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Favorable Commercial and Residential Lending Conditions on the Horizon...

by  | Corporate
Posted:     Updated: Oct 19, 2017  1:11 ET
 
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Within commercial and residential lending, given the inherent uncertainty of local, national and global real estate markets, there are promising trends. These trends prefigure well for commercial, residential real estate and mortgage professionals.

RISING LOAN VOLUMES

According to mortgage banking associations, analysts and private investors, loan volumes will continue to trend upward. Moreover, for the remainder of 2017 (continuing in 2018), commercial real estate loans are predicted to realize new highs. Following other housing reports-noting real estate investor inclinations-instead of utilizing personal or business cash reserves, these investors are now (wisely) pursuing financed (property) acquisitions. Although buy and hold real estate strategy remains popular, many rental property investors have capital allocated in equity; thus, these investors need use leverage to expand real estate portfolios (for the remainder of this and into next year).

HIGHER LTV FINANCING

With higher loan-to-value (LTV) options, lenders are expanding loan programs. In addition to 100% transactional funding, government sponsored enterprise loans; i.e. VA and USDA; private equity and other specialty lenders are closer to offering 100% financing.

DECLINING CREDIT SCORE REQUIREMENTS

Within underwriting, efforts are made to mitigate reliance on credit scores. How much relief this provides to investors depends on the acceptance of front-line mortgage originators. Still, in relationship to secondary purchase market demands, these mortgage originators remain rigid.

TRUE STATED INCOME AND ASSET LOANS

Alternative documentation loans have been on the fringes of the market. However, for investors that do not require tax returns or bank statements, more private equity and specialty lenders offer stated income and asset loans.

EQUITY SHARING LOANS

Private equity and specialty lenders seem bullish on continuing to commercial and residential real estate market growth. These lenders recognize rising equity, interest rate payment and origination fees.

MORE JOINT VENTURES

In the purchase and acquisition of viable commercial and residential real estate, savvy investors and adroit specialty lenders increasingly opt to partner. For purpose of expansion and increasing portfolio holding diversification; gaining access to multiple lucrative investments-while minimizing mutual risk, partnerships represent the preferred strategy.

LESS FOREIGN INVESTMENT

Recent news from foreign investment entities indicate real estate purchase options (and other forms of foreign investment) indicate a downward trend. The financial press reported foreign investment bankers and private equity lenders plan to reduce overseas investment. Earlier, within the first nine months, this same foreign investment rose 50%. Though not clear how reduced foreign investment impacts national commercial and residential lending, what is made evident, under current government administration, any perceived high volume foreign real estate purchase and titling will receive scrutiny.

Invariably, within U.S. and world economy, there remains inherent uncertainty. Yet, within commercial and residential real estate lending, this uncertainty is par for the course.

For value added service and conversation, contact: 216-373-7539 or submit lending inquiries and scenarios via: www.lucevfinance.com; lucevfinance@aol.com

Topics: Commercial economy | Commercial lending
More by: LUCEV Finance & Investment Group

 

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Favorable Commercial and Residential Lending Conditions on the Horizon...

by LUCEV Finance & Investment Group | Corporate
Posted: Oct 19, 2017  1:11 ET    Updated: Oct 19, 2017  1:11 ET

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