"Tightening the Screws"
Federal Proposal May Increase Commercial Real Estate Lending Scrutiny
By Paul Rosta

Availability of capital has become a cliché in today's robust lending and development environment. Yet a proposed federal regulation in the pipeline raises concerns about how much real estate lending commercial banks will be doing in the future. Critics charge that the rules are unnecessary and overreaching and could restrict the volume of capital and slow development, especially for smaller banks and projects.

A battery of federal agencies is proposing to establish thresholds that banks can use to determine whether the proportion of real estate loan concentrations in their portfolios is too high to be prudent. Giant real estate lenders - BofA, Wachovia Corp. and KeyBank will be largely unaffected, bank executives said, because they typically do not have high concentrations of real estate lending relative to their other loans.

However, the rule will certainly affect smaller commercial lenders, potentially forcing customers to look elsewhere. "Inevitably, there will be some dampening of enthusiasm for commercial real estate loans from smaller banks," said E.J. Burke, executive vice president & head of KeyBank.

With banks tighening up and making it tougher to get commercial real estate financing, it makes better sense than ever to use an experienced mortgage broker to assist you in getting the financing you need at the most competitive terms available.

Washington Post (06/30/06) P. D1; Henderson, Nell Concerns about inflation prompted the Federal Reserve this week to implement the 17th straight quarter-point hike in the federal-funds rate since June 2004, boosting the benchmark rate to 5.25 percent from 5 percent. The move means higher costs for mortgage, home equity and credit-card borrowers, although savers should benefit. Though the central bank indicated that additional increases could be on the horizon, officials did not rule out holding the rate steady at its August meeting. "We expect them to hike in August, but it's not a done deal by any stretch," says Lehman Brothers Inc. chief U.S. economist Ethan Harris.

When you're in a hurry, you may not think you have time to listen. But one of the best ways to uncover new ideas or fresh approaches - and ultimately save yourself time and money - is to listen to the people around you.

In 2004 David Pottruck, the co-CEO of Charles Schwab-known as a listener without equal-advises "listening to hear rather than listening to answer." He describes it as an attitude more than a skill.

Example: American Airlines saved thousands of dollars by listening to one employee's idea. A flight attendant noticed that the passengers were not eating the olives in their salads when served. The airline listened and stopped buying olives. No one complained. And the airlines saved $40,000 year.

Adapted from How to Succeed in Business Without Working So Damn Hard, Robert J. Kriegel, Warner Books, www.twbookmark.com.

Cornerstone Commercial Mortgage specializes in commercial real estate finance. We act as mortgage consultants, focusing on providing the appropriate financing solutions for each client. We work with investors and developers on all product types from Land loans to permanent loans providing the best financing option available.

John P. Lloyd, President/Owner
Phone: (702) 385-2658
Cell: (702) 379-3468
Email: john.lloyd@cmlv.net