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What to do When the Bank Turns Down Your Borrower’s Commercial Mortgage

Commercial Mortgage
Posted on 
December 2, 2014

It’s happened to every commercial mortgage broker:  The local bank or your primary traditional lender calls to let you know that the deal you submitted has been turned down. While setbacks of this nature are disappointing and frustrating, that might be all it is: a setback. Just because the bank or your primary lender can’t fund the mortgage doesn’t mean the deal is dead. Here’s what you need to do in order to close this loan:

Stay calm

If your borrower’s commercial mortgage application is turned down, don’t panic.  Banks have stricter guidelines for the commercial loans, so not every deal is going to make it through the underwriting process. However, there are other financing options for your borrower, such as non-conforming commercial lenders.

Ask for details

In order to avoid additional issues, you need to discuss why the loan was turned down. Ask your bank or primary lender why this loan wasn’t a good fit for them, and ask them to give you as much detail as possible. These details will help you to better understand the loan scenario and to find a lender who can help your borrower.

Research alternative lenders

Once you’ve learned why your commercial deal was turned down, it’s time to look for a lender who can close the loan. If the local bank or your primary lender couldn’t offer your borrower a mortgage because their scenario was too difficult, seek out lenders who handle unique or tough lending situations.

Talk to your borrower

Before you submit the loan anywhere else, call your borrower and let them know what happened as soon as possible. Explain the situation, as well as what your plans are moving forward. Be upfront and honest; this will inspire trust and confidence.

While it’s never easy to hear your deal has been turned down, it’s your responsibility as a commercial mortgage broker to find a funding solution for your borrower. When you receive the news from your lender, keep your cool and discuss why the deal was turned down. Make sure you look into an alternative commercial lender who specializes in unique commercial mortgages and talk with your borrower about moving forward. Turndowns don’t mean the end of a loan; they simply mean that a broker needs to get creative.

Has your borrower been turned down by a traditional lender? Call APEX at 800-262-2739 to learn how we can help.


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