* Constraints on commercial real estate lending eased during the first half of 2010, a trend that should continue as more lenders re-enter the securitization market and life insurance companies pursue a broader range of deals. Unlike a year ago, financing has become available for properties over $10 million, and some lenders have re-engaged higher-quality, lower-risk transactions in noncore markets. In addition to greater availability of financing across property types, price ranges and markets, lenders also have increased loan-to-values (LTVs) on new loans by an average of 5 percent from last year. Despite these positive developments, potential borrowers continue to face tight underwriting standards and stringent lender requirements compared to historical standards. * While commercial mortgage originations during the first quarter remained depressed relative to figures reported from 2005 to 2007, conduits and life insurance companies drove up activity 12 percent from last year. During the first half of 2010, U.S. CMBS issuance reached $2.4 billion, approaching the 2009 total of $3 billion but still just a fraction of the $197 billion annual average reported from 2005 to 2007. Even when viewed against a less frothy period, such as 2000 to 2003, activity in the first half still pales by comparison. Recent CMBS issuance included multiple-borrower deals with subordinate tranches, a far cry from the ultra-safe, single-borrower transactions completed late last year, generating optimism the sector will soon offer increased liquidity. * New CMBS loans price in the 6.0 percent to 6.5 percent range for five-year mortgages, with lenders targeting deals of $10 million or more. While these interest rates may be at the higher end of the spectrum, CMBS borrowers can often negotiate 30-year repayment schedules versus an average of 25 years for life insurance companies, offsetting the impact of interest rates on monthly payments. In addition, LTVs for CMBS loans can push into

The House-passed version of the bill would have required people to register as mortgage originators if, more than once over a three-year period, they finance a sale of property they own. The provision was written into the bill out of concern that unscrupulous businesses would try to get around new tough lending rules by financing real estate transactions themselves. But this week, Sen. Christopher Dodd (D., Conn.) and Rep. Barney Frank (D., Mass.), who are the lead House and Senate negotiators working to finish the financial-overhaul legislation, agreed to relax the limitation on seller financing to three properties in one year.

Now let’s just hope the Senate doesn’t screw it up!

Hi Susan, Thank you very much for the great information on portfolio loans. I can learn a lot from you. I meet lots of investors but none of them talk about portfolio loans. If you don’t mind, I have some questions. Do I need good FICO score to qualify for this loan? Do I need to have reserve funds? Do I need to have 10, 20, 30 percent down? Do they need collateral? How long should LLC or Corporation need to be seasoned? Thanks, Alvin

Hi Alvin, Thanks for the note.  No one talks much about portfolio loans because no one really understands them.  Except me.  Portfolio lenders will look at the underlying collateral which is the residential or commercial property you want to finance to answer most of

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