LGIS Group (LGIS) announced today the first ever official availability of commercial property loan insurance (CPLI) to the commercial real estate (CRE) finance industry. Representing an entirely new product category within CRE, LGIS’ patented product is the first of its kind available to borrowers and developers and their financial institutions, signaling a vastly improved structural change in how CRE lending is managed for all parties.
Similar in concept to private mortgage insurance (PMI) in residential mortgage lending, commercial property loan insurance is institutional grade-rated loan guarantee insurance that serves as an effective risk transfer and mitigation strategy, providing immediate, significant, stronger credit and capital relief to bankers, empowering them to increase volume and profitability across their CRE portfolios and enhance customer relationships and deposits. Removing the need for a personal guarantee also benefits the borrower, improving borrowing terms and increasing their capacity for more possible deals.
“For years, the commercial real estate market has been hindered by the shortcomings of traditional, outdated loan methods,” said Edgar Ortiz, President, Strategic Analytic Solutions. “There has long been a need for a mechanism that could at once open it up, benefiting both lenders and borrowers all while minimizing risk, and LGIS Group’s CPLI is the answer. CPLI is a truly unique and innovative approach for the industry, providing direct, cost-effective capital relief that reduces risk and provides an injection of fresh capital into banks’ balance sheets.”
Traditionally, bankers have relied on an onerous, operationally inefficient and falsely reliant process to base lending of CRE projects primarily on the personal balance sheets of developers and guarantors and only secondarily looking at the feasibility of the project itself. By adopting CPLI over the inefficient and uncertain personal guarantee process, financial institutions are positioned to reduce their required capital reserves, driving profitability by redirecting non-earning assets to support increased CRE and other lending. Additionally, institutions gain significant operational savings over time by reducing (or eliminating entirely) the need for quarterly re-evaluations and confirmation of collateral value and liquidity on their CRE customers. Relationships and deposits are also positively enhanced for a competitive advantage.
“As short term CRE projects continue to grow, financial institutions find themselves facing increased levels of competition from non-bank market entrants that are aggressively targeting borrowers and developers in an effort to gain market share,” said David Eichenblatt, president of LGIS Group. “To counter this, our team has leveraged decades of CRE industry experience in developing a viable commercial property loan insurance product and bringing it to market – one that provides a compliant way for bankers to significantly increase their loan credit strength, customer relationships and deposits and reduce their capital reserves and grow their CRE lending business.”
To learn more about LGIS and the CPLI program, visit www.lgisgroup.com.
About LGIS Group
LGIS Group is the pioneer of Commercial Property Loan Insurance (CPLI) for the CRE lending industry. Through its patented, institutional grade-rated loan guarantee insurance, LGIS Group eliminates the need for bankers to secure onerous personal guarantees from valued customers when providing commercial loans to fund their development, redevelopment and value-add projects. As a proven risk transfer and mitigation strategy, LGIS Group provides significant capital relief to bankers, empowering them to increase volume and profitability across their CRE portfolios while increasing the customer relationship and deposits. LGIS Group also provides benefits for borrowers by transferring risk, lowering costs and expanding their overall capacity for deals, as well as intermediaries (i.e. mortgage brokers, insurance brokers) by offering an impressive new market and revenue source for servicing customers from a project’s inception to take out.