Silver Hill Funding (SHF) underwrites small balance commercial mortgages, a niche business that is gaining traction and popularity for developers across the country.
And as the economy returns to pre-housing crisis levels, SHF is opening its doors to service borrowers nationwide and looking to partner up with local banks.
SHF typically originates loans in the range of $250,000 to $1 million, although every situation is different, and that number could reach as high as $2 million if the borrower requests.
Michael Boggiano
“There has definitely been an uptick in the small balance commercial acquisitions marketplace,” said Michael Boggiano, senior vice president and national sales manager of SHF.
“We are a resource for both the residential and commercial brokers.”
The small balance lender is a division of Bayview Loan Servicing, which is a subsidiary of Bayview Asset Management, based out of Coral Gables, Florida. Prior to the housing bust in 2008, Bayview companies were very active in small balance commercial lending — anywhere from $100,000 to $1.5 million.
Through its online portal, SHF offers live-streamed webinar courses, which can be accessed on-demand by brokers at a later time. The webinars help introduce small balance commercial mortgages to residential brokers looking to transition into commercial. It also helps commercial brokers get a better understanding of the resources available to them.
SHF instead of Wall Street
“We feel that most of the financing that is available on the street is geared toward Wall Street and not main street, and we want to be a main street lender,” Boggiano said.
SHF is trying aligning itself with small balance operators who may not qualify for a bank loan, or who don’t want to go through a big bank for reporting requirements, covenants and more.
According to Boggiano, SHF is concerned with one thing: “If you make the payments, we allow you to operate the business,” he said.
But with this dedication to small balance lending comes the inevitable stories of why people aren’t working with banks.
Factors that contribute to a bank disqualifying a loan application could be the property type itself or something as simple as the borrower’s credit. “What we try to do is mitigate the strengths of the transaction against the weaknesses or exposure,” Boggiano said.
Boggiano spoke hypothetically about how seasoning on a property could deter a bank from lending, but SHF would be able to assess the property and see its value. He’s seen many investors re-entering the marketplace for commercial properties as the economy has turned around, but also recognizes that many are purchasing foreclosed and REO properties.
“We are a direct lender. It’s our capital that we are putting on the street,” he said. “We’re not brokering our transactions to other lenders… so we control the process.”
