Are lenders really lending????

Question

I have a 154 unit apt under contract in Dallas. I had an approval and LOI from Wash Fed through a broker at BMC Capital. Terms were ok. I was only asking for 65% loan and got approval at 6.25 %, for first 5 years and an AUTOMATIC renewal for another 5 years at 6.875. 30 yr amort 1 point.  I was pretty happy. Last week, Wash Fed pulled the plug on TX loans except for Class A(almost new), and this loan disappeared, after sending appraisal fee and money to lock the rate.
      BMC found a new deal out of First Bank in ILL. 25 year  amort, 6.75%, 5 year call, and 1 and half points. Not very good, but maybe ok. The LOI was FIVE pages long and a bunch of blank spaces like "buyer must maintain same financial net worth during loan and have X amount in liquid assets at all times. These spaces were blank. Upon further review, the assets were ok but they wanted liquid funds Stocks, mutual funds or cash in the amount of THREE MILLION DOLLARS at all times during the loan!! Why would ANYONE borrow the 3 mil and then leave 3 million in liquidity?
     The property is $4,325,000 and the 65% loan was under 3 million, yet they wanted liquidity of 3 mill!! Does any of that make sense. If it drops below that level during loan, they may call the loan. I felt like contacting them and asking what stocks I should buy. I almost question if they're really lending or scamming. Anyone that had taken a loan like this a year ago, with the market  loss, they'd now be in default!!
     I ask again, are lenders REALLY making loans??? Rich.

Kevin Yeats · Answer

"... and then there was the Bank President who told his Loan Officer VPs to drink Whiskey or Scotch at lunch instead of Vodka so that the customers would know that they were drunk and not Stupid."

Justin Pierce · Answer

Rich,

I feel your pain.  I'm getting so tired of risk averse sissies in this industry.  Appraisers, lenders, investors unwilling to do their job an put it on the line a little and yet still expecting big profits.  3 MIL liquidity... what a joke.

We need to put together the big boys real estat group.  Only those willing to work hard to find and manage good deals allowed.  Must be willing to bet on good risks.

You want safety and security then go get a government job.

Justin

Rich Weese · Answer

This thread I started a long time ago. I have a more recent follow up called bringing lenders to their knees. I was successful on bluffing them. Check it out, Rich

Bryan Hancock · Answer

Banks seem to be getting a lot of heat from regulators right now and they are scared stiff.  I deal with them as little as I can right now and try to exhaust all private money options before using a bank.  That is obviously difficult to do if you need to borrow several million bucks though...with a personal guarantee.

Rich Weese · Answer

Christopher Wallace- Did you actually get your loan deal closed with Wash Fed? I haven't heard back from you. Rich in Killeen.

Tod R. · Answer

Ha ha! Now that's funny!

Chris Chung · Answer

When we flip properties, its either through a local (small) bank or through a private/hard money lender. The big guys just can't take the risk.

Tod R. · Answer

Lenders, in general, are making it very  difficult to borrow.  I think they are still trying to recover from all the write downs/offs of real estate loans and are scared to death of the upcoming maturing loans as well as making more bad real estate loans.
          
          Single Family Subdivision Loans-Typically financed through banks are now either laughing at us or tell us to get the hell out if we ask for one of these.
          
          Office Refi's-Long term lenders now are loaning at 65% LTV with similar cash/liquidity requirements Rich is seeing.  This is hard when you originally borrowed 75% on a higher appraised value.
          
          Multifamily Construction-Reasonable LTV and interest rates only if you have significant cash/liquidity reserves.

Rich Weese · Answer

Kyle,
     Why not share the name of the lender you're using? Others would love to find what you have apparently found. Rich

Kyle K. · Answer

Yes, of course lenders are really lending.  I'm sure it varies from place to place and lender to lender.  As a whole, lenders are more conservative, but we must remember one thing:  lending is their job.  Banks WANT to lend.  It's in their financial interest to do so.  Obviously, loan products are always changing, but you can still find good ones out there. We're currently closing escrow using a solid, fixed-rate, non-recourse loan product with very favoriable terms.  It's made a good investment even better.

Are lenders really lending????

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