Stats on the drop in commercial mortgage lending

I did a lot of business with Lehman over the years and am still in touch with my clients who's loans are being serviced by Lehman - all of them real good deals.

So it doesn't surprise me that Lehman's commercial real estate portfolio is performing well, after all, most commercial lenders didn't have the kind of liar-loans common to residential. All were well-documented and underwritten to the common underwriting guidelines most commercial lenders use.

So note the comment in this article on the latest MBA press release:

Nevertheless, the total amount of new securities backed by commercial real estate loans plummeted to $12 billion in the first half of the year from $137 billion a year earlier, the trade group said.

"There continues to be a fundamental disconnect," between the performance of those investments and investors' willingness to buy them, said Jan Sternin, senior vice president of commercial and multifamily at the mortgage bankers' group.

The problem in commercial mortgage markets is not loan quality in the portfolios. It is the lack of liquidity in the market.

Until someone starts buying this performing paper, there isn't going to be any commercial lending except hard-money or anything with a government guarantee.