This is a bank's comments on a commercial

[hastalavista]

Stephen-

Care to make a prediction on how the appraiser might respond? :new_smile-l:

And I think fair is an accurate description of a property in many cases. Last time I looked it up, it means "not terribly good, not terribly bad".

 

[Vernon Martin]

This illustrates another type of scam that isn't being talked about--the misrepresentations made by regulated financial institutions trying to securitize their commercial loans.

I saw it once happen when I was at Home Savings back in the 1990s. An apartment building in a high vacancy neighborhood of Indianapolis was represented as being in a low vacancy neighborhood, and the loan was sold to Wall Street. By the time I found about it, nothing could be done.

VM

 

[hastalavista]

Having said that we do appreciate the appraiser bringing out these issues in his draft report. We will address these violations, and instruct the client to remedy them as a condition to close. However, for securitization purposes, it is very important that we try to tone down any inflammatory language in third party reports. We appreciate your help in this regard.

(my bold)

I find this part most troubling.
While certainly worded in a professionally-resembling manner (and cordial), it is the same trash that is asked by residential mortgage brokers-
Do you have to mention all that? The lender wants you to change it to "average condition" and take out the other stuff, otherwise it will kill my deal!

 

[Non Sequitur]

The secondary market strikes again!

Welcome to our world.

 

[Carnivore]

Even so FIRREA requires we provide an "as is" value. While you could scope the issue away for "as proposed" it would be dificult "as is".

That was my first thought when I read your post. The parallels between commercial and residential work are interesting.

How old is this report? Seems odd something like that would pop up now!

 

[Riick]

Welcome CGs to to wonderful world of Lending.
Word has it that Commercial properties are seeing increasing vacancy rates, and the days of see-thru office buildings and strip shopping centers are on us once again.
-- So what did anyone expect with the ratios so VERY skewed.

 

[CBBoston]

The same large lender also is now pushing for the very low end of rents, high end of expenses, and low end of cap rates. Or even below. This is a 180 from two years ago. They said they didn't want to lend as much as would have been justified by a 75% LTV on our value. To me this is an underwriting issue and they just want to make us the bad guys. "Nothing we can do, the appraised value wasn't high enough." This is one of the things I hate about delivering point values either in an up or down market. Nobody knows what the value really is other than what someone actually pays for an asset. If you get together 10 potential buyers, you'll get 15 different estimates of value. :new_multi: I know I'm ranting but sometimes the game gets old.

 

[xm4yb7]

Welcome CGs to to wonderful world of Lending.

What world were we in before?

Word has it that Commercial properties are seeing increasing vacancy rates, and the days of see-thru office buildings and strip shopping centers are on us once again.

Most reports show that vacancy around here increased by 0.1% on average for most property types. I think calling it "the days of see-thru office buildings and strip shopping centers" might be a little extreme.

So what did anyone expect with the ratios so VERY skewed.

Not sure what you mean here.

The same large lender also is now pushing for the very low end of rents, high end of expenses, and low end of cap rates. Or even below.

I have noticed the same thing. It seems that some lenders are afraid to make any loans until the dust settles. It’s just easier to blame the appraiser.

 

[The Matrix]

faster cheaper, faster cheaper, omit information..what's next? Doesn't anyone want honesty anymore?

 

[Mike Kennedy]

http://appraisersforum.com/showthread.php?t=133952