answer to the lender's dilemma of how to originate product and the borrower's dilemma of where to find the best product is the emergence of a new breed of local mortgage banker, who, like the HMO Referring Physician in the medical community, can select and recommend the best "specialist" - with one distinct advantage: the mortgage banker can actually deliver product on the specialist's behalf.
The specialist lenders are providing their designated mortgage banker/correspondent the ability to underwrite and close loans in the mortgage banker's name. (This form of secondary marketing has been the traditional structure within which the residential mortgage industry has operated.) This arrangement provides the lender with a steady outlet for its product and the borrower can feel secure in the knowledge that they will obtain cost-efficient and reliable service from their mortgage banker.
This evolution of "sourcing" commercial mortgages will continue to grow so long as there remains such a myriad of specialized lenders and will further validate the growth of the mortgage banker in commercial lending.
Most Recent Business Articles
- How do I determine my retainer fee?
- Why fly solo when an executive assistant can accelerate your CLNC® business?
- The CLNC® mentors held the key to my first case and to my CLNC® success
- Atlanta CLNC® 6-day certification seminar photo galleryplus sign up today for spring 2009 to save $100.00
- Speak to a full-time practicing CLNC® consultant
Most Recent Business Publications
Most Popular Business Articles
- Using object-oriented analysis and design over traditional structured analysis and design
- Big Fish Games Migrates Upstream to Fisher Plaza; High Growth Online Gaming Firm Vaults Fisher Plaza Occupancy Rate Above 90%
- Top of the line: some of the world's most well-respected doctors practice in South Florida. A guide to choosing the best physician specialists - Top Doctors in South Florida
- Sand filter basics: high-rate sand filters can be confusing for those new to the business. Understanding valve modes is the key
- BEHR Paints Introduces a Colorful New Way to Paint and Prime All in One with BEHR Premium Plus Ultra™ Interior
Most Popular Business Publications
Content provided in partnership with http://findarticles.com/source//

