Concessions on Commercial Property

[Mejappz]

Fannie Mae says it suffered losses from commercial mortgage fraud​

Agency discloses investigation for first time, warns of risk

The agency acknowledged it did not independently verify information about borrowers provided by outside lenders. Instead, it relied on representations made by lenders about the loans they were buying.

Fannie Mae says it suffered losses from commercial mortgage fraud

Fannie Mae confirmed for the first time an ongoing investigation into schemes that may be far more pervasive than initially thought.

therealdeal.com

duped again...

Over the past year, the Department of Justice has targeted real estate investors for illegally inflating property valuations. By falsifying financial information, investors were able to obtain larger loans than they otherwise would have. These loans were made by private lenders and were often sold to Fannie Mae or Freddie Mac.

Sound familiar? Waive them all.

 

[djd09]

Over the past year, the Department of Justice has targeted real estate investors for illegally inflating property valuations. By falsifying financial information, investors were able to obtain larger loans than they otherwise would have. These loans were made by private lenders and were often sold to Fannie Mae or Freddie Mac.

Sound familiar? Waive them all.

i do notice that the commercial appraisers are and were not under the same scrutiny like the independent residential appraiser...waive them all except for east cleveland and marin city

 

[TerryRohrer]

It takes two to tango. What have been the consequences for the biased GSE employees?

 

[Mejappz]

It takes two to tango. What have been the consequences for the biased GSE employees?

They will probably get a promotion.

 

[George Hatch]

i do notice that the commercial appraisers are and were not under the same scrutiny like the independent residential appraiser...waive them all except for east cleveland and marin city

Every one of my reports get read for content by the actual decision makers, frequently by more than a couple people involved in those decisions. My reports don't get autoscanned or "3-min checklisted" by reviewers and clerks working at the high volume scale. Most of my lending clients are also subject to regular auditing by the banking regulators up to and including their individual review of the appraisal reports in those loan files.

Problems will still occur and lies will still get told to both the lenders and the appraisers (as I just explained) but it is possible for a lender to verify via the banking records how any income-oriented property's income is performing.

If Fannie/Freddie or any other secondary market participant are buying loans on major assets without looking deeply enough into the property performance or going through the appraisal with an open mind then that's an avoidable error on their part. That doesn't excuse any misconduct which might also be occurring at the lender or by the appraiser, but IRL lenders on both the residential and commercial sides of the lending game do have the means to avoid getting cheated.

 

[djd09]

facts are facts...the gse's got duped again

 

[Mejappz]

I smell a total and complete collapse on the commercial side. Take a look at Dr. Cole's study. Mama Fannie is in trouble. Waive waive, waive them all.

U.S. Banks’ Exposure to Risk from Commercial Real Estate Screener | FAU Business

This data analysis examines 157 of the largest banks in the United States to calculate their exposure to commercial real estate. We calculate each bank’s total commercial real estate exposure as a percentage of the bank’s total equity. Any ratio over 300% is viewed as excessive exposure to...

business.fau.edu

 

[djd09]

I smell a total and complete collapse on the commercial side. Take a look at Dr. Cole's study. Mama Fannie is in trouble. Waive waive, waive them all.

U.S. Banks’ Exposure to Risk from Commercial Real Estate Screener | FAU Business

This data analysis examines 157 of the largest banks in the United States to calculate their exposure to commercial real estate. We calculate each bank’s total commercial real estate exposure as a percentage of the bank’s total equity. Any ratio over 300% is viewed as excessive exposure to...

business.fau.edu

all they need to do is massage the cap rate...

 

[George Hatch]

The complicating factor about non-residential properties is that simply lowering the price doesn't generate a rental tenant or a buyer when businesses are not financially viable. Just ask Fernando about marketability in a difficult retail environment. A business has to make money in order to service the rents or the mortgage. If nobody is making money then nobody can pay the rent.

So an office building that's operating at 93% occupancy and strong rental rates in 2019 absolutely can become economically unviable if the vacancy rates for competing properties go up and the rents go down in 2024. That's not the same thing as saying the comps in 2019 didn't actually sell at those prices and weren't actually generating those rents at the time of sale.

I just appraised an older multi-family in the La Brea/Melrose vicinity in L.A. where the 2019 value was actually higher than the 2024 value because the comps are currently selling for less and that cap rates are more conservative. Not because the 2019 appraisal (performed by a different appraiser) was out of line in any way - it wasn't. Those sales did go off exactly as he reported and the cap rates actually were at 3% or thereabouts.