ommercial real estate agents are often deluged
by originators who peddle flyers offering loan
programs and services that usually have no
discernible difference from each other. In addition,
many Realtors have long-standing
relationships with mortgage
brokers who they feel
comfortable with, so overcoming their reluctance
to establishing a new
relationship can be hard
This is where an in-
troduction to your niche products can come in handy. The
same Realtors, as a result of their hesitancy, may be
oblivious to the opportunities afforded by niche products.
Realtors may find it difficult to resist an originator who
asks about their deals that could not get done, to see if there
was a loan program available that could accommodate the
transaction and earn the Realtor a commission. It is better
(and easier) to set up a meeting with a new referral source
by asking them to discuss the deals they lost rather than
walking in with doughnuts and a rate sheet.
Regardless of the space in which you originate commercial
mortgages, there is probably a niche product (or products)
that can enhance your matrix and help you close more loans.
Some mortgage brokers are fearful of establishing new
relationships with lenders that offer niche products, given
they have no prior experience with them. Certainly, that can
be a cause for concern as you do not want to jeopardize a
referral source or client. There are no rewards, however, for
those who do not take risks.
The majority of lenders that offer niche programs are well-established in the marketplace. In addition, niche products
afford you options for deals that may not qualify for conventional loans because of a multitude of factors. This is not to
say that niche programs are offered only by nonbank lenders.
If you primarily originate multifamily loans, for example,
tax returns or historical income and expenses.
Some transactions through the government-sponsored
enterprises Fannie Mae and Freddie Mac also do not require
tax returns from the guarantor. Some conventional lenders
will allow you to close on a vacant property using market
rents to qualify. Other lenders will work with borrowers
who have, for example, an outstanding violation from a
city’s environmental control board or department of buildings,
or those with FICO scores as low as 620.
Depending on how aggressive you want to be in offering
niche programs, you can find loans with low minimum
debt-service-coverage ratio requirements; “low FICO”
products for borrowers with credit scores below 500;
stated-income and no-ratio loans that reduce or eliminate
income-verification requirements; and even owner-occupied
commercial real estate transactions that rely mainly on a
business' profit and loss statements.
All of the above are examples of niche loans, and the ability
to accommodate transactions that happen to meet any or
all of these factors equates to more closed loans. Although a
lender or mortgage broker may receive many referrals from
conventional sources, they often close more loans when
there are obstacles to conventional financing, and they are
able to provide viable solutions. That is the main benefit of
For the most part, the commercial real estate lending landscape has taken on a similar shape as the low-documentation
Alt-A market of a decade ago within the residential mortgage
space. Whether that is a good thing or a bad thing can
It is irrefutable, however, that these additional options
<< Niche continued from Page 74
afforded to commercial mortgage originators provide
tional hard money loans.
“Niche products afford
you options for deals that may
not qualify for conventional
loans because of a
multitude of factors.”