SUBMITTING A SUBPRIME COMMERCIAL REAL ESTATE LOAN TO
BROWNSTONE MORTGAGE CAPITAL CORPORATION

If you are primarily a residential mortgage broker and would like to submit a subprime commercial real estate loan to us, please read over the following material.

Prime Commercial vs. Subprime Commercial.

As in residential lending, there are prime and subprime commercial RE loans.

The following categories help classify a Commercial RE loan as Prime or Subprime:

  1. The property; property type, use, zoning, age, size, & condition.
  2. The rental income of the property.
  3. The borrower’s financial condition: net worth, cash reserves, & credit.

Examples of Prime Commercial loans:

  1. The Sears Tower in Chicago.
  2. South Coast Plaza Shopping Mall in Orange County.
  3. An urban, office building with credit tenants.
  4. A neighborhood shopping center, anchored by one credit tenant.
  5. An urban commercial-retail, strip-center on a major commercial street.

Examples of Prime Commercial Lenders.

  1. Insurance companies.
  2. Wall Street conduits.
  3. Real Estate Investment Trusts [REIT].
  4. Large, National Commercial Banks.
  5. Small, Community Commercial Banks.
  6. Credit Unions.

Examples of Subprime Commercial Lenders.

  1. Private lenders (like Brownstone).
  2. A few Wall Street conduits.

The first question you need to answer as a Commercial Mortgage Broker: Is this a Prime or Subprime Loan Request?

As a Commercial Mortgage Broker, you might have a Subprime commercial loan when:

  1. The borrower tells you that his community bank turned him down.
  2. The borrower does not want to submit his tax returns and needs to go “No Doc” or “Stated Income Doc.”
  3. The borrower’s FICO score is below 620.
  4. The property is “owner-occupied" (the borrower operates his business at the property).
  5. The property is older.
  6. The condition of the property is poor.
  7. The zoning of the property and the use of the property do not match (ex: SFR on a commercial zoned lot).
  8. Excessive land value.
  9. The borrower has a low net worth.
  10. The borrower has no cash reserves.

Once you determine that the loan is Subprime, here are the basic steps to submitting a Subprime loan request to Brownstone.

Step #1: As in Residential Lending, your first task is to take a loan application (the standard 1003 will do). [If your client is a legal entity like a corporation, click on “Documentation Requirements for Legal Entity Borrowers” on our web site].

Step #2: Run the borrower’s credit report.

Step #3: Complete the Brownstone Mortgage Capital “Loan Submission Request Sheet.”

Step #4: Submit the loan package to Brownstone Mortgage Capital via e-mail or Trans-Box.