Printer Friendly
The Free Library
7,774,290 articles and books
Member login
User name  
Password 
 
Join us Forgot password?

What borrowers want: how to adopt to a new market.


In order to create and maintain a competitive edge, lenders must constantly adapt to the demands of the marketplace. In order to win business, lenders need to be on the pulse of the most creative deals in the industry, ready to bring innovative finance solutions to their own clients when called upon. In the last few months alone, the dynamic field of real estate finance has taken turns and twists that even the best experts couldn't predict. Therefore, it is essential for commercial mortgage firms to offer as many products as possible in order to capitalize and accommodate market demands. Unless lenders continue to provide flexibility, creativity and greater leverage, their success will be limited.

A recent office financing in New Jersey highlights the importance of staying on the cutting edge of the lending industry to best serve client needs. In this recent multi-family property transaction, the borrower was offered interest only products for two-three years on a ten-year fixed rate financing based on a 30-year amortization schedule. Since the first two years are interest only, the borrower will receive a great deal of relief on his cash flow. Six months ago, the same borrower may have been offered a straight ten-year term based on a 30-year amortization schedule.

In today's market, innovative lenders offer a wide range of loan terms. For instance, if a borrower wants to put debt on a property for two years, there are terms ranging from five, seven and ten years on a 25-30 year amortization schedule, with a balloon payment The final installment of a loan to be paid in an amount that is disproportionately larger than the regular installment.

When a loan is made, repayment of the principal, which is the amount of the loan, plus the interest that is owed on it, is divided into installments due at
 at the end of the period. And there are other lending products such as Fannie Mae Fannie Mae: see Federal National Mortgage Association.  and FHA See Federal Housing Administration.

FHA

See Federal Housing Administration (FHA).
, which allow 25-35 year fully amortized loans. Lending firms can offer and suggest products such as portfolio loans' bridge loans, mezzanine loans A mezzanine loan is a relatively large loan, typically unsecured (ie., not backed by a pledging of assets) or with a deeply subordinated security structure (e.g., third lien on the property but non-recourse vis-a-vis the borrower). , conduit conduit /con·du·it/ (kon´doo-it) channel.

ileal conduit  the surgical anastomosis of the ureters to one end of a detached segment of ileum, the other end being used to form a stoma on the
 loans and government programs, such as Fannie Mac, Freddie Mac Freddie Mac: see Federal Home Loan Mortgage Corporation.  and FHA/HUD loans, that will accommodate the borrower's individual needs and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact.
     2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or
.

Being an expert in the vast array of product lines allows the lender to provide the best guidance for his clients and, ultimately, the best deal specific to the borrower's needs.

In addition to being flexible, creative and providing greater leverage, there is a final skill that will keep originators on the top of the game. As is evident with the scope of product lines available, originators need to cross-sell products ranging from bridge loans, permanent loans and government products to short-term LIBOR-based loans. This adaptability a·dapt·a·ble  
adj.
Capable of adapting or of being adapted.



a·dapta·bil
 and expertise will help better serve the dynamic needs of the clientele.

Again, honing Honing could refer to
  • Improving surface finish & geometry using a Hone
  • the practice of sharpening
  • Honing, Norfolk
 cross-selling skills helps maximize client's options, in turn giving the client the right combination of products to satisfy his or her needs:

The bottom line is, the greater the choice of products presented by a lending firm, the more lending opportunities there will be for a company. It is no longer an option, but a competitive necessity for mortgage lenders to provide the ultimate in expertise, product lines and custom-made solutions to grow the business and achieve success.
COPYRIGHT 2004 Hagedorn Publication
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2004, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Insiders outlook; real estate industry
Author:Blass, Peter
Publication:Real Estate Weekly
Geographic Code:1USA
Date:Sep 8, 2004
Words:498
Previous Article:Tenant gets a hold of 200 W. 57.(Kaufman/Adler Realty)(Impressions on Hold)(Trump Group Ltd.)(Brief Article)
Next Article:Learn to properly calculate your operating expenses.(Insiders outlook)(investments)
Topics:



Related Articles
Statements to the Congress. (Policy Statements by Members of Federal Reserve System)
Negotiations more complicated in 90's. (real estate industry financing) (Review and Forecast, Section III)
Prospects positive for liquidity in capital markets. (review of key sources of capital for real estate industry) (Review & Forecast, Section II)
Short-term lender has a nose for great deals. (Mercury Capital Corp.)(Company Profile)
New real estate news site makes Web debut. (PointCast Business Network Real Estate Insider)
Niche marketing can fuel home mortgage business growth.
Newmark unveils mortage subsidiary.(Newmark Realty Capital LLC )(Brief Article)
Annual bings and bongs of real estate finance.(Fantini & Gorga report)(Brief Article)
Hudson doubles up in 2004.(Finance)
City's middle market has special banking needs.

Terms of use | Copyright © 2009 Farlex, Inc. | Feedback | For webmasters | Submit articles