CONTENTS
Acknowlegments
Introduction
Chapter 1: An Introduction to Commercial Real Estate Loans
What Is a Commercial Mortgage?
"Mortgage” Defined
"Commercial” Defined
Types of Commercial Properties
Non-Income-Producing Properties
Income-Producing Properties
Single-Tenant Properties
Multitenant Properties
Types of Commercial Real Estate Lenders
Banks
Life Insurance Companies
Conduit Lenders
Agency Lenders
Credit Companies
Mortgage Bankers
Private Lenders
Commercial Mortgage Terms
Maturity Period
Amortization Period
Loan-to-Value Ratios
Interest Rates
Prepayment Penalty
Recourse vs. Nonrecourse Loans
Commercial Mortgage Underwriting
Sponsorship
Property Underwriting
Final Underwriting Analysis
Chapter 2: Preparing the Loan Request Package
Executive Summary
Purpose of Loan Request
Sources and Uses
Property Description and Location
Financial Summary
Borrower
Property Description
Location and Demographics
Property Economics
Financial Statements
Financial Analysis
Schedule of Income
Historical Cash Flow
Loan Analysis
Supporting Documents
Market and Submarket Data
Sponsorship
Chapter 3: Financial Strength and Creditworthiness
Net Worth and Liquidity
Assets
Non-Real Estate Assets
Real Estate Assets, Cash Equity, and Market Equity
Cost vs. Market Value
Pre-Funding Liquidity
Post-Funding Liquidity
Lender's Calculation of Net Worth and Pre-Funding and Post-Funding Liquidity
Credit Score and History
Five Adverse Conditions Unacceptable to a Commercial Lender
Personal Income and Cash Flow
Gross Income
Self-Employment Income
Net Cash Flow and Taxable Net Cash Flow from Rental Income
Cash Flow Statement
Banking and Credit References
Chapter 4: Real Estate Experience
Ownership and Management Experience
Ownership Experience
Management Experience
Chapter 5: Real Estate Assets
The REO Schedule
The REO Schedule and the Balance Sheet
Anatomy of an REO Schedule
Property Value Section
Property Name
Property Description
Property Address
Date of Acquisition
Original Cost of the Property
Name and Address of Lender
Loan Number
Ownership Percentage
Market Value of the Property
Balance of Mortgages
Total Equity
Net Ownership Equity
Cash Flow Section
Monthly Rental Income
Monthly Operating Expenses
Monthly Loan Payments
Monthly Cash Flow
Net Ownership Cash Flow
Chapter 6: Forms of Ownership
Borrowers and Borrowing Entities
Types of Borrowers and Borrowing Entities
Individual Ownership
Co-Tenancy and Joint Ownership
Partnerships
Limited Liability Companies
Corporations
Trusts
Index