Simplified

It seems like CommercialBanc is getting more and more requests for stated income commercial real estate loans. Talking with the commercial loan specialists and select underwriters, it seems that the majority of requests are coming from business owners or investors that have filed tax returns but are not showing much income due to effective tax planning and accounting - compared with borrowers that haven’t filed tax returns.

For borrowers that haven’t filed tax returns, a stated income commercial loan option is generally the only choice when applying for a commercial mortgage.

However, for borrowers that can provide tax returns, a stated income option is generally not required, at least for investor - income producing - commercial real estate properties.

When underwriting commercial mortgage loans, the income required to service the debt is generated from the commercial property, not the borrower. Therefore, the subject property’s cash flow is the source of repayment for the commercial mortgage, not the income shown on the borrowers tax returns.

While this is a brief and very general analysis, the point is that don’t automatically assume you need a stated income commercial loan just because you have effective personal tax planning strategies.

Contact a CommercialBanc Commercial Loan Specialist for further information on stated and traditional commercial loans and apartment loans.

With commercial lending volume up 16% in 2005 to $1.3 trillion, it was only a matter of time until federal regulators stepped in to put a possible “halt” to this staggering growth of commercial real estate loans.

In January, several regulatory agencies, including the Federal Reserve, proposed new guidance for banks concerning commercial lending on commercial loans and apartment loans, including: lending caps, increased risk management, adding additional capital and more. You can read the entire report here.

According to an article published online by The Wall Street Journal, local and regional banks are in an uproar over the feds call for a “tightening of the belt.”

So, should banks really be concerned with the proposed new regulations? Apparently they are. The American Bankers Association, and over 1000 banks, sent letters of protest, claiming their commercial real estate loan portfolios are healthy and performing well.

However, it wasn’t long ago that 1000s of banks and S&Ls closed their doors due to the bottom falling out of the commercial real estate market.

In the late 1980s and early 1990s, aggressive commercial lending led to “overbuilding, vacant properties, price collapses and huge losses for taxpayers,” states the WSJ article.

The ABA and banks argue that their commercial mortgage lending practices have become far more sophisticated since the ’80s and that they shouldn’t be restricted on new originations, nor should their existing portfolios be exposed to additional risk management practices.

In the next few weeks, Congress will decide. We at CommercialBanc feel that there will be some new guidelines issued, after all, many of the banks in question have commercial mortgage portfolios averaging over 800% of capital, or 8.0 times their capital, that’s pretty aggressive!

Welcome to CommercialBanc.com’s very own commercial mortgage blog titled Simplified.

Launched on September 11, 2006, Simplified is an exciting addition to our commercial mortgage learning and resource center.

Simplified is Not…

Simplified is not a source to “spam” our own website with self promotion.

Simplified is not a source for CommercialBanc.com to “spam” or endorse affiliate websites or products.

Simplified is not an uptight, perfectly written corporate mouthpiece.

Simplified is…

Simplified is the informal voice of CommercialBanc.com.

Simplified is a place where where our visitors can learn more about commercial mortgage loans and apartment loans through a laid back interactive medium.

Simplified, as the name implies, has one goal: support CommercialBanc.com’s platform of simplifying the commercial loan process and bring standardization to a somewhat disconnected industry.

So, now that we have laid out the theme for Simplified, a few rules for those that would like to comment on our commercial mortgage topics:

You may provide links to related articles, threads, etc.

You may not provide links to self promote a product, service, or website.

There will be a zero tolerance for flaming, either on an individual, website, or company basis.

This is not a place to file a grievance against CommercialBanc.com. We are not perfect by any means, we make mistakes, and from time-to-time we drop the ball. However, we own up to our mistakes and take responsibility for them. A valued part of that process is customer feedback. So, if you have a problem, we would love to hear about it and you can contact us here: www.commercialbanc.com/contact

We welcome guest commentators. CommercialBanc.com is a rapidly growing commercial loan and resource site with a wide audience. If you would like to have your voice heard by our visitors, drop us a note here www.commercialbanc.com/contact

Well that’s about it for our inaugural post. Thanks for reading.