Comercial Loan News Blog

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 ve... Read More

What is a Fannie Mae Apartment Loan

A The Federal National Mortgage Association (FNMA or “Fannie Mae”) mortgage is an adjustable or fixed-rate loan product available for various types of multifamily properties. The underwriting and application process is standardized and performed by Delegated Underwriting and Services (DUS) lenders. Through it’s two major programs (Small Loan Program and DUS Program), Fannie offers multifamily mortgages starting at $750, 000. Like CMBS mortgages, these loans are pooled, securitized, and sold to investors, but typically servi... Read More

Fannie Mae Apartment Loan Application Process

A Fannie Mae (“Fannie Mae” or FNMA) mortgage is a loan product for apartment buildings with 5+ units. These loans can be fixed or floating and are generally non-recourse. It is a great product for various multifamily property types, including conventional apartments, affordable housing, senior housing, student housing, cooperative housing, and manufactured housing. It can also be used for mixed-use buildings where the other commercial units make up 20% or less of the gross income. Fannie Mae loans are only available for experience... Read More

Freddie Mac Apartment Loan Application Process

Freddie Mac Apartment Loan OverviewA Federal Home Loan Mortgage Corporation (“Freddie Mac” or FHLMC) mortgage is a non-recourse loan product for multifamily properties with 5+ units. These loans can be fixed, floating, or a hybrid of both, with interest-only periods available. It is for various multifamily property types, including conventional apartments, affordable housing (tax-exempt and taxable), seniors housing, student housing, cooperative housing, and manufactured housing. Freddie Mac loans are only available for experienced multifam... Read More

5 Reasons Your Commercial Mortgage Rate Could Go Up Before Closing

For both new and experienced investors, the commercial loan diligence and closing process can be stressful, and the last thing any borrower wants to think about is their interest rate increasing between submitting their loan application and closing. However, there are several factors that can lead to an interest rate change before the loan closes, which can not only affect investor returns, but potentially down payments if the change is drastic enough. The 5 most common reasons an interest rate increase can happen are the following:One of the e... Read More

How to Prepare a Financial Package For a Commercial Loan

Not all Lenders or loan programs are created equal and each program has it’s own specific guidelines. That being said, here is a general list of the items you should consider preparing in advance of contacting Lenders for a loan quote*:Schedule of Sources & UsesName of current lender and payoff amount (including any prepayment penalty)Property name/addressDate property was built/rehabbedRequested loan terms (i. e. loan amount, interest rate, term, amortization, fixed/variable, etc. )List of all Sponsors (including spouses) with at least 10% o... Read More

How to Prepare a Financial Package for a Commercial Construction Loan

Keep in mind that each Lender has it’s own specific guidelines and that commercial construction loans take quite a bit of diligence before they are approved. This is only meant to be a general list of the items you should consider preparing in advance of contacting Lenders for an investment construction loan*:Project Executive Summary, including schedule of Sources & UsesStatus of entitlements and permits (regulatory letters, if available)Resumes for Architect, General ContractorAIA bid submission, if availableFeasibility/market studyMarketin... Read More

What is an FHA Apartment Loan under HUD?

In addition to its healthcare and special needs programs, the Federal Housing Authority (FHA) branch of the US Department of Housing and Urban Development (HUD) offers government guarantees on various types of multifamily mortgages through its Office of Multifamily Housing Programs. These loans are available for conventional apartments, low-income housing, manufactured housing communities, cooperative housing, and seniors housing. This type of loan is only for very seasoned commercial real estate investor/owners because of the extensi... Read More

5 Ways Commercial Real Estate is Different Than Residential

Commercial and residential real estate differ in many ways, which is why it can sometimes be difficult for a residential investor to transition into the commercial arena without professional assistance. These are just some of the ways residential and commercial properties differ:1.  Property Occupancy.  Residential real estate is a single-family home or building with 4 residential units or less (i. e. duplex, triplex, 4-plex) that has individual(s) or family(ies) as tenants. A commercial property is any property that has commercial businesses... Read More

Why Lenders Should Stop Re Trading Borrowers

After working in both commercial real estate lending and investing for the past ten years, I can say two things with absolute certainty concerning commercial real estate loans: 1) Lenders re-trade Borrowers far more often than they should on the loan terms they put out on their initial term sheet 2) there’s almost nothing that angers a Borrower more than being re-traded (or worse having their loan denied) because an underwriting item wasn’t taken into consideration on the front end. Any experienced commercial real estate inve... Read More