Here’s the low down on the current financial crisis. 

Effectively, the entire consumer and business lending market is now in the hands of the banking industry. No more investment banks or investor funds looking for higher yields (thanks to the Lehman Brothers failure).

Our latest survey of lenders and banks indicated that all are as busy as they want to be. The majority are cutting back personnel at the very moment that our economy needs them most.

Treasury Secretary Paulson called the 9 largest banks to the table because they hold 50% of the nations bank deposits. He needed them to show the Feds are serious about providing capital to any bank that simply asks for the money. It’s the capital to lend to their communities.  Banks have been reluctant to ask Big Daddy for money.  Cash is not the problem for banks. It is FEAR.

Currently:

Not everybody who wants to borrow will be approved. In fact, many will not qualify in this new age. But money is the grease that makes our world go round. Unless you win the Lottery, households do not create enough spending power with the stagnant payrolls we have seen in the past decade. So we borrow because our homes and 401K's HAD more value than our debt.

Investors and business owners should expect low leverage financing for the next couple of years. Typically 65% LTV for most small business owners should be expected. They will need a lot of tax breaks to get by.

I think we will see some form of direct government loan programs in the near future as home lending will lack much leverage to provide much stimulus. Home buyers and home owners with good credit will need a government held second mortgage in some form to help purchase and refinance loans.

SBA will need to be reformed and it should be done sooner rather than later.

The Multifamily Investment market has easily outperformed most all other real estate sectors.  We expect that many of our financing programs will be back.  It's still the highest leverage at 80% LTV.

The Great Depression didn’t happen because of the stock market failure or lack of a government response. It happened because banks were failing and that fear caused the banks to stop lending. Businesses then failed and the rest was history.

This isn't about the subprime borrower any more. It's about you and me.

___________________________