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Thursday, August 28, 2008

Daily Observations - Prohibitive List

As the lending environment starts to adapt and adopt to the new credit and lending parameters we are seeing more and more lenders actually refusing to do certain types of businesses.

Each lender / bank is thoroughly looking at all their past transactions and trying to determine any negative patterns. For example if all of a sudden bank A has an excessive amount of work outs and foreclosures on escrow companies they may immediately determine that they do not want any more escrow companys. This actually happened to me, we had a deal in final underwriting and at the loan committee, one director / officer had a credit problem with an escrow company they approved and they therefore denied my deal for that only reason.

This pattern is very prevalent today. Instead of receiving rate sheets and propaganda every day I am now getting prohibitive lists. Just yesterday one of my newer lenders that I am working with were very happy to provide me with a list of deals they will never look at. I asked them if there were any extenuating circumstances that would allow the lender to look at a particular transaction, and the answer was flat no.

So my advice this evening is before you submit a biz loan to a lender check first with their growing prohibitive transaction list.

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