Rick Fitzgerald -The MultiFamily Expert

Business owners and real estate agents should receive some glimmer of hope for 2009 sales.  What should we see in 2009?

Government backed commercial loans will continue to grow in 2009 as investors and banks seek the safest real estate investments.  In the near future, only two sectors of real estate will receive the benefit and guarantee of the government.

SBA financing fell for several years as banks and secondary market loan programs offered a cheaper alternative along with less paperwork.  That all changed in 2008. 

The biggest change in the SBA program for 2009 should be the current proposal to raise the SBA guarantee to 80% for all existing and future loans until 2010.

This change would be a catalyst for banks to lend and a higher valued investment for a secondary capital market.  The proposal is a good step towards rebuilding the secondary capital market for investors. 

Multifamily investment loans currently are the same 2008 guidelines with no foreseen changes right now with the expectation that the support of Fannie Mae and Freddie Mac continue. 

Their investments in multifamily properties have outperformed the market tremendously with the non-performing properties still well under 1%.

Business owners and real estate investors who are just now seeking financing in the new lending age generally should seek a lending professional before submitting an application to assure they have the best opportunity for an approval. 

We shifted our market focus in 2008 to multifamily due to secondary market meltdown.  In 2009, we have partnered with a bank whose niche is working with the scratch and dent borrower.  Strong borrowers with good financials and credit will be able to obtain an SBA loan at their local bank.  However, there will be a great number of "out of the box" borrowers who will be declined.  Our bank is seeking those borrowers.

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Multifamily Investments Expert AAM Capital 5000 Alpha Lane Chattanooga TN 37421 Office 423-870-2285 Toll Free 800-452-9287

Rick Fitzgerald Your Multi-Family Investment Expert

Choose AAM Capital Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com Fax 423-443-4784

Each of us who earns an income (and even those of us who don't) in the real estate market should pay attention to forth coming legislation that helps and encourages the buying and selling of real estate related securities. 

Currently there is legislation raising the amount of an SBA guarantee to 80% on all current, future or existing first lien mortgage loans until September of 2010.

This will free up capacity and capital for banks who have risked lending to business owners recently as well as encourage other banks to participate. 

All of us in the Active Rain community benefit from this SBA change.  You, your family and friends livelihood all depend directly or indirectly on someone obtaining funding as a business owner.  And most business owners own homes.

If you would please right now send an e-mail to the names listed below in support of the “SBA 504 First Mortgage Guaranty - Secondary Market”.  Encourage them to raise the SBA guaranty to help stimulate all of our local markets.

Senate:

Kevin Wheeler:  kevin_wheeler@small-bus.senate.gov  Ph. (202) 224-5175 or (202) 224-8496

Nick Coutsos:  nick_coutsos@small-bus.senate.gov   Ph. (202) 224-5175 or (202) 224-4175

Matt Walker: Matt_walker@small-bus.senate.gov  Ph. (202) 224-7884

 

 

House:<

Adam Minehardt:  adam.minehardt@mail.house.gov  Ph. (202) 321-9300

Barry Pineles: Barry.pineles@mail.house.gov  Ph. (202) 225-5821

 

 

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Multifamily Investments Expert AAM Capital 5000 Alpha Lane Chattanooga TN 37421 Office 423-870-2285 Toll Free 800-452-9287

Rick Fitzgerald Your Multi-Family Investment Expert

Choose AAM Capital Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com Fax 423-443-4784

Feds pulled another $800B out of their ………………hat? Taxpayer hat that is.

Actually that’s not even accurate. The Fed is essentially creating the $800B first to purchase debt and then using taxpayer money to weed out the bad loans. The initial plan to purchase bad loans from banks was scrapped but has now been restructured to buy $500B worth of higher quality mortgage securities.

In addition, the Feds will purchase bundles of consumer debt, credit card debt, student loans and car loans in an attempt to free up the seemingly frozen solid credit markets.

Let’s stand back here and take a look at how the surviving banks made out. The industry has been criticized for booking tremendous profits while taking huge risks and then being propped up, bailed out, and then practically having all loans now guaranteed by the Feds. We even fund the loan loss reserves on the guarantee.

