Who would have guessed that the commercial real estate loan market would be so scattered in 2008. CBMS lenders have been taking a beating and the corner banks are on a comeback. The employees at these banks that for so many years just couldn’t compete with conduit loans, due to higher rates, shorter amortization periods and shorter fixed terms, must be quietly smiling, patting themselves on the back.
Many of these banks never jumped on the band wagon of loosening underwriting standards or creating more aggressive loan programs. They stuck to the basics and stayed conservative. If the commercial real estate loan didn’t fit their guidelines, they passed. Now many of these smaller or regional banks are flush with cash and are in the position to cheery pick the deals they want, on their terms. Borrower much of the time simply have to conform to their demands because all of the other options have dried up, or they just won’t get their commercial real estate loan funded.
I had a conversation with a vice president who was modestly boasting that “nothing really has changed here, or default rates are still low and showing no signs of increasing and our funding percentages haven’t been altered at all”. To him all of this talk about the so called credit crisis certainly seems overstated.
Meanwhile as the rest of the industry seemed to chuckle at these quaint little banks, they are now having to go back to them in order to get loans funded. And we are no exception. Dealing with the corner bank is still no joke. They still have the committees (that seem to meet only once a month), the “one step at a time process” and are in general not commercial mortgage broker friendly. But they have the capital to lend so I guess we will all have to adapt.
