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Property market might benefit from MetLife's new status

U.S. insurer MetLife plays a significant role in commercial real estate lending, and according to experts, the firm's redesignation by a district court could see it becoming even more involved. As part of the 2010 Dodd-Frank Act, MetLife was deemed a systemically important financial institution, or SIFI, along with companies like GE and AIG. In the spring of 2016, courts decided that the company is no longer important enough to qualify as an SIFI under the too-big-to-fail legislation. Maryland developers could see their chances at receiving financing increase as a result.

News sources say that losing the designation frees the company of requirements that it maintain certain levels of capital in reserve. The change could also make MetLife less strictly bound by regulatory oversight. Although experts say the government's Financial Stability Oversight Council might appeal the decision, they predict the ruling will eventually leave the company with more available funds to lend.

Regulatory requirements tend to increase lending rates by making it more expensive for businesses to operate. Although MetLife was previously subject to restrictions, analysts suggest that its healthy involvement in commercial lending bodes well for its future activities. The declassification might not, however, prove beneficial to smaller lenders who seek to offer competing services.

Commercial real estate developers know how important reliable sources of financing can be for their current and future projects, regardless of their size. When a loan proposal is received, it may be advisable to have legal counsel review it in order to ensure that it does not contain any provisions that could prove troublesome down the road.

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