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 Beach FL. (Source: 4-13-20)
We could source many and varied others, but this encapsulates it.
We, however, respectively disagree!
Our own grass roots, boots-on-the ground experience tells us differently. Since Feb 26, we’ve initiated and secured 5 commercial loans, all with banks (as opposed to non-bank lenders). Three are SBA 7(a) loans … one for a gas station acquisition in New Orleans (a COVID-19 hotspot), one to re-fi an existing conventional loan with cash-out to the borrower, and one for construction of a gas station/c-store & carwash in the Phoenix metro market. The two conventional loans are both re-fi’s, one of a hard money loan on a retail single tenant property owned less than 3 months by the out-of-state borrower, and one to re-fi 2 gas stations in AZ.
The notable thing is not that we found funding sources for these loans, but that we had multiple offers!
Which goes to the point … banks are liquid. There were more than adequately flush before COVID-19, and all the Government & Fed pumping of money into the system has made them more so. Now that interest rates are as low as we might see them before they go negative (if they do), lenders are “passing the savings on to you”. (It’s not the rate, it’s the spread.) Borrowing money at ¼ point means nothing if banks can’t lend it out. Prime is still 3.25%.
Case in point … one of our conventional re-fi’s had fixed rate bids of the 5-year Treasury + 3%, and another of the 5-year Treasury 3.5%. (The 5-year Treasury is about 50 basis points – ½%.)
What isn’t widely discussed is the loosening of Government Agency regulations on the banking industry. Banks have more of a free rein in saving the economy – the Government doesn’t want a repeat of 2008-2009. It’s commonly known by now that banks are over-run with PPP loan processing, and administrating other Government programs intended to essentially nationalize our economy. Government inefficiencies under stress, however, are being passed down to the lenders, effectively making federally charted banks quasi Government agencies. Lenders we talk with, however, want very badly to make “real loans”. It’s just that nobody is coming forth to apply – But how do you make it through the quagmire to get to the right person? Who is the right person? And when you leave a message, you never get a call back … then what? Is it not what you know, but who you know? Maybe … now more than usual, and when will usual come around again?
Will opportunity pass you by before usual re-appears for you? You probably don’t know, and of course we don’t know. But what we do know is … some people. Perhaps more importantly, some people know us.
If you think we might help, give us a call at Counsel Mortgage.
We offer a variety of products and services, ask us how we can assist you today:
Counsel Mortgage Group®, LLC
NMLS #178927
AZ MB #0909580
CA DBO #60DBO43873
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