Loans

photo credit: sburke2478

Getting a Commercial Mortgage is Tougher Today

We are, indeed, in the midst of a significant and severe credit crunch. Conventional lenders, such as banks, Wall Street investment houses and insurance companies have greatly curtailed their lending activity. Even the very best investors and developers are finding it hard to get projects funded.

The collateralized debt market has dried up. Few bond buyers are interested in mortgaged backed paper today. Big institutional lenders are finding it impossible to turn the mortgages they originate into cash. Put in simple terms; no mortgage buyers, no mortgage loans. (more…)

photo credit: justindula

Wall Street is in utter turmoil and banks are simply not lending. Our financial system is not functioning and no one knows just how long the problems will last. Commercial real estate property owners, investors and developers are desperate for capital and many don’t know where to turn.

Is anyone still funding commercial mortgage loans anymore? Fortunately, the answer is; yes. With traditional, conventional lenders virtually out of the picture, the private sector has stepped in and is filling the “funding gap” that this crisis of liquidity has created.

Private lenders, to include, hedge funds, private equity firms, wealthy individuals and privately held financial firms, are still making deals and closing loans. These unique lenders, once referred to as “hard money” lenders, lend their own money from their own accounts and hold or “portfolio” the loans until maturity. They are cash rich and do not need to sell or borrow against their loans to stay in business. Private lenders are not deterred by the problems in the secondary mortgage backed bond market.

Private money will cost borrowers more than institutional financing, but lending standards are much more flexible and usually not credit driven. (more…)