Some of my clients are telling me that a few of the commercial banks were behaving like the residential lenders – selling their loans off to investors and generally running very loose with their due diligence.
I never did much – if any – business with the really agressive commercial lenders because our philosophies with respect to values never meshed. I’d do an appraisal for one and then I’d never hear from them again, most likely because my value didn’t meet their “needs”. Everywhere else the lending officers were acutely aware that they would have to live with any non-performing loans, so they avoided making weak loans.
But yeah, there are a few commercial lenders who are at substantial risk, in part because of their due diligence criteria and in part because of their eagerness to write loans in markets with horrific price increases that far outpaced rent increases. There’s a few of these lenders who are already dealing with REOs and the commercial meltdown hasn’t really started in earnest yet.