BOULDER - Despite a global credit crisis, well-capitalized real estate investors with good credit and good projects can still borrow money, financial experts said during the Boulder Valley Real Estate Conference & Forecast.
The experts said the stabilization of the credit markets will be the first sign of a recovery.
"Don't watch the stock market; the importance here is to watch the credit markets," said Lou Barnes with Boulder West Financial Services.
Barnes said the U.S. government's $700 billion bailout plan is moving in the right direction, working to infuse capital into the credit markets.
Keith Dickelman, a commercial banking manager with Bank of the West, said credit standards are tightening, but that creates opportunity for good borrowers.
"With the uncertainty in the real estate industry, now is the perfect time to go out and establish yourself," Dickelman said. "But highly leveraged loans will be tough to get. Cash has always been king, but it's even more important during these times."
John Richert, a principal partner with Terrix Financial Corp., said the economy got caught up in "a perfect storm of leverage."
"Not only were the properties leveraged, and the borrowers were leveraged, but the lenders were leveraged as well," he said.
Brad Blackwell, an executive vice president and retail national sales manager with Wells Fargo Home Mortgage, said many people lost focus about investing in their homes.
"A home is always going to be a good investment," Blackwell said. "But it's a long-term investment and a place to live, it's not an investment to get rich quick."
Blackwell said lenders were also at fault by not following the basic principles of the industry - verifying a borrower's ability to repay the loan, willingness to repay the loan and commitment to repay the loan. No-stated income, subprime, and 0 percent down loans violated all those principles, he said.
Blackwell called for communities to institute financial literacy education into their schools.
BCBR Article By David Clucas December 2, 2008
Posts
