Graphic picture! (Drop in CMBS issuance)

Wanna know why your favorite commercial real estate lender's phone doesn't ring? Because they don't have a job!

Look at this chart which shows the entire secondary CRE market having imploded. There's no money out there to lend, except bank money, and we know how tough it will be to get some dimes out of those type of lenders . . .

What I'm finding is only bank deals are getting done, and they better be clean, and even then the rejections will pile up until someone has some capital to lay out on the market.

"Chain of Blame"

"CHAIN OF BLAME: How Wall Street Caused the Mortgage and Credit Crisis" is a new book clearly explaining how the subprime loan mess developed and imploded. The website to order the book is http://www.chainofblame.com/

Most amazing to me, so far, is this quote:

The approach started with salespeople.
"The sales guys from the Street would
come talk to you and hype you up," said one subprime executive from Irvine.
"They would try to get you to do something. From Monday to Thursday you would
make the loans, put all the data in a spreadsheet, and send it to the Street,
and they'd call you back with their bids. By Friday your mistake would be in the
marketplace."

Talk about calculated risk! Dump the problem on someone else.

Olympic Whiners

The athlete's performances in the Olympics have been masterful. I'm a great admirer of the years of dedicated hard work that show up in the Olympics.

Most amazing is the split second differences between 1st place and last place, for example in the swimming finals. Even 8/100ths of a second separated first and second place in one race.

Is that difference representative of the difference in training and dedication of the two athletes? Not at all. It just is the result of the competition, for whatever reason.

Today on the front page of Drudge was the big headline about women's gymnastics: "US team blame stadium official for gymnastics loss."

A few nights ago when staying up late to see the US Men compete again China, and be in second place for most of the night, with the slighest differences in performances resulting in the slightest differences in scores, I thought about those in 4th place and how it might not have been their night - after all, they all were likely as dedicated and well-trained as the other competitors.

The commentators were complaining about the wait time between performances due to slow judging, but that isn't much different than in any other gymnastics competition, such as at the World Championships. But at least it is something to complain about, or, to use as an excuse.

I thought it was fantastic in how the last U.S. performer on the pommel horse had not competed the entire night, and was last to perform his routine on pommel, and had to wait and wait and wait to start - and still sucked up the pressure and performed a spectacular routine thereby guaranteeing a medal for the team!

So for the women's team to complain that they had to wait too long, suffer "unusual holding," and break mentally - well, it just doesn't cut it for me.

Competition isn't always as fair as one wants, but it is still competition and it still requires adapting to the situation or your circumstances and giving your best performance.

Sometimes it doesn't work. That's sports. That's competition.

Stop whining.

In commercial lending there is a lot of whining lately from many, many commercial lenders who have been layed off, fired, or just can't get a deal through. Yeah, its rough. But its basically the same environment for everyone.

So why are some lenders or loan officers still performing and making money? Because they suck it up, get out of the negative mindset, and go to work. They hit the phones, they hit the books, they work hard, they get deals done.

Stop whining. Suck it up.

Like we didn't know there was a credit crunch . . .

This credit environment is good only for the best qualified loans. Other than that, it is very difficult to get a loan funded.

Note the comments on the CBS Marketwatch article today where the banks reporting to the Fed gave depressing lending numbers, citing the following reasons for their conservation of funds:

Ninety-eight percent of the banks cited the uncertain economy, 92% cited
illiquid secondary credit markets, and 75% cited reduced appetite for risk.

Banks were lowering credit lines, increasing interest-rate spreads, requiring more documentation, demanding more collateral, or requiring co-signers and or covenants before granting credit.

Michigan's poor lending environment compounded

The difficult lending climate in commercial real estate - investment or owner/user - is magnified within Michigan.



This article discusses some of the problems, not to mention the bad publicity from the City of Detroit's mayor spending time in the pokey.

Nonetheless, deals are getting done but not by the big lenders. That's the big secret that is being overlooked.

40% of Indiana Mortgage People Bail Out

Just how many mortgage people are bailing out of the industry?

If Indiana is an example, check out this article on how 40% did not renew their licenses.

Now with new Federal regulations for nationwide licensing, at least there will be some minimum compentency required to get licenses as at least one barrier to entry.

Further, it is my understanding there will be Federal tracking of each individual loan officer for fraud or defaulted loans. That way bad actors won't be able to easily switch companies and continue their nefarious deeds.

$192,000 on $220,000 Value?

A former "client" - disgrunteled at questions about his documentation of tax returns and financials statements that are inconsistent, pulls his deal and suppposedly gets his loan from a bank that doesn't even exist here in Michigan.

Basically this is a way to save face in light of falsified documentation.

Name a bank or any lender, in this credit environment, who will lend on a standalone retail building at an 87% leverage on a cash-out transaction . . . . .

In this economy, lenders are scrutinizing everything - and everything must be perfect. If there is a question on anything there better be a good answer.

For example, if "interest expense" doesn't show up on your financial statement but it shows up on the tax return, please explain why - especially if you want it added back!

UPS Capital Bites The Dust

Another lender is down for the count: UPS Capital just fired most of their business development officers and gave a 3 month severance.

Many of these were excellent lenders who could really size up a transaction, and some had a decent pipeline.

But with the credit markets drying up and a huge volume of loan requests to approve, most banks are saying "yes" to only the very best of the very best loans.

So even a healthy pipeline of good deals doesn't guarantee a job in this market.

I Cut My Speed Dial by 85%

Most commercial mortgage brokers have a go-to list of about 18-20 lenders with whom they have solid working relationships.

In this credit environment where lenders are closing up every day (Lehman, IndyMac, UPS Capital, etc.) those who work there as lenders, loan officers, business development officers, or whatever title they have - are all getting fired.

Today I reorganized my speed dial and cut 15 lenders out. Most were excellent conduit lenders, but that business is down 95% from last year.

Its banks and life companies now.