"It all depends on to what extent they get into the real estate business," says Patten, the current Central Florida chapter president of the National Association of Industrial and Office Parks. "If it's development, the (unanswered) question is, are they going to build investment property portfolios and function like insurance companies, pension funds, REITs or merchant builders?"

Patten says "if they do, then it probably won't affect the mortgage banking industry anymore than the REITs have already done." His company is a loan originator and servicing correspondent for 12 insurance companies, two conduit lenders and several commercial banks.

"What we're primarily all about is the placing of long-term, fixed-rate debt on income-producing properties," says Patten. "Ninety-five percent of the banks are short-term (construction-mini-perm) lenders and seldom put their own money into long-term debt."

That scenario, says Patten, "is due primarily to the matching of assets and liabilities, which doesn't work for the banking industry."

Patten wonders if the banking industry plans to enter the commercial real estate business "the way the S&Ls did it back in the 80s by developing large-scale developments, many of which turned into a disaster, even the good ones because of the real estate downturn due to overbuilding, the repeal of the 1986 tax law" and other economic factors.

"We all know that isn't probably going to happen again for a hundred different reasons," he says. "Many of the banks got onto the bandwagon to have their own conduit during the mid-90s, as a permanent loan vehicle, and probably lost a ton of money in 1987 like the rest of the industry."

Patten says, "As you know, there are very few Wall Street conduits left. " He adds, "My economics professor told us that 'excess profits breed ruinous competition,' and it's happened in just about every industry that I can think of."

Patten serves on the state NAIOP board; the NAIOP National Build-to-Suit Forum; and the board of the Central Florida Commercial Real Estate Society.

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Mortgage Banker Says Jury Still Out on Bank's Fulltime Entry into Real Estate

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