Oppenheimer & Co. and Amresco Capital Corp. have created a national commercial mortgage program that will fund nonrecourse loans referred by a national network of banks.
Oppenheimer, a New York investment bank that performs asset-liability management and fixed-income service for about 600 banks with $10 billion or less in assets, says the fledgling program has attracted a high level of interest from its clients.
"This is a ground-breaking program for banks," said Richard Luftig, vice president at Oppenheimer's commercial mortgage transactions desk. He said banks are eager to provide nonrecourse loans to their customers but reluctant to hold such loans on their books.
With a nonrecourse loan the lender must rely on cash flow from the real estate for repayment. Bankers say that when a project goes bad, they like to have a guarantee from the borrower that enables them to negotiate settlements outside bankruptcy court.
Banks would pay $9,500 a year to participate. The banks would receive a fee of one-half basis point for referring the loans.
Amresco, the unit of Dallas-based Amresco Inc. that will fund the loans, would receive an origination fee of 2 basis points. It may package the loans and sell them as securities.
Some bankers warned that the program could face pricing competition from life insurance companies that have recently regained their appetite for real estate loans.
"Conceptually it makes sense, but I think they are going to have a tough go of it because of the spreads they would have to charge," said William R. Nicholson, director of commercial real estate at Barnett Banks Inc.
Michael N. Maberry, president of Amresco Capital, said the program would focus on properties with an established tenant base and known operating history that were "a notch below" the quality that would attract the life insurance companies.
Some skeptics said a similar program for larger banks, Commac Inc., created by Nomura Securities and former Federal Deposit Insurance Corp. chairman William Seidman, failed to get off the ground. Unlike the new program, however, Commac wanted banks to make representations and warranties on the loans that would have put them at risk, one source said.
The ability to place some nonrecourse loans with Amresco could generate enough extra real estate activity for a small bank to justify the expense of a larger staff of commercial real estate specialists, said Joseph S. Tockarshewki, president, chairman, and chief executive at Poughkeepsie (N.Y.) Savings Bank. "It could be a useful tool as the real estate market begins to awaken from this past recession."