Pub. 11 2021-2022 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S May • June 2021 21 uninsured loss to a third party, and it is frustrating when the settlement of a claim lowers the payout significantly. If the only goal is to remove tracking and force-placing (while providing high-level coverage), this policy will provide a high level of “sleep easy” protection for a lender and appease regulators. Blanket Mortgage Hazard: In contrast to Mortgage Impairment policies, Blanket Mortgage Hazard policies specifically eliminate tracking and force-placing insurance. A Blanket Mortgage Hazard policy is much simpler. Whenever an uninsured loss happens, the Blanket Mortgage Hazard policy acts as if the lender had force- placed that property from the date of lapse while allowing the lender to cease tracking and force-placing insurance. These policies are dual-interest: the lender does not need to foreclose on the property to get a claim paid, and land values do not reduce claim amounts on Blanket Mortgage Hazard policies. The Take-Away When comparing these policies, the main difference is that one policy requires foreclosure, while the other policy covers the lender without foreclosure. When a lender looks to transfer their risk of uninsured collateral loss to a third party, the speed of claims payment and settlement options are typically the last items discussed. Both policies protect against the uninsured loss, but the difference in the efficiency of payments is significant. Whenever I hear that a lender “already has a blanket policy,” often it is because they have a Blanket Mortgage Impairment policy. If no claims have been filed, that policy can be of great value. However, while claims are rare, community lenders protect their assets efficiently and effectively, and the specifically crafted Unitas Blanket Mortgage policy does just that. n Topic: Is a Relationship with Real Estate Capital Markets Advisors an Arrow in a Banker’s Quiver? T here may be a misnomer about the value of having a relationship with a solid real estate capital markets advisor. Some bankers view them as competitors. Knowing their role can make all the difference. Competent capital markets advisors map the lending landscape to build a database of all public and private lenders in the debt universe. These lenders include banks, credit unions, lifecos, government options, CMBS, private debt funds, family offices, pension funds, and hard money lenders. Lender product offerings constantly change, as do the operatives representing them. Having this up-to-date data from a trusted source is an invaluable resource for bankers and their clients. As the readers of this article are fully aware, banks cannot always make a loan. Over-exposure to a borrower, asset class, locale, or loan size are just a few of the reasons. Also, there are instances when a customer has a time or leverage issue that the bank cannot accommodate. If the banker can direct customers with these issues to a capital markets advisor who can provide options while keeping the client's accounts and treasury at the bank and refinancing the property at the end of the loan term, everyone wins. Here is an example of a win-win-win scenario. A banker sent us one of their clients who had been with their bank for over 30 years. The client had broken an obscure covenant, so the bank could not provide them with an $8.5 million loan they needed to acquire an office building. When we were introduced to them, per their purchase agreement, they had only nine days to close, or they would lose the property and a significant deposit. We have a relationship with a family office that provided the $8.5 million bridge loan at 80% loan-to- value, an 8.5% rate, a nine-month term, and non-recourse within the nine-day timeframe. The client was ecstatic. The bank looked like a hero and refinanced the bridge loan. This is a simple example of how bankers can provide financing options for their clients when they cannot provide a loan. Conversely, capital markets brokers have clients that become "bankable" and are happy to introduce them to bankers. There's so much real estate lending activity at this stage in the economic cycle that it makes good sense for bankers and capital markets advisors to collaborate. n Author contac t info: Creighton C. Bi ldstein, Pr inc ipal , Plat tPointe Capi tal , LLC, 303 - 589 - 4258, creighton@plat tpointe.com , plat tpointe.com.