I suspect that most CRE loans do not have guarantors behind them. In most cases, the principal source of repayment is the property’s cash flow and the secondary source is liquidation of the collateral. And unfortunately most banks leave it at the primary and secondary sources of repayment (which are required by regulation).
There are plenty of banks, however, that do require guarantor support (that is, an unlimited personal guarantee from the guarantors) as a tertiary source of repayment. The two banks of which I’m a director make very few CRE loans without unlimited guarantor support. The only loans that we’d consider waiving that requirement would be cases in which the LTV was less than 60% and/or the borrower held high deposit balances with the bank, and even then it would be unusual.
In my view, underwriting CRE loans without guarantor support is unsound. But that’s a minority view… and one reason why we are in the mess we’re in.
