A Commercial Loan Review May Facilitate A Request For A Loan Modification
Lenders and banks have been silent regarding the impending crisis in Commercial Property Mortgages although analysts have been predicting that this is another bubble that is scheduled to burst in 2010. Bank regulators and financial experts are now urging both banks and borrowers to sit down and workout a solution before these properties go into foreclosure.
The reason for the apprehension is that Property Owners have been hit by the ongoing financial crisis. The number of vacancies in apartment buildings, hotels, multi-tenant buildings, strip malls, company complexes, warehouses and office buildings, has been so high that tenants have even gained the power to call for reductions in their rent. This has severely affected the cash flow of the Property Owners that it may have come to a point that payment of the mortgage installments is impossible. Naturally, this is expected to lead to foreclosure if the situation continues.
To make matters worse, a substantial number of these Mortgages are about to the reach the end of their terms in 2010 when the property owner has to make a balloon payment. Normally, the property owner will seek for a refinance or sell the property to come up with the amount due. However, with sources of funding very limited and the woeful state of Commercial Property, these two options may not be available. Once again, the property owner will be in danger of default and the property may go into foreclosure.
One possible way out for the property owner is a Mortgage Modification. However, lenders and banks are averse to allowing such changes in the Mortgages because of the impact on their cash flow. The assistance of a Commercial Mortgage review is therefore required. An expert in this particular field will review the Mortgage documents and try to find out if there are any indications that the bank had violated any laws or regulations that may make it impossible for the bank to enforce the terms of the Mortgage agreement, such as a foreclosure.
Such a finding would make it easier for the property owner to convince the bank to agree to a Mortgage Modification. Moreover, if the foreclosure proceedings have already been started, these will come to a halt as the investigation of the possible violations is being held. The discovery of these violations may finally convince a reluctant bank to agree to the Mortgage Modification. Not that the bank will not also benefit from the procedure because in a foreclosure, the bank would just be in possession of a property that he cannot sell.
SOURCE: Commercial Loan Review
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