home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News


Mortgage News

HOT Topics









site map

twitter linkedin
facebook google+

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Commercial Mortgage News | CRE Lender Directory | CRE Statistics
Stories about commercial lending on multifamily, office, retail and industrial properties.

Pros, Cons of Commercial Originations

White paper looks at commercial opportunities

October 10, 2006


photo of Paula Parisot
Paula Parisot

Commercial mortgage originations can be very lucrative for residential mortgage brokers. But these complicated transactions take more time, require more work and experience more fallout than their residential counterparts.

While commercial mortgage originations can offer residential brokers bigger commissions, a new market to tap and the chance to extend investment opportunities to existing clients, it takes more time to deal with the additional variables commercial lending brings.

As residential fundings wane, some mortgage brokers are turning to commercial lending.

One commercial wholesale lender says it is sweetening the deal by offering brokers reward incentives and in-house training that simplifies an often-complex process.

Coral Gables, Fla.-based Silver Hill Financial specializes in small-balance commercial loans from $100,000 to $1.5 million and says it has streamlined the lending process, making it easier for residential loan brokers to learn the commercial real estate lending procedure.

Evelyn Kidd of Texas-based Directors Mortgage, who is a commercial broker for Silver Hill, told MortgageDaily.com there is more to learn but that it has been a lucrative move for her, adding commercial lending to the origination mix.

"A considerable amount of my residential business is investment," Kidd said. "I was interested in offering my current client base more avenues for their investment opportunities.

"Silver Hill has simplified their underwriting and fashioned it after a residential underwriting style, it is extremely user-friendly," she continued. "You have to familiarize yourself with rent rolls, profit and loss statements, etc., but it is basically the same concept as residential lending."

She said that most of the commercial loans she originates are between $500,000 and $1 million, and pay between two and three points.

"The commercial deals do take a bit longer and are a little more difficult however the end result makes it well worth while," Kidd said.

Opportunities in commercial lending can exist just about anywhere -- from apartment buildings to retail strip centers and commercial condos, according to The Insider's Guide to Small-Balance Commercial Mortgages, a white paper released by Silver Hill last May.

And the commercial market appears to be heating up. The National Association of Home Builders/Fannie Mae Multifamily Rental Market Index released last August indicated a record increase in demand for luxury and lower-priced apartments. Moderately priced apartments were also up from last year.

"We are in the midst of a solid comeback on the rental apartment side of the multifamily housing market," NAHB Chief Economist David Seiders said in the press release. He also noted, "During the last three years, condos have made up a rising share of multifamily housing production."

Common commercial property types include multifamily, office and retail properties, the paper explained. Other types include warehouses, storage facilities, mobile home parks, automotive and restaurants.

The different property types cause commercial deals to become more complicated and involved than with most single-family loan originations, Patrick Connors of Marketing Mortgages Direct told MortgageDaily.com by e-mail. But there is "great satisfaction when one commercial loan closes," he said.

"You cannot expect a cookie cutter approach for commercial loans," Connors said of an industry he calls very competitive. "You really have to offer the right product at the right price to be awarded the business."

Geoffrey Dorney of GP Dorney Mortgage Services agrees that every deal requires customization.

"The biggest difference is that they take longer, more effort (more phone calls, faxes, emails and copies), and there is a lot more fallout," Dorney told MortgageDaily.com in an e-mail interview. "No matter how hard the lending industry tries to standardize the process, from origination to (underwriting) to closing, something unexpected pops up in virtually every case, causing either a delay or an end to the deal."

In any case, Dorney added, there is room in this industry where there are "very few real experienced players."

"With time, you can develop a reputation as a 'go-to' person, to residential professionals that need someone they can count on, when an important client needs a commercial deal. That's our bread and butter."

Paula Parisot is a MortgageDaily.com feature reporter and a blogger at CloserBlog.com who has also worked in the mortgage industry.

e-mail Paula at: [email protected]

Wholesale Lending News | Directory | P r i cing Engine | Originator Newsletter
News about wholesale lenders, correspondent lenders and wholesale mortgage lending programs. Alt-A, subprime and other niche loan programs. Lawsuits between wholesalers and brokers.

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter


mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders