Enter your e-mail address and password below.

  •  
  •  

Forgot your password? New User? Register Now.
   ARTICLE   |   From Scotsman Guide Commercial Edition   |   December 2014

The Emergence of the Super Wholesaler

The rise of commercial mortgage-backed securities opens the door for mega-brokerages

Things are heating up in the commercial real estate market, as evidenced by commercial mortgage-backed securities (CMBS) returning with a vengeance in 2014 and many of the lending programs that virtually disappeared in the crash of 2008 being offered again.

What some might describe as a perfect storm of lending is occurring on Wall Street, which is flooding the market with commercial mortgage loans. More than a trillion dollars in mortgages is due to mature between now and 2017, and banks are still struggling to meet lending demand. This is creating an unparalleled time of opportunity, and the  pendulum is swinging in the direction of market prosperity for a change.

Now that many commercial lenders are back in the CMBS game, they are competing for essentially the same business. The marketplace for wholesale lenders, therefore, is getting crowded. This competitive CMBS market may indicate that the time of the super wholesaler has arrived.

Definition

A super wholesaler is a lending company that offers many program options instead of just one. These companies may be correspondent lenders or just very large brokerages. Super wholesalers are large packaging-and-origination vehicles that lenders and investment banks need to quickly obtain thousands of loans to package into CMBS bonds for the Fortune 500 companies they represent.

Besides serving large lenders, super wholesalers are also a great resource for individual brokers to capitalize  on the thriving CMBS marketplace. As lenders get busier and more inundated with loans, they are increasingly likely to require brokers with only a few deals — or one-offs — to work through a super wholesaler as a “loan filter.” Lenders need clean loan files that are presold and have high leads-to-close ratios, which the super wholesalers can provide by working with many brokers.

Not all super wholesalers are created equal, however. Commercial mortgage professionals should recognize the traits that help distinguish between a run-of-the-mill super wholesaler and an exceptional one.

Loan volume

Companies that handle larger quantities of loans have more value to investment banks in the CMBS market. Volume is the key. The best super wholesalers are master loan originators that represent a large number of brokers actively pursuing commercial loan clients. The largest super wholesalers may represent literally thousands of mortgage brokers.

Super wholesalers with substantial loan volumes also tend to receive more perks and attention from the major investment banks and financial entities they serve. Companies with larger volume and loan production tend to enjoy expedited service, better  pricing, yield-spread premiums and broker price opinions instead of appraisals.

Training

Another key to identifying a top super wholesaler is the training it makes available. Does it offer any type of training for the brokers using the programs it represents? Some companies that call themselves super wholesalers may offer little more than a product sheet, a rate matrix and a website. Everything else in the process may appear to be invisible.

The best super wholesalers offer extensive product training and more transparency.

After all, the more educated a company’s mortgage brokers, the more likely they will become master originators, which means more clients and more closed loans. The biggest super wholesalers offer lenders that actually train their brokers and reps on a daily basis.

Ease of use

Another trait to look for when assessing a super wholesaler is the ease of use it offers. To determine this, mortgage professionals should ask prospective super wholesalers how deals are submitted to them, if an online summary is offered, how long it takes to get a response and whether the response is automated or from a person.

Asking about and researching the company’s track record is also important. Other factors to consider when researching super wholesalers are how their compensation works, what their marketplace value is with the lending sources they represent, and how technologically sophisticated they are.

Upfront costs

Sometimes finding the right super wholesaler can be a trial-and-error process. To keep from falling into the error category, avoid any company that requires an upfront fee of borrowers, which is usually a red flag. An appraisal fee should be the only upfront cost to a borrower, although sometimes legal fees may be required. Application fees are often required by banks, but should not be by super wholesalers.

After you have identified a super wholesaler that seems to have the right combination of volume, training, ease of use and low upfront costs, it’s time to test the waters and start submitting loans. After a couple of loan submissions to the wholesaler, you should be able to tell if it will be a regular source for your commercial lending needs.

With the right super wholesaler, you’ll find you’re getting better prices, improved customer service and more available loan programs. Do your homework and the sky is the limit when working with super wholesalers to capitalize on the CMBS market. 


 


Fins A Lender Post a Loan
Residential Find a Lender Commercial Find a Lender
Scotsman Guide Digital Magazine
 
 

Related Articles


 
 

 
 

© 2019 Scotsman Guide Media. All Rights Reserved.  Terms of Use  |  Privacy Policy