Real Estate Lending

Commercial banks offer many varieties of loans. Some main types are interim, bridge, and mezzanine financing. Interim loans are for completed commercial structures, while bridge loans are short term intermediary loans that can link to a permanent loan. Mezzanine financing is generally used for residential projects in urban and rural areas and financing for the acquisition or substantial rehabilitation of multifamily properties.

By now you've heard of the U.S. government's ugly stepchildren Freddie Mac and Fannie Mae and all the problems they caused in the summer of 2007 issuing mortgages to "subprime" borrowers with bad credit and low income. This upended the whole financial market and has subsequently rippled into commercial real estate lending. Many real estate projects have stalled or stopped completely due to the economic distress. As vacancy rates climb for commercial properties, the Urban Land Institute, a nonprofit education and research organization, predicts 2009 will be the worst year since 1992 for the commercial real estate market, which doesn't bode well for real estate lenders.

According to a February 2009 Federal Reserve survey of 51 domestic banks and 23 American offices of foreign banks, commercial real estate lending standards were tightened by 79 percent of domestic banks. That number dropped from the 87 percent of banks that reported making loans harder to get in the Fed's previous survey. It's too early to tell how the $700 billion bailout program enacted in October 2008 will impact banks and their lending practices, but lenders are hoping for the best.

Real estate loan officers are similar to commercial loan officers in that they employ their savvy sales skills to close deals with their clients, so their banks can make money on the interest. According to the U.S. Department of Labor, loan officers on average earned around $63,000, based on 2007 statistics.