The recent economic downturn has left commercial lenders with an onslaught of loans in default or on the verge of default. This has created opportunity for borrowers facing financial hardships. Lenders have over leveraged themselves and now find it in their best interest to work with commercial borrowers rather than foreclose. With the risk of these defaulting and distressed commercial loans turning into a second wave of foreclosures following the recent residential real estate meltdown, banks are now more open and willing to work with commercial borrowers to avoid bankruptcy and save the bank the expense of going through the foreclosure process.
Commercial loan modification is a process of changing the mortgage terms permanently from the original agreement between the mortgage holder and a business or an individual who owns a commercial property such as shopping centers, strip malls, apartment buildings, office buildings and warehouses. The purpose of a modification is to significantly lower your monthly payments, for either a temporary or permanent period of time.
These loans can either be portfolio loans from a private lending institution portfolio or from lenders and special services that participated in a securitization. Since the investor or special servicer of the loan is often easier to identify and approach, the right attorney hired by the property owner is much more effective in negotiating a solution that benefits both parties.
Recently the Federal Reserve added commercial mortgage backed securities (CMBS) to the TALF program in an effort to mitigate the coming losses that commercial mortgage bondholders are going to take. The TALF program facilitates refinancing of commercial loans by making cheap taxpayer money available to commercial lenders.
This post was written by First Source Law
