Rents for industrial warehouses have dropped as a result of companies reducing the scope of their operations in response to the economic slow down. This may also be due to current warehouse tenants asking for reductions in their rent. The final effect is that the warehouse owner is unable to come up with the usual monthly mortgage payments. This could result into a foreclosure with the end result of the owner losing the property together with the income that comes from it.
Warehouse loan modifications will allow for a temporary or permanent adjustment in the terms of the loan agreement, such as a reduction in the interest rate or an extension in the payment term. Lenders and banks are usually reluctant to entertain any applications for changes to the loan term because it disrupts their plans regarding cash flow. However, the restructuring of the loan may be the only remedy if the borrower is undergoing an economic hardship and may be forced to accept a foreclosure. For the lender, a foreclosure is unwelcome because of the effort and expenses that it requires. Moreover, it may be difficult to sell the property particularly if the economy is in a downtrend.
Because of the complexity of the loan agreements and the possibility of long negotiations with the lender, the borrower usually hires a commercial loan modification company to provide assistance in the various stages of the process. This company usually has a professional with expertise in this particular field who will ask for input from the borrower to assess the loan agreement and determine the available options. Then, he will start negotiations with the lender by finding out first if the borrower is qualified for a loan modification. Then, he will proceed with the negotiations until such time that an agreement is reached and the loan restructuring is approved.
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