A commercial loan review is usually the first step to take when planning to apply for a modification of a commercial real estate loan. A loan modification may be the only way out for a property owner who has been experiencing difficulties in coming up with the mortgage payments because of the effects of the financial crisis. This is understandable because of the high vacancy rates in hotels, apartments, warehouses, strip malls, and office buildings.
And even if the property owner has sufficient cash flow for the monthly installments, the end of the loan term may be fast approaching. At the end of the term, the loan agreements usually require a balloon payment. To pay for this large amount, the borrower usually looks for refinancing or sells the property. However, these two options may not be readily available because of the slow down in the economy.
Because of the complexity of commercial loan agreements, a professional or expert is often called in by the company or the individual who owns the property. The first step in a commercial loan review is the auditing of the loan documentation to ensure that the agreement is legal and that the lender has been servicing the loan appropriately. The next step is to approach the lender and inquire about the possibility for a loan modification. If the lender is agreeable to the process, then negotiations take place, which may take a few months, depending on the borrower and the lender. The final agreement is then drafted and both parties will affix their signatures.
Other articles you might like;
- The Commercial Financial Crisis
- The New and Improved Commercial Modification Blog!
- Get A Commercial Loan Workout To Help You Now
- When Choosing Loan Modification Foreclosure Can Be Dodged
- Use The Short Payoff Strategy To Your Advantage
