Commercial Mortgage Brokers: directory of firms

A residential lender underwrites you. A commercial lender underwrites the building first and you second. The central figure is the property's net operating income measured against the proposed debt service, and the lender will rebuild that income itself: market rents rather than your pro forma, a vacancy allowance, a management fee whether or not you pay one, and a reserve for replacing the roof and the parking lot.

Terms look different too. Amortisation often runs longer than the term, so the loan balloons and has to be refinanced or sold out of. Recourse is negotiated rather than assumed, and even a non-recourse loan carries carve-outs for fraud, waste and unpermitted transfers. Prepayment is rarely free: expect a step-down penalty, a lockout period, yield maintenance, or defeasance on a securitised loan.

A broker builds a package — rent roll, trailing operating statements, leases, a schedule of real estate owned, personal financial statements — and takes it to lenders. What comes back is a term sheet or letter of intent: proceeds, rate and index, term, amortisation, recourse, prepayment, reserves and conditions. It is not a commitment, and the deposit that goes with it usually funds the reports.

Then come third-party reports, and they set the timeline. An appraisal establishes value and often income. A Phase I environmental site assessment looks for contamination history, with a Phase II if it finds something. A property condition assessment prices deferred maintenance, and a survey and zoning report confirm the building is legal where it stands. Title, entity documents and estoppel certificates from tenants follow. Most deals slip because a report comes back with a surprise, not because the lender changed its mind.

There is no single federal licence for arranging a commercial mortgage. Several states require a mortgage broker or lender licence that covers commercial activity, others require a real estate broker licence because the loan is secured by real property, and others regulate nothing. Ask which licence the firm holds and in which state, then verify it with that state's regulator rather than taking the answer on trust.

Where a broker also touches residential lending, they will appear in NMLS Consumer Access, and that record is worth reading even for a commercial deal. Beyond licensing, ask for three closed transactions of similar size and property type in the last two years, and for the name of the lender on each. A broker who cannot name the lenders they placed deals with has not placed many.

Regulation Z does not reach credit extended primarily for a business, commercial or agricultural purpose, nor credit extended to anyone other than a natural person. That is the legal reason your commercial file has no Loan Estimate and no mandatory review period, and it is why the paperwork arrives in whatever format the lender prefers.

State law fills part of the gap at the smaller end. California requires providers of commercial financing to give small businesses standardised disclosures including an annual percentage rate, in force since December 2022. New York requires similar disclosures on commercial financing of up to 2,500,000 US dollars. Those regimes are aimed at working capital products more than at permanent real estate debt, but they can catch a small bridge or business-purpose loan, and a broker who has never heard of them is not following the rules that govern their own market.