With mortgage-backed securities gone, lenders tell local real estate pros what it takes to qualify.

During the real estate boom, a lot of deals got done with the help of commercial mortgage-backed securities, which are pooled loans secured by the cash flow generated from stores, offices and other property. In 2007, the national market was issuing $230 billion of the popular debt financing.

This year, financing from commercial mortgage-backed securities has fallen to near zero.

What’s the impact of the loss of this option, and what’s taking its place?

The evaporation of this securitized debt hasn’t been a dominant issue in southern Maine, compared with places such as south Florida and Las Vegas, experts said Tuesday. For solid prospects, local banks are eager to help fill the void, the experts said, although at much tighter underwriting standards and with greater financial participation from borrowers.

“We are seeing a lot of deals,” said Noel Graydon, regional vice president and commercial lender at Norway Savings Bank in Saco. “There is money to lend.”

Graydon was part of a panel that fielded questions for roughly 100 commercial real estate professionals at a breakfast meeting organized by the Maine Real Estate & Development Association. Joining him was David Bronson, a commercial lending veteran at TD Bank, and James Whelan, senior vice president at Q10/New England Realty Resources.

Their general message is that higher-risk loans aren’t coming back anytime soon. Current owners will need to take aggressive steps to shore up falling values and cash flow before they try to refinance debt that’s due to mature.

“No ‘story’ loans,” Whelan said. “If you have a story to tell us, we don’t want to hear it.”

Lenders that previously looked only at elements of a specific deal are now interested in “global” cash flows and other indicators of a client’s total financial picture, Whelan said. They’re worried about property values, which nationally have fallen an average of 25 percent in the commercial sector, and may not have bottomed out. That’s making banks skittish about high loan-to-value ratios – how much they’re willing to lend compared with the value of the property.

Community banks see some opportunity in this environment, Graydon said, but they’re most likely to lend when borrowers can put up more of their own cash to lower risk to the banks. He declined to name names, but said some local banks have begun joining together to make larger loans for projects that once might have looked toward commercial mortgage-backed securities.

“The challenge,” he said, “is that each of these community banks wants the relationship, not just the transaction.”

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