The World of Private Lenders
In today’s commercial lending space, there is a new trend taking place to address the vacuum left in banking with the demise of traditional lending. An extraordinary paradigm shift is occurring in the real estate financing sector as private lenders with billions of dollars to invest are moving aggressively to replace the investment banking community.
Since the lending “meltdown” started in 2007, the major focus in Washington has been on residential mortgage reform. Legislators are scratching their heads as they begin to deepen their understanding of the complexities of the mortgage system as it exists in the United States. Many in the financial sector have even begun to look at other parts of the world for examples of how the mortgage lending problems can be solved. The same issues have spilled over to the commercial mortgage industry with the inability of the federally insured banks to lend money they do not have.
The mortgage story began in the late 1990′s, with the advent of lending banks, and other mortgage lending institutions seeking to improve the inherent risk of sub-prime borrowers and maintain liquidity. The financial community began to bundle together mortgages with a similar risk factor and sell these notes to private corporations like Ginnie Mae, Fannie Mae and Freddie Mac. These entities in turn issued securities that functioned like bonds and provided investors with a steady cash flow. This type of lending model became known as risk-managed lending.
Risk managed lending showed its inherent flaws when a large portfolio of nonperforming notes started the advent of the mortgage meltdown. This wave caused banks to virtually stop lending and pull back on their risk to their depositors and the FDIC.
A quiet revolution has started taking place in the commercial lending sector with the influx of private lending consortiums coming to the forefront and confronting these lending problems. Companies like Realty Funding Partners in Dallas, Texas have moved forward to solve the commercial mortgage lending needs now facing business owners.
Over $5 trillion dollars in commercial mortgage loans are maturing in the next 3 years. Businesses are now faced with the need to refinance their mortgages in a declining value economy. This has created a “perfect storm.”
This storm has caused a vacuum to take place in the commercial lending sector. Realty Funding Partners has created a new business model to replace the traditional investment banking community by using private equity funds as a lending source.
The impact of the recession on the stock market has caused private money to withdraw from the market and look for the next best opportunity in which to place their investments. That opportunity is commercial real estate.
Realty Funding Partners works with over 300 private equity sources across the U.S. that have positioned themselves to lend on commercial mortgages. Private equity investors can include funds from high net worth individuals, hedge funds, pension funds, insurance pools, or other privately held funds. These investors have a common approach to lending. Rather than managing risk to assure uniform paper that can be bundled and sold, private lenders look at return on investment (ROI.) They tend to portfolio their paper, and are looking for projects with consistent cash flow.
Realty Funding Partners is able to help you understand the different parameters being reviewed by private lenders and will help you package and present your funding request to optimize responsiveness from lenders. We can quickly tell you if your project is ready for funding. If we see problems with the executive summary of your business needs we can also help with suggestions to secure low cost private money.
We have over 300 private equity funds lending in excess of $400 billion in capital allocations. We work with commercial mortgage needs in refinance, purchase acquisitions, debt restructure, and business expansions. We are able to provide solid loans with interest rates ranging from 5.5 – 6.5% on level terms of up to 10 years amortized over 25 years on most projects.
www.wladirect.realtyfundingpartners.com
Please contact Susan Faris at 816-876-5179 for more information.
