Mortgage experts split on if market is loosening

Mortgage insurers and lenders in some markets, including New Orleans, are beginning to relax their standards. "People are becoming more secure and confident in the way that they are underwriting their loans," says Richard Allen, with Standard Mortgage Corp. "They're making better decisions on their loans now." Over the past six to eight months, Allen says private mortgage insurance companies have lowered the minimum credit scores locally from 720 to 680, and given waivers to preferred lenders, allowing them to enter certain distressed markets. Despite the expanded guidelines, Allen says mortgage insurance companies have taken a bigger role in approving loans. "Over the last 10 years, the private mortgage insurance companies let the lenders approve loans first before going in," he says. "That’s reversed now. They want to see the files."

Kenny Hodges of Assurance Financial Group says he hasn't seen that many changes, since Baton Rouge was never really considered to be a distressed market, where home values were plunging. Post-Katrina New Orleans was considered to be distressed. "The only thing that has really changed for us in this market is that you have to verify income and assets," Hodges says. "It's very easy to get a loan." Hodges says the record low interest rates, along with federal tax credits for first-time homebuyers and the fact that it's a buyer's market makes it the right time to get a home, regardless of underwriting standards. "Houses are readily available," he says.—Timothy Boone

B.R. home prices drop

The price of a home in Baton Rouge fell by 1.3% in October when compared to the year before, according to First American CoreLogic’s Home Price Index. That’s better than the 3.1% decrease reported statewide and the 7.8% drop in the national index. The HPI continues to project a spring recovery in the U.S. housing market; by October 2010 Baton Rouge home prices are expected to be up by 2.35% and on the state level, a 2.5% increase is projected. California cities hard hit by the housing bust are expected to see the most significant increases, with San Francisco on tap for 5.7% price growth and Los Angeles projected to improve by 5%.

Growth Coalition getting ready for awards

The Baton Rouge Growth Coalition is getting ready to start accepting nominations for its 14th annual Good Growth Awards. Application forms will go out to growth coalition members in early January, and architects, builders and others who work in development are encouraged to enter projects through the organization's Web site growthcoalition.com. Hardy Swyers, executive director of the growth coalition, says nominations are due Feb. 15. The event will honor commercial and residential development projects that improved the Capital Region landscape in 2009. This year, Swyers says he would like to see more emphasis on affordable housing projects. "We want to open it up to a broader base than just the big, flashy projects," he says. "There have been some nice affordable housing projects done in the past year or so." The banquet is set for 6 p.m. March 18 at the Hilton Baton Rouge Capital Center.

Poll: Most don’t expect foreclosures to drop

Sixty-five percent of people who participated in a Real Estate Weekly poll say they don’t expect local foreclosures and delinquencies to drop in the upcoming year. Thirty-four percent of the people who took the online survey say the number of people losing their home and getting behind on mortgage payments will improve in 2010 and 1% are undecided. Nearly 100 people participated in the survey.

This week’s question: Are local mortgage insurers and lenders beginning to relax payment requirements?

Tom Cook: Baton Rouge Powder Coating expands

Oliver Property Investments, which owns Baton Rouge Powder Coatings, a metal coating-application company, which serves residential, commercial and industrial customers, purchased an office warehouse on Wooddale Boulevard for an expansion. They were located on South Choctaw Drive, but needed more space. Scot Guidry with Sealy & Falgoust Real Estate Company brokered the transaction. The 1.72-acre site was improved with two separate structures, a detached 2,066-square-foot office building and a metal office warehouse building containing 7,200 square feet. The sale took place last week for $292,500. This calculates to about $31.60 per square foot. According to Guidry, this was an excellent buy when you consider the fact the site has 1.72 acres that was stabilized and concrete paved.

-- An apartment complex located near the corner of La. Highways 42 and 44 in Prairieville has sold. Laura Dupree at Dupree Terrell & Company brokered the 8-unit complex. The sale took place last week for $565,000. The complex consists of 3-bedroom, 2-bath units that were built about 8 years ago. At $565,000, the price calculates to about $71,800 per unit. According to Dupree, the property was listed for $625,000 and sold within 30 days after receiving several offers for $565,000. The seller was James Rawlins, and the purchaser was KHC Properties, represented by Jill Savoy. The agent for KHC Properties was Anna Belle Lee at ReMax First of Ascension.