It’s probably not fair to say that the banks have refused to lend trying to leverage consumer pain into a government handout but it looks like that to some. The Feds have done everything possible to get banks to lending to consumers again before Christmas.

Everything except loaning directly to consumers but that will be coming if the banks don’t fork over loans. We can call it the “Consumer Loan Administration” or CLA.

We might as well have the profit if we are going to guarantee it all. Lastly, the bad loans are still sitting on bank books and tax payers will eventually have to ante up again to buy those as well.

It’s been absolutely amazing how the Feds have been able to orchestrate such historic moves while still maintaining a sense of confidence in the banking industry.

Who would have thought that the investment banking industry would have collapsed in such a short period of time? It’s inconceivable that so many investment banks cut off their head, shot themselves in the chest, broke both legs and then jumped into a volcano to ensure there could be no survivors.

And all for a buck.

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Multifamily Investments Expert AAM Capital 5000 Alpha Lane Chattanooga TN 37421 Office 423-870-2285 Toll Free 800-452-9287

Rick Fitzgerald Your Multi-Family Investment Expert

Choose AAM Capital Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com Fax 423-443-4784

It has become apparent that all the fist shaking and rhetoric going on between the Feds and the banking industry regarding consumer lending is going nowhere.

I wondered just how Congress can mandate a bank to lend money.  No matter how you cut it, lending money is a matter of choice for banks.  You might dictate the circumstances as congress has done with housing but not the choice.

As long as a bank does not decline a loan due to the protected under the Equal Credit Opportunity Act (among other legislation), you are out of luck.  Our banks simply raised the standards when faced with losing profits.

Can you blame them?  I don’t think you can.  The standards will rise until the reward meets the risk. They are a For Profit business.

What I do think is the government will be forced into directly lending, buying or guaranteeing almost all consumer loans for the time being.  This could be done through a new entity created with private and bank capital backed by the government.  After all, the Federal Reserve Bank was created in the same manner.  Now you just have to deal with consumers.

There will be of course, a whole lot of belly aching going on from many sides on this idea. However, the Feds are backing literally every lending aspect anyway.

In the end, consumer credit has been driving this bus for a long time. And it seems without a license or practically blind.

Take the bus driver off a bus and see if the passengers can complete a route.  Now make sure you replace that driver with an educated high income sort of guy. See where he thinks the route should be driven. A bunch of folks will never even see the bus.

I see the government needing to get a new bus driver.

 

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Multifamily Investments Expert AAM Capital 5000 Alpha Lane Chattanooga TN 37421 Office 423-870-2285 Toll Free 800-452-9287

Rick Fitzgerald Your Multi-Family Investment Expert

Choose AAM Capital Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com Fax 423-443-4784

The multifamily purchase market is almost at a standstill right now. Seems like the entire investment market has taken the rest of the year off.

A multifamily investment lender like an insurance company has basically folded their tents for the year leaving even less choices. We have two insurance companies still willing to make an investment in the sector putting very good loans on their books. I'll say that again. Very good loans.

The general consensus is the multifamily investment market is more than holding it's own in both performance and cash returns. Occupancy is up but collections are as well washing each other out. Surveys indicate that the multifamily investment is capable of high returnswhile maintaining its value better than most other real estate investment options. Even out pacing the NNN properties.

Thank goodness for the Fannie and Freddie Multifamily programs as the backing has kept something going in real estate for both agents and investors. More than a leap of faith, it's actually making a profit.

Refinancing is taking a large percentage of the business right now. Multifamily investors are becoming a bit comcerned over bank balloon notes and calling more often.

No one is able to predict how the banking industry will be handling maturing notes. What we do know is they want deposits right now and not risk.

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Multifamily Investments Expert AAM Capital 5000 Alpha Lane Chattanooga TN 37421 Office 423-870-2285 Toll Free 800-452-9287

Rick Fitzgerald Your Multi-Family Investment Expert

Choose AAM Capital Find out why investors choose us. Multi family investments include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com Fax 423-443-4784