From the Editor
By Neil Pierson
Keep an eye on regulations
as election season unfolds
Voters across the country will be casting their ballots in various national, state and local elections this month.
Our November focus topic, legislation and compliance, goes hand in hand with what is likely to be an important
and compelling election season.
An important piece of legislation passed this year that is expected to impact commercial real estate
financing is the Economic Growth, Regulatory Relief and Consumer Protection Act, which was
signed into law this past May. Although it will take time for lenders and analysts to document
the actual financial impacts, revamping the high-volatility commercial real estate (HVCRE) rule
within the act should boost the volume of certain types of loans.
Among other things, the revised HVCRE rule allows lenders to originate a loan based on
the appreciated value of contributed land, rather than the original purchase price of
the land. This should help developers who “purchase land when it is less expensive
and hold it for months or years before beginning to build on it,” according to NAIOP,
the Commercial Real Estate Development Association.
Our November magazine begins with a timely topic from a compliance standpoint. On Page 31, Lawrence S. Brown of Evergreen Private Finance writes about
foreign-national financing. Brown makes the case that undocumented foreign
nationals — those without a visa or permanent-resident status — represent a
good business opportunity for commercial mortgage brokers because they need
specialized financing. You’ll need to perform some extra due-diligence work with these
clients, however, Brown writes.
Commercial Property Assessed Clean Energy, or C-PACE, financing appears to be more popular than
ever, even at a time when these energy-conservation loans for residential properties could be in jeopardy
because of proposed federal legislation. On Page 77, Woolsey McKernon and Chris Robbins of CleanFund
Commercial PACE Capital Inc. discuss the rapid growth within the C-PACE industry and offer examples for utilizing
the product as a less-expensive option than mezzanine debt.
Pat Jackson of Sabal Capital Partners LLC returns on Page 47 with a look at loans for affordable multifamily housing.
In particular, Freddie Mac has designed some financing options to help property owners acquire or rehabilitate
older apartments that serve low- and middle-income renters, Jackson writes.
The multifamily sector also is the subject of Dan Palmier’s article on Page 68. Palmier, the founder and CEO of UC
Funds, outlines the reasons why rental housing is a smart play for mortgage brokers and their clients. Unlike other
commercial-property sectors, the multifamily sector is often insulated from significant downside risk because
people always need a place to live.
Jeffrey Taylor of Velocity Commercial Capital turns the attention to commercial mortgage-backed securities (CMBS)
and the loans that underpin them. On Page 52, Taylor discusses the benefits of CMBS financing. Brokers should be
aware of regulatory-compliance issues with these transactions, too, as lenders must retain a 5 percent share of CMBS
deals, but they are generally low-risk financing solutions for a variety of commercial deals of $5 million or less.
This month’s issue wraps up on Page 80, where first-time author Mitch Ginsberg of CommLoan writes about
technology-based marketplaces for mortgage brokers and borrowers. Ginsberg compares today’s commercial
lending environment to the entertainment industry of a decade ago: Mortgage brokers who don’t adapt to these
new tech platforms could wind up resembling the now nearly defunct Blockbuster video-store chain.
Regardless of how the midterm elections shake out and potentially affect the nation’s economy, we hope our
readership enjoys continued business expansion in the month of November and beyond. Feel free to reward
yourself with an extra helping of turkey or pumpkin pie when you sit down at your Thanksgiving table.
Neil Pierson is editor of Scotsman Guide Commercial Edition.
Reach him at (800) 297-6061 or firstname.lastname@example.org.