Commercial Realtors Commercial Realtors The Next Big The Next Big OpportunityOpportunityPresented by Christopher PerezPresented by Christopher Perez

Sensible Lending Solutions, IncSensible Lending Solutions, Inc

The Real 2012 The Real 2012

Did the ancient Mayans have it right? Maybe. Did the ancient Mayans have it right? Maybe.

The FactsThe Facts We are in a depressed economy We are in a depressed economy Property Values are at all time lowsProperty Values are at all time lows The Banks are failing The Banks are failing An unprecedented amount of commercial mortgage An unprecedented amount of commercial mortgage

balloons are coming due. balloons are coming due.

The EconomyThe Economy

Currently (2011) the economy is growing but not robustly and Currently (2011) the economy is growing but not robustly and there is still weakness in the elements of business there is still weakness in the elements of business investment. Gross Private Investment is still only 79 percent investment. Gross Private Investment is still only 79 percent of what it was in the first quarter of 2006. Investment in of what it was in the first quarter of 2006. Investment in inventory which was fueling the recovery dropped to a inventory which was fueling the recovery dropped to a negligible level in the fourth quarter of 2010. It has returned negligible level in the fourth quarter of 2010. It has returned to significant levels in the first quarter of 2011 but not to the to significant levels in the first quarter of 2011 but not to the levels it reached in the second and third quarters of 2010. The levels it reached in the second and third quarters of 2010. The Administration can very easily offset everything that it does Administration can very easily offset everything that it does to stimulate the growth of the economy by creating to stimulate the growth of the economy by creating uncertainty about its future actions and policies. Uncertainty uncertainty about its future actions and policies. Uncertainty about present and future government policies strongly about present and future government policies strongly discourages investment in plant and equipment.discourages investment in plant and equipment.

Commercial Property ValuesCommercial Property Values

U.S. commercial property prices fell to a post-recession low U.S. commercial property prices fell to a post-recession low in March as sales of financially distressed assets weighed on in March as sales of financially distressed assets weighed on the market, according to Moody’s Investors Service.the market, according to Moody’s Investors Service.

The Moody’s/REAL Commercial Property Price Index dropped The Moody’s/REAL Commercial Property Price Index dropped 4.2 percent from February and is now 47 percent below the 4.2 percent from February and is now 47 percent below the peak of October 2007, Moody’s said in a statement today.peak of October 2007, Moody’s said in a statement today.

The national index has fallen for four straight months as The national index has fallen for four straight months as sales of distressed properties hurt real estate values. The sales of distressed properties hurt real estate values. The index “continues to bounce along the bottom as a large share index “continues to bounce along the bottom as a large share of distressed transactions preclude a meaningful recovery of of distressed transactions preclude a meaningful recovery of overall market prices,” Tad Philipp, Moody’s director of overall market prices,” Tad Philipp, Moody’s director of commercial real estate research, said in the statement. commercial real estate research, said in the statement. “Indeed, the post-peak low in price has been reached in the “Indeed, the post-peak low in price has been reached in the same period as a post-peak high in distressed transactions same period as a post-peak high in distressed transactions has been recorded.”has been recorded.”

The State Of BanksThe State Of Banks

"Elizabeth Warren, chair of the Feds TARP, Troubled "Elizabeth Warren, chair of the Feds TARP, Troubled Assets Relief Program, oversight panel suspects Assets Relief Program, oversight panel suspects half half of all commercial mortgages will be underwater by of all commercial mortgages will be underwater by the end of 2010-11.the end of 2010-11. The kick though is that The kick though is that commercial real estate loans are mostly held by mid-commercial real estate loans are mostly held by mid-sized banks, not the international powerhouses. It is sized banks, not the international powerhouses. It is estimated that 2,988 of such banks are endangered by estimated that 2,988 of such banks are endangered by commercial loans. In all likelihood there could be as commercial loans. In all likelihood there could be as many as 200 bank failures in 2010-11 (there were 140 many as 200 bank failures in 2010-11 (there were 140

in 2009). 23 banks were closed in April 2010 alone."in 2009). 23 banks were closed in April 2010 alone."

Commercial BalloonsCommercial Balloons

Of particular concern, says Jon D. Greenlee, associate director at Of particular concern, says Jon D. Greenlee, associate director at the Division of Banking Supervision and Regulation in the Division of Banking Supervision and Regulation in congressional congressional testimony on July 9 and on July 9 and again on Nov. 2 “Almost on Nov. 2 “Almost $500 billion of commercial real estate loans will mature during $500 billion of commercial real estate loans will mature during each of the next few years. In addition to losses caused by each of the next few years. In addition to losses caused by declining property cash flows and deteriorating conditions for declining property cash flows and deteriorating conditions for construction loans, losses will also be boosted by the depreciating construction loans, losses will also be boosted by the depreciating collateral value underlying those maturing loans. The losses will collateral value underlying those maturing loans. The losses will place continued pressure on banks' earnings, especially those of place continued pressure on banks' earnings, especially those of smaller regional and community banks that have high smaller regional and community banks that have high concentrations of CRE loans.” concentrations of CRE loans.”

