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Windrider (Stubborn)
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Discussion Starter · #1 ·
We have an investor that is willing to buy a building for us and lease it to us secured by our lease of the building. His Bank asked for copies of our financial statements.....we complied.

He then told the investor that our financials were not strong enough to support the loan.

I called him up to discover what the problem is and in the midst of the conversation, he says: " If you were buying the building yourself and wanted a mortgage, we'd do it in a heartbeat, but we are wary of commercial investors."

So let me get this straight....we are paying the lease, the money is going to pay the loan and the loan is secured by the lease (If the investor defaults, the bank collects directly).....that's not OK. But if we were paying you directly, that would be OK.

When I said that to him....he got very quiet and sheepishly said....well, yes. He did not see the irony in the statement.

Arggghhhh:mad2: And people wonder why the economy is slow to recover. (Just venting, not looking for political commentary

Great way to end the week.

Len
 

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Ricardo Cabeza
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Had a friend years ago who had a nice car with accompanying high payment. Life changed and the payment became a burden. She was making the payment ok (had never missed one or been late), but just wanted some wiggle room. She wanted to refinance to cut the payment by half. They said her income wasn't high enough to get the new loan (even though it was evidently high enough to make the current payment). huh??
 

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Bacon!
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I'd just like to be able to refinance my house which is 50,000 upside down and stuck at 6.75%. Bank told us we'd have to skip 3 months of payments and then they'd talk to us. Ugh. :(

I wish there was some way to do it. Oh well :(.
 

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Pedal Master
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Len J said:
He then told the investor that our financials were not strong enough to support the loan.
As a former lender (long time ago), I'm GUESSING the banker doesn't have confidence that you can make the lease payments based on your financials.

If I understand correctly, the bank is putting up the cash so the investor can buy the building. In this economy, banks won't loan on speculative commercial real estate projects, so evidence of a hearty/profitable pre-leased tenant is required. Based on your account of the situation, it doesn't sound like the bank believes you will weather the current economic storm leaving the investor with a tenantless development and the bank with an empty building not likely to lease-up anytime soon.

Again, I'm just assuming this is the thought process at hand.
 

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Stumpcake!
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When Mom used to work for Wachovia I used to tease with this...."If you can't get a gig being God, become a banker." She used to get peeved with it but I think it still holds some validity.
 

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tconrady said:
When Mom used to work for Wachovia I used to tease with this...."If you can't get a gig being God, become a banker." She used to get peeved with it but I think it still holds some validity.

+ 1 :thumbsup:

or if you cant get a gig being God......become a cop.....most think they are God once they put the badge on :thumbsup: :thumbsup:
 

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Windrider (Stubborn)
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Discussion Starter · #8 ·
real stonie said:
As a former lender (long time ago), I'm GUESSING the banker doesn't have confidence that you can make the lease payments based on your financials.

If I understand correctly, the bank is putting up the cash so the investor can buy the building. In this economy, banks won't loan on speculative commercial real estate projects, so evidence of a hearty/profitable pre-leased tenant is required. Based on your account of the situation, it doesn't sound like the bank believes you will weather the current economic storm leaving the investor with a tenantless development and the bank with an empty building not likely to lease-up anytime soon.

Again, I'm just assuming this is the thought process at hand.
Nope.

Investor was putting up 35% cash and borrowing 65%. we would be doing the exact same thing if we bought. Our Financials would support us buying it ourselves and financing 65%, but they won't support us leasing....at basicially the same payment rate......d'uh. ???????

He specificially told me we'd get approval to buy ourselves.

It seems that anything with the word investor attached in the commercial market, sends bankers running for the hills.

Len
 

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banned from the museum
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Growing up I hung around with the son of a bank president. The BP knew my parents as well. We also did business with the bank he worked for. My parents, for whatever reason, decided to buy a car, and get a car loan. They went to their bank, and were denied credit because their credit score was too low. They basically had no credit history, because they had owned their home outright for over 15 years, had no credit cards, and never borrowed money.

After being denied the loan they were walking out of the bank, and ran into the president. They laughingly told him what had happened. He took my parents into his office, and called the loan officer into his office as well. He told the loan officer to go back to his office, and look up my parents' accounts. He did and came back with a sheepish look on his face. They had enough money to pay for the car about 20 times over, but the loan officer had never bothered to check. The bank president then proceeded to rip the loan officer a new one.

The bank has policy, and employees who feel like they aren't allowed to think for themselves.

My parents paid cash for the car.
 

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i dont know anything about these types of issues but couldnt you just buy it yourself and then deal with the investor ??
 

