Commercial Mortgage Loans in 2009

Whether you’re in the business or are a property owner, trying to a get a commercial mortgage loan closed in this market, is akin to having a hyena as a house pet. You can do it, but it will be painful.  Here’s  what is going on, from a commercial mortgage brokers perspective. Conventional lending is all but dead. If your property isn’t less than 60% loan to value, you’re going to have a difficult time getting it closed. If you have a typical investment property (non multifamily like office or a warehouse), with a non national credit tenant(s), you had better have enough outside income to carry the loan on its own or you are going to have a tough go at it (though not impossible). Literally 80% of the banks either don’t want to lend or they can’t lend as their banking ratios have fallen below the feds standards. And or they just don’t have the cash… Many banks including some major national one have gone out of business, as its been well publicized. So you have to work with what the remaining 20%. Often times the offered terms are harsh and expensive. For those of you that are in the business you know that the conduit and or CMBS market is completely broken and nonexistent. It was literally down 98% in 2008 versus 2007.   98%… That’s according the respected Mortgage Bankers Association.The SBA and other more mysterious (and unpredictable government programs) have tried to step up and fill the void. In some regards its working in others it has been disappointing. For example SBA lending was down 60% as of May 2009 compared to the previous year. Ironically, this is when we all thought they would really kick in and save small business.Commercial Mortgage LoansWithout suddenly sounding optimistic one of the best things you can do for yourself is to work with the RIGHT bank and or lender. You need to only work with the 20% that are still actively lending. Conversely and especially if you are facing a balloon the worst thing you can do is tie up you loan request with a bank that is not aggressively lending. Most of these commercial mortgage loans end up in the decline category wasting months of time and thousands of dollars, at a minimum, for the borrower. For those that qualify for the government programs such as the SBA commercial loans, this can be a blessing. 85% – 90% financing is a life saver as property values continue to decline. In addition, the secondary market for these types of programs are the healthiest in the business and continue to improve. Our fearless leader, Obama, has step up the guarantee to banks as well as bought $15 billion of SBA 7a loans that had clogged the system in early 2008. By the way, the main qualifying component to the SBA loans is that your business occupies at least 51% of the buildings space. Contrary to their reputation, the SBA program have some of the easiest qualify standards out there, compared to other commercial mortgage loans.

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