In simple terms, commercial loss mitigation is the process of assisting those with commercial real estate loans get reduced monthly payments through the modification of the loan terms. This is because residential loans are not the only ones in trouble with foreclosure. With vacancy rates hitting all-time highs and tenants forcing property owners to lower their rents, many commercial loan borrowers are discovering that they are no longer in a position to pay the monthly installments.
Analysts predict that 67 percent of all commercial loans will be in danger of going into foreclosure. This is not just bad news for the borrowers but for the lenders as well. With commercial real estate sales at a stand still, banks and lenders would find it very difficult to sell the properties when they are foreclosed. As a results, banks are now easier to convince to find a way to modify the loans to make them more affordable and prevent foreclosure. In simple terms, the lender will alter the payment terms either permanently or temporarily to provide the borrower with some breathing space and recover.
To assist them in conducting the research and in the negotiations with the banks, property owners usually hire commercial loss mitigation professionals. At the start, this professional will consult with the borrower and thoroughly examine the loan documents. He will be scrutinizing every detail of the loan documents to find some leverage for the borrower that can be used to facilitate the approval of the request for a loan modification. For example, the way in which the loan had been provided might have caused the violation of certain rules or laws that protect the rights of the borrower.
The loss mitigation expert will then contact the lender to determine if there is a possibility that the lender will grant a loan modification. Then, he will move on to the qualification process that will lead to the approval of the loan restructuring agreement.