Small Balance Lending Evolves with Technology

Alison Williams Walker Dunlop Small Balance Lending

The small balance multifamily lending industry is antiquated, leaving thousands of prospective borrowers behind in a booming market. Multifamily property owners need access to fast, reliable quotes and a streamlined approach to financing.

The current industry practice of quoting from rate sheets does not present a holistic or dynamic picture for borrowers or lenders. Walker & Dunlop is offering an alternative approach with a new digital lending platform that utilizes machine learning to quickly provide customized quotes for small balance multifamily acquisition and refinance loans.

The rapid pace of lending means that borrowers need strategic partnerships with small balance loan experts that provide personalized customer experience backed by the data science capabilities to pull comparables, as well as online tools that can both streamline and inform processes.

Sponsored: As the #1 multifamily lender in the U.S., Walker & Dunlop is launching a digital lending platform that will deliver tailored quotes in minutes for acquisitions and refinances. The platform uses machine learning powered by millions of data points from Walker & Dunlop’s proprietary property database to offer clients accuracy, transparency and confidence from kickoff to closing.

The State of Small Balance Lending

Small multifamily properties account for roughly 85 percent of the apartment inventory in the United States. Small balance lending generated more than $80 billion of total origination volume in 2020, and Fannie Mae’s small multifamily loan originations grew 78 percent from 2018 to 2020 alone. Technology has contributed to this growth immensely. For example, property management software has made it easier for owners and operators to manage their buildings and grow their investments. However, the lending process has been behind the curve on utilizing technology to make the financing process smoother. But today, machine learning can process and analyze millions of data points very quickly.

The Difficulties of Disjointed Financing

Financing is deeply fragmented, with more than 3,000 different lending sources providing liquidity in the $1 million to $10 million range. This makes getting a loan time-consuming and challenging for investors, as they are forced to navigate an opaque, slow and complex process. The consumer sphere has addressed these issues, and it is time to utilize technology to improve the process for obtaining small balance multifamily loans.

There is a need to disrupt traditional multifamily financing with technology that can synthesize common data sources supported by local expertise, all while automating time-consuming tasks, such as filling out forms or searching through agency databases.

A New Way of Doing Business

This is where new, digital platform’s like Walker & Dunlop’s comes into play. To evolve the process of originating small balance loans, technologists and experts in deals large and small collaborated on features and functionality, with the goal of taking inefficiencies out of lending.

Property owners are provided with quotes within minutes. These quotes are pulled from Fannie Mae Small Loans and Freddie Mac Small Balance Loans for loans $7.5 million and under and the platform will soon add HUD and other proprietary capital sources for loans up to $10 million. This new platform offers the following advantages to clients:

  • Streamlined lending experience that automatically generates quotes in minutes utilizing predictive algorithms and property cash flows
  • Interest rate and property value calculations using proprietary data on real-time rents, expenses and sales comparables
  • Greater certainty of loan terms and transparency from quote to close
  • A dedicated team specialized by product and geography to guide clients through the process
  • Superior product offerings, including non-recourse loans and no tax return or bank account control requirements

Clients deserve a better lending experience. That’s why we’re building the most advanced technology enabled platform to serve the small multifamily loan space.

 By Alison Williams, senior vice president & chief production officer, Walker & Dunlop. Walker & Dunlop is a content partner of REBusinessOnline. For more articles from and news about Walker & Dunlop, click here.

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Content Partners
‣ Arbor Realty Trust
‣ Bohler
‣ Lee & Associates
‣ Lument
‣ NAI Global
‣ Northmarq
‣ Walker & Dunlop

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