What is a Commercial Loan Workout/Modification?
With our nation in an economic recession and with the retail market suffering, tenants on commercial properties are experiencing difficulties paying their rents. As a result, commercial property owners are becoming cash flow negative and defaulting on their mortgages. Banks and commercial lenders cannot keep up with the current number of defaults and want to minimize their losses.
Therefore, with hopes of avoiding a pricey foreclosure process, they are willing to restructure the terms of defaulted loans, by modifying a commercial loan properly; a property owner can avoid foreclosure, greatly reduce their monthly payment, and reduce the principal amount owed. Commercial loan modification is a relatively new market and with so many modification possibilities, it's best to consult an expert before beginning the process. Borrowers often find their bank or commercial lender difficult or unwilling to renegotiate the terms of a loan. This is where companies like CFR come in. Borrowers find it extremely beneficial to seek the help of the professional representation that CFR offers.
What does a Commercial Loan Modification Do?
One must understand all commercial loan modification companies are NOT the same. The number of services they provide, amount of experience, and the results they produce may vary greatly. With that being said, typically a commercial loan workout company will generally offer the following services:
Expert Consultation and Analysis
Final Modification and Loan Restructuring
What services does CFR provide?
This is a basic outline of CFR’s Services:
Provide you with a comprehensive evaluation of your commercial portfolio and financial Situation
Assign you a loss mitigation/commercial loan modification professional who will analyze your property
Present all your options so you can make an informed decision
Help renegotiate the terms of your existing commercial mortgage to prevent a default.
Work to restructure your current loan for better property income cash flow
Negotiate favorable terms with your lender so you get the best deal possible
How will these services help me?
These services can help you in several ways. For instance:
Workout and Deferment Solutions
Reduce Interest and/or Principal Amount
Improve Cash Flow
What can one expect from our Commercial Loan Modification Firm?
We are dedicated to our clients and work extremely hard to get the results you deserve. All of our clients have been very happy with the results from our company- we have saved many commercial property owners from bank foreclosure and helped them become cash flow positive. We are so confident that you will get results that we offer a money back guarantee*. We truly value your business and we want to make sure you feel very comfortable with the modification process. At CFR, we take pride in offering the most professional, educated, friendly, and affordable firm in the nation. You will always receive top tier customer support. Relationships with clients are very important to us.
We will analyze your financial situation; compute how much your property value has declined, and how much you can afford to pay each month. We also look into the possibility of getting the principal amount reduced**.
We audit and crunch the numbers before they get to your lender. While other companies are using unqualified representatives, we have highly trained and experienced agents, attorneys, and appraisers. We possess a well-connected network to help us achieve the best possible result for your particular situation.
How do commercial loan workouts work?
The biggest part of the process is research and analysis. Once all the components of your financial situation are taken into account, the next step is to review your current loan, and consider the options available for your particular situation. We have found that when our clients talk openly and honestly with us about their situation, we can best serve them in the modification process. We work with you during the modification process to get all documents and forms compiled. Once everything is in place and agreed upon, the modification is presented to the bank for approval.
What are the types of commercial properties can you modify?
A loan modification can be performed on many different commercial properties. For Example:
Condominium and Apartment Complexes
Mobile Home Parks
Malls, Strip Centers, Retail Centers and Restaurants
Office Buildings and Complexes
Hotels and Resorts
Industrial and Manufacturing Warehouse Facilities
Health Care Facilities, Senior Living Facilities
Do You Qualify For A Loan Modification Plan?
The main question a bank or lender will need to answer before renegotiating a loan is: Will the cost of foreclosure be greater than the cost of a loan modification? The lender's decision will be based on their best interests. Your ability to successfully negotiate a plan will depend on many factors. Some of these factors include:
Amount Of Equity In The Property
Past Payment Experience
Costs Of Foreclosure
Borrower's Financial Position
Borrower's Willingness To Retain Property
Local Market Conditions
In addition to these factors, many small commercial loan modification plans will depend on the financial situation of the borrower's business. The lender must feel confident that the commercial property owner will produce enough profit to service the new payment successfully. Regardless of whether the property in question is a single family rental unit, multi-family apartment building, or retail property, your lender will request a business plan. The plan should include realistic numbers and a convincing explanation as to why the restructured plan will work. Be prepared to present a realistic proposal and back it with solid numbers. Consider seeking the services of an accountant, attorney, or experienced loan modification consultant. A negative result could mean the loss of a property and a business.
Many banks have created special legal departments to deal with the protection of their interests. That is why it is so important that you or your company seek the assistance of an outside modification agency like CFR to represent you.
Is it harder to modify large commercial properties?
For larger commercial properties such as large retail, office complexes, and manufacturing facilities, the process of commercial loan modification becomes more complicated, but not overwhelming. Borrowers tend to be large corporations and lenders range from individual banks to large securitized real estate trusts. Often times the process is very similar to that of a smaller commercial property just on a larger scale. As with many things, the bigger the objective, the more professional help is needed - that is why many owners of large commercial properties are seeking the assistance of CFR.
What if I filed for bankruptcy?
You still have options, but the bankruptcy must have already been discharged, or dismissed. Please contact our office for further consultation.
What is a Short Sale?
As the name might imply, short sales, as an alternative to foreclosure, can permit commercial borrowers with proven hardships to sell property to a third party for an amount less than the balance of the existing loan. Our staff of professionals has extensive experience and a high understanding of short sales and what they can mean for our clients. If a short sale appears to be the best alternative to foreclosure for a client, we will work hard to negotiate the best possible terms. In a short sale, the borrower must prove financial hardship to the lender. If this is done successfully, the lender will give the borrower permission to proceed with the short sale. The lender, in effect, agrees to accept less than the amount owed on the loan, and releases the borrower from the note rather than allowing the property to go into foreclosure. However, many times the commercial property owner is responsible for the difference of money that is discounted on the short sale and is forced to pick up the difference as additional income on their tax return. This could end up costing the property owner to show unwanted gains on his or her tax returns and may put that person in a higher tax bracket. Our Firm can advise you on how to avoid this costly mistake.
Foreclosures can be devastating to credit ratings and that can create major issues for years. Short sales are often the last-ditch effort to prevent foreclosure, and while they probably won't keep your credit rating at its previous level, they can be far less devastating than foreclosure. With proper mortgage mediation and professional guidance, a short sale can set you on the road to financial recovery. Many lenders prefer short sales, since their losses on loans will be far less than they could be in foreclosure proceedings. Most are willing to consider the most cost-effective way out of any financial crisis. Short sales are a less expensive and much faster way to relieve some of the consequences of unexpected financial hardships.