From the Editor
By Neil Pierson
Alternative lending plays
a key role in mortgage financing
Defining and understanding the alternative-lending industry may still be a tricky task, even for commercial real
estate professionals who have been around since the fledgling days of marketplace, peer-to-peer and other
online-lending platforms — a major component of the alternative-lending market.
According to The Americas Alternative Finance Industry Report, co-authored by the business schools at the
University of Chicago and the University of Cambridge, technology-enabled online lenders in the U.S.
issued $34.5 billion in financing in 2016, a 22 percent year-over-year increase. Marketplace and
peer-to-peer (P2P) lending — subsectors written about in this month’s magazine — accounted
for about two-thirds of that loan volume.
Broadly speaking, alternative financing is obtained from sources other than traditional
banks. Throughout the year, in our mission to inform commercial mortgage brokers
and connect them to business opportunities, Scotsman Guide presents a wide array
of articles about alternative loans. Our June magazine is focused on the topic of
alternative lending and we hope to give our readers a glimpse into what is happening
within this expansive — and fast-evolving — realm of real estate finance.
First-time author Bill Lanting of RealtyShares gets things started on Page 31. In his
article, “Emerge With An Alternative,” Lanting lays out the evolution and present-day
roles for crowdfunding, P2P and marketplace lending.
On Page 44, another first-time author, Creighton C. Bildstein of PlattPoint Capital, writes about
the various regulatory burdens facing traditional banks and how these constraints have pushed
borrowers toward alternative lenders. Speed and flexibility make private lenders an attractive
option for small-business owners who have had their bank-loan requests turned down, Bildstein writes.
This edition wraps up with an article titled “An Alternative Lending Checklist,” written by Mark Fogel of ACRES
Capital. On Page 84, Fogel details what mortgage brokers and borrowers should look for when choosing an
alternative lender. Scrutinizing a lender’s management team, its various loan products and its willingness to
maintain relationships are all key pieces to the puzzle, Fogel says.
Alternative financing, of course, doesn’t have to refer solely to funding sources. Mortgage brokers who are looking
for additional avenues of business may want to explore alternative-financing options for niche-property types.
Edwin Urrego of Kennedy Funding Financial provides an in-depth examination of the medical office building
(MOB) market on Page 77. These facilities are in high demand, are becoming highly profitable and present an
excellent opportunity for brokers to connect with private lenders that don’t require the extensive documentation of traditional banks.
Jay Litt of The Litt Group returns on Page 56 to outline the cyclical nature of the hotel industry. Evidence suggests
the hospitality sector has passed its peak, Litt writes, but there are ample opportunities for borrowers who wish
to purchase financially distressed assets and turn things around with value-add investments.
Technology is the thread that often ties together alternative-loan types. And Elliot Vermes of redIQ, on Page 54,
helps mortgage brokers and lenders comprehend the quickly evolving role of data analysis within the multifamily
market. Information like rent rolls and operating statements can be compiled and analyzed in a standardized format
that reduces confusion for all parties involved in a real estate deal, Vermes says.
The arrival of June means the arrival of summer and, with it, the apex of the homebuying season. Our readers
who also handle residential mortgage originations may be busier than ever, but they, along with brokers who
specialize exclusively in commercial transactions, can keep business booming year-round by making the right
connections in the alternative-lending world.
Neil Pierson is editor of Scotsman Guide Commercial Edition.
Reach him at (800) 297-6061 or firstname.lastname@example.org.