Lenders are loosening up! But sometimes with a string attached.

[Patrick Nissim]

As a mortgage broker (California), it was disorienting trying to find an active lender for months after COVID hit. Some stopped doing cash out and some pressed pause on everything. It seemed like the only way to get anything done was through hard money, even with our blue chip clients. Bankers who’d never done a small business loan in their life suddenly were doing PPP loans exclusively and constantly.

But we’re starting to see some lenders already loosening up, with impressive rates and cash out. Today I was quoted a 10 year rate as low as 3.08% for Multi-Family (+$6M) in Sacramento - not bad at all.

One thing though - there is a chance they’re going to ask to hold 6mo - 1yr principal/interest reserve. It’s not the worst condition in the world, but it’s something you may need to be prepared for in the short term. Some lenders are also raising debt coverage, but that’s sometimes exclusive to sector (office / retail).

If you’re a qualified borrower with strong occupancy and P&Ls, you can definitely get away with a cash out deal with normal conditions (and apparently a killer rate).

But for those wondering what the RE finance end is looking like, that is at least a glimpse into what we’ve discovered over the past 3 months. Hope this is of help!