Commercial real estate investors in California may want to learn about recent warnings issued by U.S. regulators. The regulators stated that they will be paying particular attention to commercial real estate lending in the country in this next year due to concerns about looser lending standards.
Reportedly, regulators are concerned that lenders who have eased up their lending standards for commercial real estate may lead to problems for the U.S. economy as well as for banks. The regulators are worried about some lenders that reportedly are failing to monitor market conditions appropriately and also giving numerous additional exceptions in order to underwrite policies.
The regulators stated that during 2016, they will focus on banks that have had a substantial increase in their commercial real estate loan business. Others, which operate in risky commercial real estate markets or which have plans to increase the amount of their lending, will also be closely watched. Federal agencies may ask specific lenders to raise more capital or tighten their standards, among other corrective measures. The regulatory agencies also outlined things banks can do to better reduce the risks.
The commercial real estate market has experienced significant growth in the last few years. With the demand high, prices have soared. By focusing on tightening lending standards, regulators are trying to prevent a commercial real estate bubble from occurring. Commercial real estate investors may want to consult with a business and commercial law attorney prior to investing in a particular property. An attorney may help to analyze the property, the market, the property's intended use and zoning laws. They may then advise their clients on whether the targeted property is a potentially sound investment. In the event it is, an attorney might help their client with securing loans and negotiating all parts of the transaction through to its completion.