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Question: Why does it take longer to fund a syndicated loan?

Answer: In a typical commercial mortgage banking transaction, a borrower goes to a mortgage broker; the mortgage broker brings the loan request to a mortgage banker; and the mortgage banker sells the loan to an institutional investor. However, in a syndicated commercial mortgage loan transaction, the mortgage banker sells one loan to multiple institutional investors by dividing the commercial mortgage loan into smaller individual mortgage shares that are easier sold to investors who are more willing to invest in a commercial real estate project that doesn't require them to put as much money into it. Syndication requires more time and effort than would be required of a mortgage banker in a typical commercial mortgage investment marketplace.

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Last modified: February 24, 2010