Wow, the news just keeps on coming. We pretty much saw the warning signs for some big news to hit with the second quarter coming to a close. However, 2 of the biggest names in the business closing shop doesn't bode well for the industry. Definitely shrinking the the funding sources who are now easily cherry picking loans.
Lehman Brothers Small Business Finance was a valuable option for many business owners needing to leverage cash or utilize a non bank lending program. Unfortunately, they have been mortally wounded by the sub prime mess and announced closing of the division. It's a loss that will hurt many.
The remaining national shops are not committed to growing and those who are have been growing far too fast to sustain. So they raise rates and reserve requirements, lower LTV's and refuse to lend in areas with declining values. And still have more business than they can handle.
Our local community banks are suffering as well. Residential commercial development has created strong earnings growth for a number of years and those loans are going south on them. Guarantors who could easily write checks and clear troubled loans find themselves with assets that cannot be sold. As an old time banker who personally witnessed the S&L crisis, I learned that one cannot eat net worth.
Now for the BRIGHT SIDE: Agents including commercial real estate agents) now have the opportunity to step in as real estate professionals and create an all around team that can assist their clients. My job and expectations are changing to accommodate the new borrowing era. The buy and sell mentality is now long gone even for the home owners. Holding investment property, earning good returns while exercising a tax income strategy that protects it all requires a professional. The meek, mild and newcomer need not apply. How do you maintain value on your home and investment property. Why should your investors care about a Schedule E. What's the difference between an bookkeeper and CPA. Does your CPA care about maintaining asset value? We can't advertise ourselves as being the end all answer but as professionals we can offer more than any other resource available. Be sure your clients know you are their most valuable resource.
Myself, along with our residential team are committed to this new era. What's more is that we have survived which wasn't the easiest thing to do for a mortgage company. If you are interested in creating a team in TN, GA or AL that meets the needs of your new residential market, give me a call. I can work almost anywhere in the nation with your commercial real estate clients so call or email me with any questions or social comment!
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