Lender Comments On What's Getting Funded

Riding the phones, looking to see what lenders are still employed, much less which lenders are still actually closing commercial real estate loans, has yielded the following items on which loans will get closed in the current credit environment:

• No story to the deal. The raw numbers must speak for themselves, but if an explanation is necessary the deal will die.
• Low leverage, no more than 65% LTV. Don't even start at a higher number and try to negotiate your way down unless you want to waste time killing your deal.
• Basic property types only (retail, multifamily, office). Anything else, especially anything strange or a little weird will be kicked out.
• Rate/term refinances or purchase money but no cash-out. Don't ask, don't hint, don't attempt or the deal dies.

It appears that the bankers are starting to think about lending again, though very, very conservatively. We'll see if this means that the happy talk they give to prospective borrowers actually leads to a closed loan, because so far it hasn't.

If they are intending to lend more, don't forget that bankers in the recent past were less than half the lending market and the conduits were the major lenders. Since conduits are basically gone for now, the amount of lending possible just by banks will still be way less than in past years.