CMBS conduit loans were created to offer a standardized commercial loan. From 1992 to 1998, CMBS loans had become standard for those seeking loans on income-producing properties. In 1998, the market suffered a meltdown. Credit was difficult to obtain and CMBS prices were destroyed. However, the market recovered in 2000 and so did the issuance of CMBS loans. The CMBS market died again in 2008, but restarted in 2011 and is extremely active now.
If you are interested in obtaining a commercial loan, you need to act now. The market for CMBS conduit loans is active now, and you can benefit from the standardization of these loans if you apply today. If you are interested in CMBS conduit loans, you will need to follow these five steps:
1. Find out if the property qualifies for a CMBS conduit loan
The first thing you will need to do if you wish to originate a CMBS conduit loan is find out if the property is eligible for this type of loan. In order to find out if an income-producing property that is an asset type qualifies for a CMBS conduit loan, you should speak to one of our CMBS conduit loan experts. Some information you will want to prepare so that we can help you find out if the property is eligible for this loan includes:
- The address of the potential property
- Photos of the property if available
- Are you purchasing a property or refinancing?
- Potential loan amount
- Summary of your annual cash flow
- Rent roll
- Information regarding the current property owner
- Disclosure of any issues the property has
2. Put together a property checklist and determine maximum potential loan
If your potential property is eligible for a CMBS conduit loan, the next step in the process will be to complete a short-form diligence checklist. This list should be sent to you by the sponsor.
A short-form diligence checklist requests information such as:
- Property rent roll
- Income and expense statements
- Ownership structure
- Property cost
- Existing debt information
- Any credit issues the sponsor may have
This information is used to size the loan, which means determining the maximum potential loan amount and value of the property.
3. Talk to the loan sponsor
If the loan sizes at an amount that the sponsor is comfortable with and no problems arise while going through the sponsor diligence checklist, the next step is to inform the sponsor. A form loan application will be provided to the sponsor so that he or she can determine if there are any concerns with the CMBS conduit loan. Going through this process helps make sure you don’t waste credit approval resources when issues could still come up that kill the deal.
Some problems that can arise during this time include:
- Pre-payment penalty
- Cash management
- Additional transaction costs
4. Get the loaned approved and obtain a loan application
Once the sponsor agrees to the terms of your CMBS conduit loan application, you will move on to the last step of the process. Your loan will be submitted for credit approval. If it is approved, a loan application will be issued to you. It will include all the terms you and your sponsor agreed to.
5. Finalizing and closing your CMBS conduit loan
Before your loan application can be executed, there is one final step. This is when two new checklists will be issued to you. One is the property-sponsor diligence and the other is the legal/closing checklist. It is important that you speak to your finance expert during this time. Typically, this process involves a meeting or conference call with your sponsor, lender, borrower’s counsel, lender’s counsel and other third parties. These third parties will want to monitor documentation deliveries.
The loan will close once all checklists are complete. This process, from loan application acceptance to closing, will take about 45 days. During this time, your loan expert will be available to answer any questions you have.
We can help you obtain a CMBS conduit loan
If you are seeking a CMBS conduit loan, you need to speak to our CMBS conduit loan experts immediately. We have been successfully helping our clients apply for CMBS conduit loans for many years, and we can help you today. Our loan experts can guide you through the complicated CMBS conduit loan process so that you can successfully obtain a loan for a sufficient amount.
Call us today at 949-439-1423 so that we can being the CMBS conduit loan process immediately.