(Appraiser Tom Cook owns Cook Moore and Associates. Reach him at 293-7006 or TCook@cookmoore.com.)

Brian Andrews: A thaw in lending

Maybe it's just the time of year when children, mortgage brokers and appraisers believe in things they cannot see or prove, but I am beginning to believe that commercial real estate lending is going to rebound within our communities in 2010. Here is why:

Low cost of funds -- The Federal Reserve has kept funding costs low so that banks can rebuild capital levels devastated by credit losses. This situation cannot remain for much longer and I believe banks could be motivated to extend new credit in 2010 at rates that will exploit this profitability.

Liquidity in the banking system -- There is no question that many banks are flush with cash right now but just lack the will or the incentive to extend new credit until they perceive that credit conditions have improved. The new year will bring those improved conditions.

Credit losses will continue on existing loans -- There are still some identifiable weaknesses in the portfolios of banks and losses will still occur, negatively impacting capital positions. One way to replace the capital without governmental strings attached or diluted shareholder equity is to make new and profitable loans. Stated another way: they can earn their way back.

The return of the production budget: -- The goal for bankers in 2009 was to monitor and maintain credit quality, not to grow the portfolio. I have heard from several banks, both locally and those regional/national lenders who used to be active in this market that they are receiving new production goals for 2010.

The return of the conduit loan -- Please note that I am not seeing the return of the conduit loan for shopping centers, office buildings and industrial properties for smaller and mid-sized deals yet. What I am seeing is a thaw beginning where certain national banks are putting together long term facilities of $50 million to $100 million for single borrowers with large projects or large portfolios. These lenders are making large conduit-like loans and holding them on their balance sheets until a securitization execution is available. And they would not make these loans if they did not think securitization was a near-term possibility. If the large conduit market can make a comeback, the smaller market would not be far behind.

Again, this might be wishful thinking on my part since my line of business is helping borrowers find and properly structure commercial real estate loans, but I truly believe that the banks will open up in 2010. If Santa reads this column -- and I'm pretty sure he does -- maybe I'll get my wish.

(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Mortgage and he can be reached at brian.andrews@acmla.com.)

Real estate recap: Pelican State buys Piccadilly HQ for $3.5 million ... Coursey building sells for $2.435 million ... Historic downtown site changes hands

Moving to South Sherwood Forest: Pelican State Credit Union has closed on a previously announced purchase of the Piccadilly headquarters building. The credit union paid $3.5 million for the 42,000-square-foot building in a deal that was filed Thursday. In October, Pelican State announced plans to buy the building on South Sherwood Forest Boulevard and lease back 15,000 square feet to Piccadilly. Both firms will operate their headquarters out of the building. A Pelican State spokeswoman says the credit union will begin to move into the building within six months.

UCB sells property: A nearly 20,000-square-foot building on Coursey Boulevard behind United Community Bank has been sold for $2.435 million. Provco Holdings bought the building from UCB in a deal that closed last week. Plans are for Sparkhound, a local IT company, to move in after Jan. 1 and lease about 14,000 square feet, says Brian Dantin, an agent with Beau Box Commercial Real Estate, who represented the buyer. Brent Garrett and Grey Mullins, also with Beau Box, represented the sellers. The building had been vacant since last month, when Fluor Corporation moved into Perkins Rowe.

Downtown property sold for $1.265 million: A historic building on Main Street has been sold for $1.265 million. The 10,000-square-foot building and 25 parking spaces were sold by JMH Properties to 631 Main Street in a deal that was filed last week. Paul Burns of Burns & Co. represented the seller, while Chad Ortte of Donnie Jarreau Real Estate represented the buyer. The first floor of the building is currently occupied by Holden & Associates Architects. The group that bought the building also owns Unified Recovery Group, a downtown firm that specializes in cleanup after natural disasters.