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Special Reports
Commercial Lending
Silver Hill Financial Providing 97% LTVs to $1 Mil
By Brad Finkelstein
Seeing an opportunity in the market to provide financing for small business owners
and others who are owner-occupants of a commercial property, Silver Hill Financial LLC is now offering a 97% loan-to-value
program with loan limits up to $1 million.
Silver Hill managing director Joanna Schwartz said she has heard of some 100%
financing programs in the commercial business, but because they encumber other assets as part of the deal, it is
really not the case.
Moreover, Silver Hill brought its own 90% LTV product to the market in early 2005,
which she declared was "transformational" for the industry and helping the company's growth.
This program allows the owner to take cash out or have funds available to do things
like buy another property.
Among the product types loans will made on include mixed-use, office, retail,
warehouse and others. However, the 97% loan is not available for gas station properties, an asset class the company
recently started a lending program on.
Silver Hill's approach to commercial lending is modeled on the same practices
that most residential mortgage brokers are familiar with. However, it can look at the full financial picture of
the borrower, so it has the ability to underwrite to such traditional commercial guidelines as cash flow and debt
service coverage.
A variety of sources helped to create this product, including its customers, mortgage
brokers and sales staff.
Ms. Schwartz noted there was a need in the market for a product like this one,
but most importantly, there was an acceptable risk level for Silver Hill. The performance on owner-occupied properties
has been "really stellar" and therefore Silver Hill was comfortable offering the 3% down loan.
It offers terms of 15, 20 or 30 years and it is fully amortizing. There is even
a declining fixed-rate option, she said, where the rate drops by one-half of a point every five years, based on
the borrower's payment history.
In general, Silver Hill is seeing increased interest in commercial lending by
mortgage brokers as the problems in the subprime sector continue, Ms. Schwartz said.
There has been talk among individual brokers, especially when regulatory reform
efforts gain steam or high-cost mortgage laws are passed, about moving into the commercial side. Now there is a
"groundswell of excitement" out there, she said.
For example, the company recently conducted one of its Silver Sessions in McAllen,
Texas. The city is located in the Rio Grande Valley near the Mexican border and has a population of over 120,000.
But there were 78 people who attended that session, she said.
There are two ways mortgage brokers can work with Silver Hill. The first is the
referral program, where they pass the client on to the company and get a one-point commission. It was launched
in March. All the broker needs to do is call a toll-free number and give Silver Hill the information.
There is also the Alliance Program, which in concept is very similar to the frequent
flier programs offered by major airlines. There are tiered levels of membership and a number of benefits.
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