MONEY IN MATTRESSES

TexasLending.com prez Kevin Miller (anyone else humming the TexasLending.com jingle?) says regulations are crippling the mortgage industry for everyone except the big four banks, which are growing. He also notes that mortgage bankers and loan officers must now be licensed, unless they work at the big national banks. Since November 2008, he says the Federal Reserve purchased over $1.25 trillion in mortgage bonds (which is more than 10% of our GDP). He anticipates interest rates rising  this week, too, because of moves by the Fed. “If you raise an interest rate to 20% on a mortgage, you're ruining the affordability to people,” he says.

JPMorgan Chase CRE lending exec Jeff Arrington sees more properties coming to market, but the extreme discounts everyone’s been waiting on haven't come with. “Appraisals I’ve looked at in the last three to four months haven’t had as much deterioration in value as I saw at the end of last year,” he says. There is a competition for capital, in general, across the marketplace among lenders, equity and all the real estate players, he adds. Capital is going to be more expensive to get, and a track record of performance will be crucial to closing deals.

There probably isn’t a typical deal these days, says New York Life lending VP Tim Monroe, as every deal has to be weighed carefully on its own merits. Last year, the borrowers tended to be REITs and pension funds, he says, but whether they return this year is anyone’s guess. The keys to deals getting done: if they are underwritten well and identify risk issues; and strong credit support. Debt and pricing are becoming a critical issue once again this year, he adds. There's still a disconnect between bid and ask, but it seems to be narrowing because the cost of capital is coming down.