Mortgage Loans Guide

Remember Jan Brady.  Ignored and always overshadowed by her older and prettier sister Marcia?  Borrowers seeking small commercial loans will face the same challenges as Jane.  Small commercial loan requests will have all of the typical commercial loan challenges, and yet have one more major hurdle – being ignored and neglected.  Commercial bank loan officers and commercial mortgage brokers will in most cases simply ignore the borrower’s small commercial loan.   Bottom line, there is the same amount of work involved, without the decent payday. 

This often comes to a shock to many borrowers that are use to residential loan officers competing hot and heavy on their $150,000 home mortgage.  The differences here are many but it’s not uncommon for a residential broker to make 3 or 4 points on a loan, while the commercial mortgage brokers is often expect to make only 1 point.  These borrowers often become frustrated when they can’t get their messages returned on a $400,000 loan. 

Besides the money, most commercial brokers and bank officers have a bit of an ego and will not want to admit to their peers, or bosses that they have spent 2 months working on a $300,000 small commercial loan.  Most will not acknowledge and or mention a loan closing that is less than $1,000,000.  $1,000,000 and above is considered respectable. 

So borrowers seeking small commercial loan options will in most cases be treated as the “Jan” deal and will have to overcome this factor.  It’s best to try to work with companies that are actively marketing and want to work on these smaller commercial loans than to try to egg a broker on that is not interested.  The rub here is finding the commercial mortgage broker that has the experience needed to complete the transaction and yet will still be interested in working on the small commercial loan.   

 



By: jeff rauth

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We get a lot of questions regarding the commercial loan business.  Many are from our peers that want our opinions on the commercial loan business. 

Warren Buffet was on the radio this morning.  He stated “when the markets greedy, be fearful.  When the markets fearful, you be greedy.”  I think we can all apply that perspective on our positions in the commercial loan business.  In a few years, the credit crisis will have settled.  The commercial loan business will be different, but it will still be viable.  There will be more government regulation for sure and probably more intense review of the credit rating agencies out there, like moody’s etc. 

Perhaps there will be a new type of loan structure replacing the current CMBS platform, but the players that pulled out will be kicking themselves as they see their competition making serous money and they will still be learning the “ropes” of their new chosen field.  The survivors will make big headway in market share.We believe that the problems can and will be fix.  This is just another recession in a long list of them.  We go through this every 10 to 15 years.  Now is the time to adapt and refine your skills - not the time to pull out.  We tend to think a lot about what is still funding. 

What lenders and banks are still looking at deals?  Never mind what the borrower wants or thinks he should get.  It’s more an attitude of take it or leave it. 

The commercial loan business is still moving forward, with a limp for sure, but it’s still moving forward.  For example we are still closing loans.  Both owner occ and investment.    

This is the time people build substantial wealth as they pick up bargain opportunities or take chunks of market share that just wouldn’t be possible during normal times.   



By: jeff rauth

About the Author:

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