As a commercial mortgage broker, it’s important for you to understand whether or not your borrowers will be able to obtain traditional financing and what to do if they are turned down by the bank. Enter non-conforming commercial mortgage lenders. These lenders specialize in providing commercial mortgages to borrowers who aren’t able to get a loan from their bank or other traditional funding sources.

So, how do you know if your borrower is going to need a non-conforming commercial mortgage? Here are some common reasons:

Income verification:

If your borrower is unable to prove that their income is able to support monthly loan payments through their tax returns, they won’t be able to obtain a commercial mortgage through their bank or a similar financing institution. In these instances, it’s best to contact a non-conforming commercial lender. These lenders don’t underwrite exclusively with tax returns and will take the time to understand your borrower’s true financial situation. Learn more in our previous post about the benefits of closing non-conforming commercial mortgages.

Past credit issues:

Because of tight regulations, banks are limited when it comes to lending to borrowers with credit problems, even if those problems are behind them. Non-conforming lenders will listen to your borrowers’ stories and will take them into account when underwriting the loan.

Problems with the IRS:

Borrowers who are currently behind on any of the taxes will be unable to obtain a commercial mortgage from a traditional funding source. However, many non-conforming lenders have programs in place in order to help borrowers pay off delinquent taxes. Watch this video about how APEX can help solve a borrower’s tax lien problems and get them the financing they need!

Smaller loan size:

It’s very difficult for borrowers looking for a small-balance commercial mortgage to obtain a bank loan because banks don’t view these types of loans as profitable. There are lenders who specialize in small-balance commercial mortgages, though, who can help your borrowers obtain the funds they need.

Borrowers who are turned down by the bank have options, and it’s important for commercial mortgage brokers to be aware of this. If your borrower cannot verify their income via tax returns, has had credit issues in the past, has delinquent taxes or needs a small-balance loan, a non-conforming lender could be the best solution.

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