Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. Commercial and multifamily mortgage bankers are expected to close $248 billion of loans backed by income-producing properties in 2020, a 59% decline from 2019’s record volume of $601 billion, the Mortgage Bankers Association (MBA) reported. Total multifamily lending alone, which includes some loans made by small and midsize banks not captured in the overall total, is forecast to fall 42% this year. MBA anticipates a partial rebound in lending volumes in 2021, with commercial/multifamily lending rising to $390 billion. “The ongoing COVID-19 pandemic continues...
Commercial Loans
NOT A SURPRISE, BUT WHAT TO DO?
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. The repeat CRE sales of $39.1 billion for the first 5 months of 2020 fell 24.2% from the same time a year earlier, according to the latest monthly CoStar Commercial Repeat Sale Indices. This is the first look at the year’s commercial real estate pricing trends, calculated by using the price change from the pair of first and second sales of properties sold multiple times. The indices are based on 538 repeat sales in May and more than 227,324 since 1996.
June 30, 2020June 30, 2020john
WHO’S ON FIRST? I DUN’NO … 3RD BASE!
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. For those of you old enough to remember, that line is from the classic comedy dialog between Bud Abbot and Lou Costello first released in 1945. (This is available on You Tube. A link is offered for your entertainment … a 6:18 minute escape from the trials of the day … enjoy. https://www.youtube.com/watch?v=sShMA85pv8M If the link doesn’t take you to the program, cut-n-paste it in your browser.) The dialog also, however, illustrates the difficulty in communication and the confusion it can create. Consider our current...
June 4, 2020June 11, 2020john
COMMERCIAL MORTGAGE FINANCING IN THE POST-COVID-19 WORLD
As I commented only a couple letters ago, pre-COVID-19 (paraphrased) … “It’s very difficult to make predictions, especially about the future.” Yogi Berra Yet, here we are! While we’re much more accurate reporting the past and extrapolating into the future, the recent data is largely irrelevant, and hence the process doesn’t serve us at this time. However, before we fly in the face of popular opinion, we feel obliged to share with you what that popular opinion is. “We are not lending any new money,” said David Druey, Centennial Florida Regional President, Pompano...
April 28, 2020April 28, 2020john
HOW’S THE COVID-19 CREDIT MARKETS?
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. So much happening so fast – COVID-19 … current and downstream effects! We’ll try to sift through the clutter and focus on those factors affecting our market over the next few months. As I review data accumulated since our last letter, this will be a challenge. So here we go. The primary factor affecting the market’s current negative behavior is the coronavirus … COVID-19. So the primary battle to be won is to neutralize this threat to the economy. Prior to the emergence...
April 10, 2020April 10, 2020john
HOW SHOULD CRE INVESTORS PREPARE FOR THE NEXT DOWNTURN
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. A recession is unlikely to hit this year, but that doesn’t mean that you shouldn’t start preparing. Experts say that this is the perfect time for investors to reevaluate portfolio performance to prepare for the next downturn—whenever it may come. “Real estate is a cyclical industry, and it is impossible to predict exactly when a downturn will happen. As was once said by a well-known and celebrated source (paraphrased) … “It’s very difficult to make predictions, especially about the future.” ...
March 1, 2020March 1, 2020john
BANKS ARE REVERTING TO OLD BAD HABITS
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. Banks could be slipping into old bad habits. Last year, as interest rates fell, banks started to loosen underwriting standards reminiscent of the last cycle—the kinds of missteps that ultimately led to the great recession. This includes high loan-to-value ratios as well as skipping essential steps, like income verification – no-doc loans are back in the CRE lending market! “The banks are starting to get a little bit scary. You are starting to see the behavior that you saw in 2006 and 2007...
January 30, 2020January 30, 2020john
COMMERCIAL REAL ESTATE (CRE) FINANCING & FED POLICY
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. The Federal Reserve’s recent interest rate cuts have sent a surge of excitement through the commercial real estate (CRE) market. Fed influenced rates have returned to 2018 lows, however, the Fed’s interest rate reductions have little to do with conventional CRE financing activity because most conventional commercial real estate lending is indexed over the 5 & 10 year Treasuries. The exception being SBA 7(a) loans that are indexed to the Prime rate which is normally set within a fixed spread vs. the Fed Funds Rate....
December 7, 2019December 7, 2019john
VARIABLE RATE LOANS AND FED POLICY
Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC. Reminder from our last issue: You’ve heard of ZIRP – zero interest rate policy – from 2008-2015. Now get ready for NIRP – negative interest rate policy. Currently about $16 trillion of sovereign bonds (all countries that issue), or 25% of the total outstanding, trade at negative interest rates. This trend is firmly in place and increasing. The investor is paying the issuing country for the privilege of lending them money, or seen a different way, the investor has locked in a guaranteed...
November 1, 2019November 1, 2019john
WHY AN INVERTED YIELD CURVE IS GOOD FOR FINANCING CRE
The black economic cloud that is typically associated with an inverted yield curve does indeed have a silver lining. The correlating chart shows the U.S. Treasury rates for Jan. 2, 2018, the blue normal curve, and Aug. 13, 2019, the red inverted curve. The inverted portion of the curve doesn’t turn positive vs. the 20-day bill until about year 25. As an investor, going out a full 30 years would only get you only a few bps (basis points) more than buying a 30-day T-Bill. But we’re not considering the investment side of this; we’re looking at this as borrowers....
October 2, 2019October 2, 2019john