As published in Scotsman Guide's Commercial Edition, September 2009.
At a time when commercial borrowers have an unprecedented need for cash, they face the harsh reality that the more-traditional sources of capital have dried up. Brokers, by the same token, are recognizing that they need new, innovative ways of doing business to navigate the market successfully.
For many brokers, moving past trendy loan solutions and focusing on individual clients' specific needs when seeking funding is helping them better help their clients.
Research firm Foresight Analytics estimates that about $814 billion in commercial mortgage loans will mature within the next three years, with about $250 billion coming due this year alone.
This means that commercial mortgage borrowers must refinance amid a market decline, tight credit availability and falling commercial real estate prices or sell properties that may have lost 25 percent to 40 percent of their value since the market high.
Further, because the market for commercial mortgage-backed securities (CMBSs) no longer exists, lenders have sharply curtailed their lending. Many brokers simply can't locate loans for clients.
Mortgage brokers tasked with locating funding for clients with a wide variety of needs and with varying degrees of credit issues must be able to tap into a ready pool of credit resources. First, brokers must recognize that each client's needs are different.
Although one client may be well-suited for institutional-financing solutions, many more will not. By maintaining a well-diversified lender database and having a variety of funding options for clients, brokers can tap into the best solution for a particular client's needs -- rather than trying to meet everyone's needs with a general loan product that potentially could jeopardize some clients' financial health.
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