As the housing recovery progresses, smaller lenders appear to be coming back stronger than the big banks, according to an article published by Mortgage Professional America. According to industry experts, this has a lot to do with big bank’s caution after the financial crisis.
“The short answer is the banks are becoming too conservative and now they’re gun shy,” John Councilman president of NAMB said. “The banks are becoming more credit sensitive, they don’t offer the product variety, and they aren’t reaching all areas and all people.” For more, read our previous post on how to save the deal when the bank denies your borrower’s commercial loan.
While this article focuses on residential real estate, the same could be said of the commercial mortgage industry as well. Now is a great time for both residential mortgage brokers and brokers who focus solely on large-balance commercial mortgages to begin working with the right small-balance commercial mortgage lenders. Here’s why:
Flexible credit standards:
As mentioned above, banks have become more credit sensitive following the financial crisis with both residential and commercial borrowers. Small-balance commercial mortgage lenders understand that many commercial borrowers won’t always have pristine credit and are willing to work with borrowers who have good credit explanations.
Willingness to listen:
If your borrower doesn’t fit a bank’s criteria for a commercial mortgage, they won’t be getting a bank mortgage. There’s very little room for negotiation. Small-balance commercial lenders are more willing to listen to your borrower’s story and to work to find the right financing solution.
Faster closing time:
Bank loans can take months to process and close, which can be a real problem if your borrower needs a commercial mortgage quickly. Most small-balance commercial mortgage lenders can close loans fast, sometimes in a matter of weeks.
While bank loans can be a great option for some small-business owners, the fact remains that some borrowers just won’t be able to qualify. Many of these borrowers do have need for and the ability to repay the loan, but simply can’t meet the bank’s stricter standards. If you come across these borrowers, consider a small-balance commercial mortgage lender. Not only will you be helping a borrower obtain the commercial financing they need, you’ll also be expanding and increasing your business.