Commercial Loan Fee Agreement - Timing
If you’re in the business of originating commercial loans, you know how important it is to protect yourself. A commercial loan fee agreement is one of our most important tools. Going through the long and difficult process of underwriting and closing a commercial loan all to not get paid or only collect a portion of what you expected is one of the more painful and disappointing experiences you can go through in this industry.
We know. We have had several situations where we didn’t get paid, only got a portion of what we were told or did collect our fee, only after getting an attorney involved and going through a long and draining process.
Putting together a deal after hearing the funding bank saying something like “oh, we don’t have formal agreement with brokers, but we’ll pay you a point outside of closing” is like hoping to get paid back that $500 loan you gave to your high drop-out cousin. Sure, there is a chance you’ll get paid back.
Or if you’re working on a deal and not expecting to get any YSP from the bank and you’re depending on the borrower to finally sign that fee agreement, after they know who the bank is and what they are offering, is also a seriously weak position to be.
Unfortunately, we have had both “friends” as well as national lenders that we have work with for years short us at the end of the day. The reasons and stories behind these vary, but bottom-line – if you don’t have your commercial mortgage broker fee agreement signed and in hand in the beginning of the process you are relying on their kindness to pay you. As my old boss used to say “I won’t walk across the street for a client without a contract”.
