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Special Reports
Commercial Lending
Declining Fixed Rate Program Introduced by Silver Hill
By Amilda Dymi
MIAMI -- Silver Hill Financial here is carving a unique niche for itself. The
national commercial real estate lender, whose specialty is residential-style small-balance commercial loans, is
promoting commercial lending business opportunities to broker and correspondent lender clients who normally operate
within the residential lending marketplace.
To best serve this residential-to-commercial market, Silver Hill Financial recently
introduced a unique loan option - the Declining Fixed Rate program. Moreover, Silver Hill executives say the new
and enhanced product is the first of its kind in the marketplace. This residential-style approach to commercial
lending provides financing for loans ranging from $100,000 and up to $ 1 million. It features a loan rate that
"drops 50 basis points every five years, up to 2.5% at the end of a 30-year term," company executives
said, regardless of what the interest rate will be at the time, if the customer is in good standing. It replaces
Silver Hill's current 15-, 20- and 30-year fixed-rate loans.
The company will start to aggressively promote the new program in 2006, which
according to Silver Hill managing director Joanna Schwartz, "challenges industry norms" opening new business
opportunity doors for brokers in times of a slowing mortgage market while providing another financing alternative
to borrowers. In a rising interest rate environment, she said, it also helps Silver Hill be more competitive with
banks and other private lenders and offers long-term benefits especially to customers who choose to hold their
loan to maturity.
"We have modeled our internal operations through residential lenders from
the perspective of how we process and underwrite our loans so it incorporates all the learning the company has
had over the past several years about how our borrowers perform," Ms. Schwartz said. "Now the model ...
gives borrowers much more credit for things that we care about."
A subsidiary of Bayview Financial, Silver Hill focuses on commercial real estate
loans. Its residential-style DFR program, however, provides loans on properties varying from multifamily, mixed-use,
office and retail options that may be purchase, refinance or cash-out refinance.
The program allows for up to 90% loan-to-value, with exclusive, high LTVs for
certain eligible property types, allowing for credit scores of 600 and higher for primary borrowers or primary
guarantors, on adjustable-rate mortgages with a six-month adjustable rate and two-, three-, or seven-year fixed
rates that are then adjustable, plus fully amortizing 15-year, 20-year and 30-year loans on all property types.
The biggest challenge in promoting DFR, Ms. Schwartz said, is educating brokers
and borrowers who are not familiar with the commercial lending market and tend to shy away from it. So the company
is providing broker-education seminars that demystify a marketplace that is not as complicated as many brokers
believe it is.
Following the launch of its DFR program at year-end 2005, Silver Hill said it
opened a new office in New York to "support company growth in the Northeast." Initially the new office
would support growing business in New York's five boroughs, Long Island and Westchester County. Going forward,
it will also serve broker clients based in New Jersey. The expansion, company executives said upon the opening,
was a direct response to increasing broker network demand in the area.
"Silver Hill continues to expand as more mortgage brokers discover how easy
it is to add commercial to their business with our residential style program," said Art Silberman, Silver
Hill vice president of regional sales and head of the New York office, in a company release.
The opening of the New York office was the last addition to Silver Hill's expansion
in 2005, which also included the opening of new regional offices in Boston, Chicago, Denver, Las Vegas and Austin,
Texas, as well as the opening of smaller satellite offices in other locations across the country.
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