Comercial Loan News Blog

USDA Commercial Loans

USDA stands for United States Department of Agriculture. The USDA helps create jobs and stimulates rural economies by providing financial backing for rural businesses and properties. Its primary purpose is to create and maintain employment and improve the economic climate in rural communities. USDA Loan proceeds may be used for working capital, machinery, and equipment, real estate, and certain types of debt refinancing. This is achieved by expanding the lending capability of lenders in rural areas and helping them service quality loans that provide lasting community benefits. Properties that fall under USDA loans are as follows: apartments, hotels, industrial, medical, mixed use, office, re...

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Construction Commercial Loans

Commercial Loan Direct offers conventional construction loans for commercial real estate properties, SBA-504 companion mortgages for transactions that are approved via the Small Business Administration, and FHA loans for apartment complexes construction. Property types eligible for construction financing are as follows: industrial, medical, mixed use, multifamily, office, retail, as well as self-storage. LTVs can go up to 75% through a conventional program but sometimes can go a little higher by obtaining an exception, 90% Loan to cost can be achieved through HUD’s FHA program for multifamily construction, and 90% with the SBA 504 program for owner occupied properties. Term lengths usually...

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Freddie Mac Small Balance Program

The Small Balance Program is for the acquisition or refinance of small balance loans providing liquidity, stability, and certainty of execution to the affordable rental housing market nationwide. Key Benefits of the Freddie Mac Small Balance Program are as follows. Financing of small balance loans using hybrid ARM or fixed-rate mortgage products, offering partial-term and full-term interest-only, A Streamlined processes during pricing, underwriting, closing and funding as well as Competitive pricing and Streamlined loan documentsProperty types eligible are as follows:Conventional multifamily housing with five residential units or more, including conventional housing with tax abatements and S...

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What is a Freddie Mac Apartment Loan?

Freddie Mac Apartment Loans The Federal Home Loan Mortgage Corporation (“Freddie Mac” or FHLMC) has multifamily mortgage products available for conventional (“market-rate”) properties, seniors housing, student housing, cooperative and targeted affordable housing. Through it’s various programs, Freddie Mac offers mortgages to experienced multifamily investors that focus on low- to median-income tenants. Like CMBS and Fannie Mae loans, these mortgages are pooled, securitized, and sold to investors. Freddie Mac loans are priced based on the corresponding treasury and a spread, which takes into account the loan amount, term, LTV, and property location. Pricing consideration...

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CMBS Loan Application Process

Getting an Application If you are in agreement regarding the rate that was quoted to you by the CMBS Lender, the next step is for them to issue you an application. Typically, in order to be issued an application, the following additional items are needed: 3 years historical operating statements on the property Annual budget for the current year Copy of the franchise agreement and any proposed PIP (if hospitality) Purchase price (if purchase) Cost basis (i. e. purchase price + capital improvements) and loan balance (if refinance) Requested loan amount, including schedule of sources and uses Keep in mind that some of these items may be reviewed during the underwriting period rather than ...

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How Millennials Are Changing Commercial Real Estate: Office Vacancies (Pt. 2)

The millennial attitude toward work is very different than it was for Generation X or the Baby Boomers. While being extremely savvy with technology (we are the “Facebook” generation after all), millennials work to live, not live to work. Slaving away to prove our worth and escalate up the corporate ladder at a Fortune 500 company for 40-50 years until we finally retire is not the goal of our generation (no offense, parents and grandparents! ). Instead we are a generation of efficiency, technology, creativity, and experiences. While we understand the necessity of working to make money and provide a sense of accomplishment, we value our personal lives substantially more than the generati...

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How Millennials Are Changing Commercial Real Estate: Crowdfunding (Pt. 1)

Many members of the so-called “millennial” generation (1982-2004) entered into the job market during one of the most difficult times in US history—the Great Recession. Loaded with student debt, no savings, big dreams, and the skills learned during internships, we had to come out of school and try to make a living when most companies were not only not hiring, but letting go some of their most seasoned employees. This difficult economic environment paired with the technological savviness of our generation has combined to make a meaningful and unique contribution to the growth of commercial real estate, which has been long overdue. One of the most interesting ways this creativity has expr...

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Risk Retention: Proposed Changes & Where Lenders Go From Here (Pt. 3)

Last year, some government officials began to realize the fallout that the original structure of the Securitization Safe Harbor Rule (i. e. risk retention) would have on the commercial real estate market. Because of that, some representatives started to look for a way to soften the original regulations while still protecting the public. On March 2nd of 2016, the House Financial Service Committee proposed an amendment called the Access to CRE Capital Act (meant to ease some of the original restrictions) that is supposed to be put up for consideration in the House and Senate this year. Let’s take a look at how this bill could change the current structure. This bill aims to enable more...

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How Risk Retention Affects Lenders, Borrowers, & Bond Investors (Pt. 2)

Since its inception, CMBS lending has been the go-to mortgage product for larger properties with sponsors that want non-recourse financing with high leverage, low interest rates, and lenient underwriting. However, since the market collapse in 2007 and the passage of the Dodd-Frank “Risk Retention”, things have changed. Although still more permissive than conventional or insurance products, CMBS underwriting standards have become more stringent, leverage points have been lowered, and interest rates can fluctuate greatly depending on treasury indexes and bond investor demands. Historically, one of the biggest benefits to being a CMBS lender is having the money that is loaned to the real e...

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What is Risk Retention under Dodd-Frank? (Pt. 1)

Anyone who works in or around commercial real estate has probably heard the words “risk retention” at some point, however many people may not fully understand what it is or how it may affect them personally. In order to understand what risk retention is, we have to take a look at where this term actually comes from. After the market collapsed in 2007, a lot of people lost A LOT of money, including retirees that got completely wiped out from what they were supposed to be living on for the rest of their lives. Needless to say, people were very upset, and demanded that the government do something to protect them from anything like this ever happening again. That’s where the Dodd-Frank W...

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