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Commercial Department: From the Editor: July 2017


From the Editor

Government-backed loans are a large slice of the funding pie

Whether you’re a veteran of the commercial mortgage industry or someone who’s just getting their feet wet, it’s important to understand the details of nationwide lending programs that can transform your client’s vision into reality when other funding sources turn into dead ends.

This month, we’re focusing on government loans and government-sponsored enterprises (GSEs). They’ve long been a big part of making commercial- and multifamily-property deals happen. Freddie Mac, for example, has financed almost $463 billion for more than 72,000 multifamily properties since 1993, according to its internal data. That includes $12.7 billion for 1,100 multifamily properties this past first quarter.

Fannie Mae, meanwhile, reported providing $55.3 billion in financing to support 724,000 multifamily units in 2016. Fannie’s small multifamily loan financings, defined as loan amounts of $3 million or less for most markets and properties with five to 50 units, increased 19 percent in 2016 year over year, to $1.9 billion. FTE 7-17

Small businesses are benefiting from government programs at record levels. The U.S. Small Business Administration’s (SBA’s) 7(a) program supported more than 64,000 loans totaling $24.1 billion in fiscal year 2016, a new high for the organization. The SBA targeted multiple underserved markets as part of the surge. Loan amounts and volumes for women-owned businesses went up for a fifth straight year, and loans for veterans increased 4 percent year over year.

The SBA, of course, isn’t a direct lender. It simply guarantees a portion of a loan through a private-sector lender. And it’s important to remember these partner lenders are both large and small. Wells Fargo, JP Morgan Chase and U.S. Bank were each listed among the top five for most-active SBA 7(a) lenders in 2016, but there were many regional and local institutions that broke into the top 100 by closing at least $23 million in loans.

There’s a lot to talk about when it comes to government-loan programs, and you’ll find two of this month’s articles go in-depth to help brokers understand and connect with them.

On Page 31, Shane Pierson of First Bank SBA explains the inner workings of SBA loans and extolls the virtues of working with a Preferred Lending Partner (PLP) that has SBA-specific expertise. On Page 57, Igor Zhizhin of American Street Capital LLC delves into Freddie Mac and Fannie Mae small-balance multifamily loans, focusing on the minute details that might make one program better than the other for a specific client’s needs.

Much of July’s issue provides niche-centered information. Hotel-financing veteran Jay Litt, on Page 64, discusses the rules of thumb for investing in the hospitality industry. Pinpointing the true value of hotel properties takes some practice and patience, Litt argues.

If you’re looking for more ways to secure financing for clients, then tuning into the trends in the foreign-investment market could be your ticket. On Page 40, Matthew McGovern of GRS Group talks about the nations that are major sources of investment in the U.S. real estate market, the cities they’re paying attention to and the property types these foreign investors are most interested in adding to their portfolios.

Genevieve Sherman of Greenworks Lending, on Page 75, tackles a timely topic in commercial property-assessed clean energy (C-PACE) loans, explaining the usefulness of “green banks” in helping to finance necessary building-infrastructure upgrades. And on Page 48, Stephen A. Sobin of Select Commercial Funding LLC offers a primer for novice commercial mortgage brokers that focuses on specific do’s and don’ts during the loan- application process.

Whether you’re taking a well-deserved vacation or plugging away at your desk, we hope your Fourth of July holiday — and the rest of your summer — is a pleasant one filled with personal and professional success.


Neil Pierson is editor in chief of Scotsman Guide Media. Reach him at or (800) 297-6061.

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