What this means is that over a trillion dollars in commercial loans What this means is that over a trillion dollars in commercial loans will balloon in the next 3 years. will balloon in the next 3 years.

The Perfect Storm & The PlanThe Perfect Storm & The Plan

So, should we all invest in bunkers? Is it all So, should we all invest in bunkers? Is it all gloom and doom? The end of the world? The gloom and doom? The end of the world? The short answer is NO. We are clearly in a time of short answer is NO. We are clearly in a time of economic change, but opportunity and lending economic change, but opportunity and lending are the key words of the day. The light at the are the key words of the day. The light at the end of the tunnel is new lending relationships end of the tunnel is new lending relationships and non bank programs. and non bank programs.

Alternative Lending Alternative Lending TodayToday

SBASBA

The The Small Business AdministrationSmall Business Administration ( (SBASBA) is a ) is a United States government agency that provides support to  agency that provides support to entrepreneurs and entrepreneurs and small businesses. The mission of the Small . The mission of the Small Business Administration is "to maintain and strengthen the Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of small businesses and by assisting in the economic recovery of communities after disasters." The agency's activities are often communities after disasters." The agency's activities are often summarized as the "3 Cs" of capital, contracts and counseling summarized as the "3 Cs" of capital, contracts and counseling

These loans are very difficult, time consuming, and underwritten These loans are very difficult, time consuming, and underwritten to almost the same stringent standards of the banks. to almost the same stringent standards of the banks.

Stated Income Stated Income

A A stated income loanstated income loan is a mortgage where the lender does not  is a mortgage where the lender does not verify the borrower's income by looking at their pay stubs, verify the borrower's income by looking at their pay stubs, W-2 forms, income tax returns, or other records. Instead, borrowers  forms, income tax returns, or other records. Instead, borrowers are simply asked to state their income, and taken at their word.  In are simply asked to state their income, and taken at their word.  In commercial, stated means losses on the tax returns are commercial, stated means losses on the tax returns are acceptable as long a the borrowers global picture is acceptable.acceptable as long a the borrowers global picture is acceptable.

These loans are intended for self-employed borrowers, or other These loans are intended for self-employed borrowers, or other borrowers who might have difficulty documenting their income.borrowers who might have difficulty documenting their income.

Stated income loans fill a gap of situations which normal loan Stated income loans fill a gap of situations which normal loan standards would not approve.  standards would not approve. 

99.9% of Stated Lenders are now gone. 99.9% of Stated Lenders are now gone.

Hard Money Hard Money

A hard money loan is a specific type of A hard money loan is a specific type of asset-based loan  financing through which a borrower receives funds secured by the value of a  through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or property loans and are almost never issued by a commercial bank or other deposit institution. other deposit institution.

Many hard money mortgages are made by private investors, generally Many hard money mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral important, as the loan is secured by the value of the collateral property.[1] Typically, the biggest loan one can expect would be property.[1] Typically, the biggest loan one can expect would be between 65% and 70% of the property value. That is, if the property is between 65% and 70% of the property value. That is, if the property is worth $100,000, the lender would advance $65,000–70,000 against it. worth $100,000, the lender would advance $65,000–70,000 against it. This low LTV (loan to value) provides added security for the lender, in This low LTV (loan to value) provides added security for the lender, in case the borrower does not pay and they have to foreclose on the case the borrower does not pay and they have to foreclose on the property.property.

This type of funding may be hard to find and is often times only a This type of funding may be hard to find and is often times only a temporary solution. temporary solution.

Commercial RealtorsCommercial Realtors& &

Sensible Lending Solutions, Inc.Sensible Lending Solutions, Inc.

Through our partnership Commercial Real Estate Agents will Through our partnership Commercial Real Estate Agents will be able to offer many more financing options to potential be able to offer many more financing options to potential buyers.buyers.

Sensible Lending Solutions offers a wide array of loan Sensible Lending Solutions offers a wide array of loan products from full document, to stated (representing the only products from full document, to stated (representing the only stated lender in the country), and access to hard money and stated lender in the country), and access to hard money and bridge loans. bridge loans.

For more information please contact:For more information please contact:

Christopher Perez 888.730.3811 ext. 6109 Christopher Perez 888.730.3811 ext. 6109