The credit union industry can thank their lucky stars that the NCUA didn't raise the 12.5% commercial loan cap (yet). Plenty of small and medium-sized banks loaded up on developer loans just as their big brothers scarfed up home mortgages during the housing bubble. But that's not to say that some credit union's didn't take the bait and jump into the "profitable" commercial loan ocean as well. Many more banks and maybe a few credit unions will likely end up in Davy Jones' Locker because they took the plunge.
The outlook: vacancies are rising causing rents to fall, and it is estimated that up to $300 billion in loans will mature this year; commercial loans are often written with a balloon note. Even if the loans are generating sufficient P&I payments, property values have fallen so much that the lender may not or cannot re-write the loans. As a result, according to The Kiplinger Letter, defaults will soar from about 1.6% in 2008 to 5%.
It is highly likely that a good number of your competitors are on the ropes. They are forced to charge more for loans, if they are lending at all. Do some homework; what are their weaknesses? Find out. No need to take unnecessary risk, but you may find that this is a perfect time to pick up some market share. Yes, you need to watch your expenses, but don't stop advertising. Just make sure that the advertising you are doing is effective. Demand that the people who you pay to do your advertising can quantify the expenditure.
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