A forensic loan audit is conducted to determine if the lender had violated any regulations or laws that would negate the lender’s rights to enforce the various provisions of the loan agreement. The results of the audit could be very useful for the commercial real estate loan borrower when seeking for a loan modification. The audit is conducted by examining every word in the various loan documents.
The loan modification may be needed because commercial property owners, especially those who collect rent, are feeling the effects of the financial crisis. Vacancy rates have reached record heights and tenants are now able to negotiate lower rents by threatening to leave. Thus, owners of hotels, warehouses, strip malls, shopping centers, apartment buildings, multi-tenant buildings and office buildings, are discovering that the mortgage payments have become too high for their cash flows. Experts have been predicting that about two-thirds of commercial real estate loans are in danger of going into default and into foreclosure.
Fortunately, a loan modification may be the solution to the problem for both lender and borrower. With the help of a forensic loan audit and the pressure for the lender to seek other alternatives other than foreclosure, a loan modification is likely to be approved. Meanwhile, because commercial loans are complex, the borrower may require the help of a commercial loan modification expert. This professional will make the initial contacts with the lender to pre-qualify the borrower. If everything goes well, he will start the negotiation process, which may take a few months, depending on the willingness of the lender and borrower to reach a compromise.
