Commercial Mortgage Bankers

June 12, 2008

Commercial mortgages are taken for property that is used for offices, industrial or mixed-use purposes. Commercial mortgage bankers are those who either fund their loans using their own money or those who service a mortgage for their investors. Commercial mortgage bankers who fund their own loan genuinely have money at risk and usually work in a much larger operational set up than a commercial mortgage broker.

There are two major types of commercial mortgage bankers namely the life insurance company correspondents and the CMBS (Commercial Mortgage Backed Securities) lender. Life insurance company correspondents are the most common type of commercial mortgage bankers. A life insurance company often chooses local commercial mortgage bankers in each of the major cities where it wishes to set up business. These commercial mortgage bankers will now act as the liaisons for the life insurance company. This is a most cost-effective alternative to setting up expensive loan offices nationwide.

583245 building block houses ~ photo by Tory Byrne

The other type of commercial mortgage bankers is the true CMBS (conduit) or Commercial Mortgage Backed Securities lender. This kind of commercial mortgage bankers will also fund mortgages with their own money, but they hold these mortgages in inventory after the mortgage is through. They keep the loans in inventory till a sufficient number of loans are collected to create a pool in order to make them secure.

As many commercial mortgage bankers enjoy exclusive territories and good business flow, many commercial mortgage brokers also term themselves as commercial mortgage bankers to take advantage of the trust bankers enjoy. They can act as commercial mortgage bankers since as a rule they close a deal in their own name and then instantly sell the loan off to a long-term buyer. This practice is known as table funding, and because the loan is sold off at once, the broker has no money at risk. Therefore, a commercial mortgage broker who has table funded a mortgage, cannot be said to be really “banking” the loan.

The gap separating the commercial mortgage bankers and commercial mortgage brokers has narrowed, making it essential for people to identify and make the right choice accordingly.

By Josh Riverside

Commercial Mortgages provides detailed information on Commercial Mortgages, Commercial Second Mortgages, Commercial Mortgage Lenders, Commercial Mortgage Brokers and more. Commercial Mortgages is affiliated with Commercial Mortgage Brokers Online.