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Gronk SMASH!
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Len J said:
He specificially told me we'd get approval to buy ourselves.

It seems that anything with the word investor attached in the commercial market, sends bankers running for the hills.

Len
The only way this makes sense to me is if the bank only wants the risk if they are assured of the mortgagee being tied to the building and paying interest for many years. An investor is much more likely to sell the building (and tenant) for a profit after a short while, likely with another bank. So I understand why they'd be more likely to take the risk with your company as buyer than as tenant. Maybe that's what you're saying, though.
 

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CdaleNut said:
+ 1 :thumbsup:

or if you cant get a gig being God......become a cop.....most think they are God once they put the badge on :thumbsup: :thumbsup:
Cops are a lot easier to deal with than God, tho'... if it's a good one, you won't have any problems 'cept what you yourself create; and if it's a bad one, you just pretend to go along with whatever smoke he's blowing out his arse, then he leaves, an then you go back to doing whatever it was he didn't like, after allowing for the customary 5-10 minutes later 'swing by' or check-back.

But bad cops don't even care enough to do that, usually.

Bad bankers are far worse than any bad cop, tho'. They helped put us into the Great Recession™. CDOs, liar loans... all real bad stuff.

But of course, there's a lot of blame to go around, not least of which falls on greedy reg'lar folks 'investors' who were all too willing to go along with the liar loans and to be grossly overleveraged trying to get-rich-quick in real estate during the boom.

/ not tryin' to get this moved to PO
.
 

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Seat's not level
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A friend of mine is a retired bank president. He met his future wife... by turning her down for a loan. He met her when she was loan officer. She came in and he turned her down. Told her to get a loan from her parents or somewhere else. A few weeks later they were introduced by mutual friends and started dating. The rest is history.

Len, how about buying the building, the selling it back to the investor? Maybe he can get approval if you already own the building. I'm not sure it would make any sense, but that doesn't seem to be a requirement anyways.
 

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Steaming piles of opinion
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dontbetoomuchofa said:
Banker sounds like he worked for the government in his previous job. Same distorted logic.
You are closer than you think. The risk-based lending standards that the regulators make banks adhere to are responsible for a fair bit of this sort of nonsense.

Len's banker didn't appreciate the irony because he's a sales guy, not a finance or accounting guy. He just got told 'no', and so had to spin it how he could.

This isn't meant at all as a PO teaser, but the exact same folks that are yelling that the banks aren't lending are the same ones making it impossible for them to lend. That's the real irony.
 

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Windrider (Stubborn)
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Discussion Starter · #16 ·
jptaylorsg said:
The only way this makes sense to me is if the bank only wants the risk if they are assured of the mortgagee being tied to the building and paying interest for many years. An investor is much more likely to sell the building (and tenant) for a profit after a short while, likely with another bank. So I understand why they'd be more likely to take the risk with your company as buyer than as tenant. Maybe that's what you're saying, though.
Actually, no.......as I explored further, their underwriting standards will not allow them to underwrite commercial real estate investors, no matter how low risk the deal is. They've over reacted to the commercial bubble.

Len
 

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Windrider (Stubborn)
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Discussion Starter · #17 ·
danl1 said:
You are closer than you think. The risk-based lending standards that the regulators make banks adhere to are responsible for a fair bit of this sort of nonsense.

Len's banker didn't appreciate the irony because he's a sales guy, not a finance or accounting guy. He just got told 'no', and so had to spin it how he could.

This isn't meant at all as a PO teaser, but the exact same folks that are yelling that the banks aren't lending are the same ones making it impossible for them to lend. That's the real irony.
That's actually what I thought originally thought, but it's strictly this banks individual underwriting bias.

Len
 

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Windrider (Stubborn)
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Discussion Starter · #18 ·
Chain said:
A friend of mine is a retired bank president. He met his future wife... by turning her down for a loan. He met her when she was loan officer. She came in and he turned her down. Told her to get a loan from her parents or somewhere else. A few weeks later they were introduced by mutual friends and started dating. The rest is history.

Len, how about buying the building, the selling it back to the investor? Maybe he can get approval if you already own the building. I'm not sure it would make any sense, but that doesn't seem to be a requirement anyways.

That's too simple :mad2:

Actually, we may have to, but we were hoping to keep it simple.

We will see.

Len
 

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Done
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Len J said:
Actually, no.......as I explored further, their underwriting standards will not allow them to underwrite commercial real estate investors, no matter how low risk the deal is. They've over reacted to the commercial bubble.

Len
My guess is that they got burned, maybe have an MOU in place from their regulator, and changed their underwriting standards to make the examiners happy. Just a guess.
 
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