Mortgage Banking

Making sense of commercial real estate finance.

Oil hits $127

Posted by Jordan Crouch on May 19, 2008

  • ECONOMIC NEWS: Recession predictions are tapering as some reports show signs of life in the economy; oil continues to set records highs (now at $127); Microsoft is still making noise about a Yahoo deal; GE is selling off appliance division; global food prices continue to rise; watch for the jobless claims report coming out this week.

  • LENDING MARKET: Lenders that were out of the market a month ago are now tentatively back lending again. There is not one lender out there that is lending on all types of real estate with the best terms. There are several competitive lenders lending on a particular sector of commercial real estate. Spreads are staying in the 250-300 range for most life insurance companies. Rates are moving because of the rising yield on the ten year Treasury bill (up 50 basis points in the last two months).

  • FINANCE TERM OF THE WEEK: Material Adverse Change (MAC Clause) A clause that gives the lender the right to terminate or renegotiate the loan prior to closing, if there is a major change in the market that will hurt the lender. Examples are the recent sub-prime meltdown, the 1998 Russian Ruble Crisis, or the 9/11 terrorist attack.

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