As Spring/Summer 2000's sea-sick stock market proved, investments can be rocked not only by bad news but by jittery investors who choose to jump ship even before a leak can be plugged.

When the stock market turns bearish, what happens to the loan industry? Is it harder to get every type of loan, including HUD loans?

According to Jeffrey A. Davis chairman of Chicago-based Cambridge Realty Capital, underwriting for all types of loans typically becomes tighter, and every loan proposal receives more scrutiny. He says that many investors beat a hasty retreat, resulting in less capital being available for investment.

But, not all declining markets produce nothing but bad news. Some opportunities may be foreclosed, but others often emerge, maintains Davis, whose company offers both HUD and conventional loan programs.

For example, in the market sell-off that began last April, Davis says HUD lending programs enjoyed a clear competitive edge over conventional loans. In September,1999, during a similar stock market shakeup, HUD rates dropped two full percentage points below rates for conventional lending programs available to borrowers in the senior housing and healthcare industry, but this gap has since been closed.

Davis believes the next stock market correction will probably be less tumultuous for the capital markets. Presumably, following the latest wake-up call, borrowers are more attuned to timing issues and current trends.

"But the prudent borrower will take nothing for granted. In the current investment climate, it's a bad idea to delay a funding decision based solely on the hope that the interest rate scenario might improve," Davis said.

"There's plenty of evidence to demonstrate that the capital markets are capable of sudden, unanticipated change," he added."An unexpected credit crunch proved to be a short-lived aberration that was over almost as quickly as it began. But it served as a wake-up call for many borrowers who learned, once again, that complacency can be costly," noted Davis.

Real Times: Interest Rate Watch

Published: January 26, 1999

Use of this article without permission is a violation of federal copyright laws.

Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.