Archive for October, 2009

Over the past six months, commercial banks and lenders have been watching as defaults increase on their loans and commercial mortgage backed securities.

Commercial property owners are now taking prudent early steps to avoid their commercial loans going into default.  They are looking ahead at upcoming maturity dates.  Many commercial property owners that we deal with are merely victims of the general downturn in the larger economy and the recent dramatic decrease of commercial real estate values across the United States.  Commercial property owners have begun to contact their banks and lenders directly to try and modify their commercial loans.  This approach, unfortunately, is usually unsuccessful.

When commercial property owners call their lenders in an attempt to facilitate a commercial loan modification they are usually frustrated by speaking with someone at the bank who is actually not in a position to approve a loan modification in the first place.  Many people that I speak to actually report the sad fact that they are unable even to have their phone calls returned by anyone at all.  Those property owners who eventually are able to speak to someone that has the authority to approve a commercial loan modification have told me that they are usually dismissed handily and are not even taken seriously by the lender.  The reason that many lenders are unwilling to negotiate the terms of a commercial loan modification with most borrowers is because the banks are inundated every day with calls from unscrupulous commercial real estate owners who are attempting to modify their commercial loans without any real economic hardship.  In other words, the banks are being bombarded with requests from owners to modify their commercial mortgages who have no real need to modify their commercial loans.  These owners are trying to take advantage of the current economic situation for their own benefit.

At Commercial Loan Modification USA we work with commercial property owners in all fifty states to facilitate effective commercial loan modifications for our clients. We use the following guidelines while working on your behalf:

1. We identify the proper contact. Many times lenders will assign a servicer to handle regular loan management. This is usually the case for CMBS-originated loans.  Once a loan is in default it is sent to a special servicer that might consider an extension or modification.   Knowing who to call from the beginning can make all of the difference between a successful loan modification and an eventual foreclosure.
2. We clearly present a case for the borrower’s hardship. Calling the bank and demanding a new interest rate just because you can’t pay the mortgage is not the way to begin negotiations.  After interviewing the property owner and clearly examining the economic situation surrounding the property we create a detailed report explaining the reason for economic hardship.
3. We treat your lender as a partner, not an adversary. A commercial loan modification that allows the owner to continue to stay in the property and not enter default is in both party’s best interests.  Therefore, it is our practice to treat the lender as a partner by demonstrating how the owner’s business model, asset structure and operations have been changed to help them survive temporary market conditions.

Find out how if  commercial loan modification is right for you by requesting our free report “Commercial Loan Modification — is it Right for me?”