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Enhanced marketing through financial availability.

It's no secret that residential real estate brokers work well with mortgage brokers. They understand that the early involvement of a mortgage broker is very positive, because buyers or buildings can be pre-qualified, thus helping to separate the genuine purchasers from the lookers and the dreamers.

A good mortgage broker causes the commissions from do-able transactions to be collected faster, because his pecuniary interests are also at stake. In addition, the knowledge that a property could be financed widens the net of feasible transactions, as opportunities are created for credit-worthy buyers unable to supply the full purchase price in cash, and for sellers who are unable to supply purchase money mortgages.

The same kind of marketing support is also available to commercial and investment real estate brokers, bankers, builders/developers, lawyers and accountants. We would like to describe several situations in which our involvement has helped a deal get done, and to demonstrate why all real estate professionals can benefit from a working relationship with a commercial mortgage broker.

Relationship: Real Estate Broker - Mortgage Broker

We received a frantic call from a real estate broker whose client's contract to buy an Upper East Side co-op was a few days short of expiry, and whose mortgage application had been rejected by his bank. In spite of difficulties in ascertaining the source of the down-payment and the income available to handle the mortgage payments, our residential division was able to place the mortgage for the full amount requested with another lender. Our ability to perform prevented the loss of the real estate broker's $35,000 commission.

Relationship: Commercial Banker - Mortgage Broker

A commercial bank had gotten a neighborhood strip center as side collateral for a loan to a furrier, and the latter was having problems. We separated the side collateral from the business by placing the loan with a thrift, and used the proceeds to pay the commercial bank. The latter eliminated a cited asset, the thrift got a money-good loan on a fully-occupied property, and the owner converted a floating rate debt a Prime + 3 into fixed-rate paper with a significantly lower pay-rate.

Relationship: Owner/Developer - Mortgage Broker

An owner/developer had the misfortune of finishing a condominium project six months after the market had collapsed, and reluctantly turned the units into rentals. Even though the construction lender agreed to a settlement, it was impossible to repay the remaining balance on the construction loan from the proceeds of a permanent mortgage underwritten as a pure multi-family rental complex, nor did the owner have a chance of ever recovering his original cash if there were to have been a prohibition on the sale of units when the market recovered. We placed a fixed-rate mortgage with a thrift at $110,000 per unit, with a release provision permitting sales without causing the remaining debt to become due and payable.

Relationship: Lawyer - Mortgage Broker

The mortgage on an already overleveraged 20-unit Yorkville brownstone went into default when the owner, a widow who occupied a duplex on the premises, diverted rent receipts into her troubled business. She negotiated a settlement with the mortgagee, but was unable to consummate the transaction due to her troubled credit history. As the widow's apartment had great sentimental value to her, her lawyer negotiated for the sale of the building to a white knight, who assumed her position on the settlement and closed within 45 days, and who agreed to let her remain in residence as long as her market-rate rent was paid. We arranged for the financing of the white knight with a small commercial bank.


As the world in general has grown more complex, the world of real estate sales and finance has followed suit. The ability to compete in the Nineties and beyond will hinge on the willingness to embrace new technology, and to accept the reality that outsiders may be able to do portions of a deal better than if the entire transaction were handled in-house. If service to the client is paramount, then all parties benefit when mortgage professionals are part of the team that gets deals done... better and faster!
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Copyright 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Insider Outlook
Author:Dreifus, Kenneth S.
Publication:Real Estate Weekly
Date:Nov 15, 1995
Previous Article:Members serve up creative marketing ideas.
Next Article:How to distinguish a complex service in a segmented market.

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