The Commercial Mortgage Sub Prime Market
Mid Market Commercial Mortgage Options Have Shrunk And Are Still Shrinking
Like the well publicized sub prime residential mortgage tailspin occurring in the U.S., the commercial mortgage sub prime market is also way down to non existent.
The sub prime market is a second tier institutional market that provides funding between traditional institutional lenders and private lenders.
The recent economic turn down has driven many North American sub prime lenders out of business either through failed portfolios, a lack of available funding, or a combination of both.
Sure, some of the bigger players have been provided with well documented bail outs, but even they aren’t issuing a whole lot of new loans these days.
The impact to business financing is considerable in that if you can’t qualify with an “A” lender, which is no easy feat these days either, you can drop right down into private money commercial options as there isn’t much between at the current time.
In many cases, commercial property purchases or refinancing scenarios are having to utilize private mortgage options for one or two years to provide a bridge financing to hopefully better days when the business performance will have increased and the mortgage markets have returned to a closer version of normal.
The biggest challenge business owners are having right now is in not recognizing this change in the market and as a result, they end up spending too much time looking for a type of money that doesn’t exist.
And because of the increased opportunity level for private lenders, its not automatic that a private loan can be secured either.
The commercial version of the sub prime market is likely going to be in disarray for some time to come as more banks in this category are expected to close in the coming months.
The key take aways from all of this are 1) allow more lead time to get commercial mortgage financing in place, and 2) don’t spend too much time looking for money that’s not there right now.
If you have a commercial property financing requirement that you’d like to discuss, please give me a call and we’ll go over the relevant options together.
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About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel