Banks Agree to Relax CRE Lending Rules

 Posted on December 00, 0000 in Commercial Real Estate

After the recession, banks tightened their lending requirements for all borrowers. Individuals in the commercial real estate market took the hardest hit. Several institutions stopped offering lending options to CRE investors altogether, and all remaining lenders were bound by federal regulations. Of particular concern was the requirement that all CRE transactions valued at $250,000 or higher had to be valued by an independent third-party. Thankfully, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) has recently relaxed this requirement. Learn why this matters and how it could give you the freedom you need to expand your investment portfolio in the following sections.

Relaxed Lending and Your Investment Portfolio

Lending requirements are designed to protect lenders, not investors. Likewise, when lending requirements are relaxed, it is the investors who stand to profit. Under the current changes, investors can expect to experience fewer delays when seeking funding for smaller investment properties (those valued at under $500,000), and they will no longer be required to pay for the third-party valuation that was previously imposed on such transactions. The benefit of this is obvious: lenders can save money on smaller investments, and they can obtain funding a little sooner, which can aid them in growing their portfolio at a faster rate.

Lending Requirements Are Still Stringent 

Despite the relaxation of lending requirements for CRE transactions, investors should still expect to experience possible delays and complications. Stringent rules and conditions do still exist, and there are still lenders who are unwilling to work within the CRE market. As such, investors are highly encouraged to seek legal counsel before speaking with a lender. Able to assist in performing due diligence and skilled at helping investors make smart choices that can expand their portfolios, a competent attorney can help ease the entire CRE real estate transaction process, from start to finish.

Contact Our Naperville Real Estate Attorneys

While the aid of an attorney is not required while navigating a commercial real estate transaction, the sheer amount of money involved often encourages investors to seek seasoned legal assistance. This is a smart choice, not just for the deal in question, but for the long-term. Seasoned and experienced, Lindell & Tessitore, P.C. has your best interest in mind, and we will protect your investment at every turn. Schedule your personalized consultation with our Naperville real estate attorneys to get started. Call 630-778-3818 today.

Source:

https://www.reuters.com/article/us-usa-fed-real-estate/more-u-s-real-estate-deals-can-go-ahead-without-appraisal-regulators-idUSKCN1H91MZ