9.29.17: Reach Out to Community Banks for CMBS & Non-CMBS Opportunities

ValueXpress is always looking for effective avenues to find borrowers that may be interested in CMBS conduit loans. Until recently, a steady source of CMBS conduit loan originations resulted from refinancing maturing 10-year term CMBS conduit loans closed in 2006-2007 during the height of the CMBS market. You may recall the market for CMBS conduit loan originations in the United States peaked in 2007 at $228 billion, well in excess of the $75-billion annual rate in recent years. Most of the CMBS loans closed in 2007 were structured with 10-year terms, but all have now matured and refinanced.

So new business needs to be found. We are finding some success through the community banking system, in particular community banks that originate income-producing loans in the $3-$15 range for their balance sheet. We have developed relationships throughout the United States with community banks to refer requests to ValueXpress for income-producing loans that don’t fit their lending criteria. These opportunities are mostly requests for non-recourse loans or very large unrestricted cash-outs on refinances. Other opportunities arise from borrowers that reach their legal lending limit at their bank or need to reduce their contingent liabilities related to large amounts of personally guaranteed loans. Taking some or all of these loans into the non-recourse CMBS market opens up capacity for the bank to continue to lend to the customer.

A side benefit we have discovered through this process is how active community bank lenders have become on income-producing commercial loans. Commercial banks have fully recovered from the financial crisis, and with low cost deposits, they are aggressively closing loans at attractive terms. So when we meet with commercial bank loan officers, we share our CMBS product information with them. At the same time, we learn the terms and benefits of their loan programs. While most community banks still only close recourse loans, we find that in certain instances in which a borrower is not concerned about recourse, we can place that loan with a community bank to get the best terms for our client.


This entry was posted in CMBS, CMBS Conduit Loans, Commercial Lending, Commercial Real Estate Loans, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged , , , . Bookmark the permalink.

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