Obtaining a commercial loan workout can be a very labor-intensive course of action. Having all of your “ducks in a row” is meaningful to a successful workout. For character owners who can’t refinance, have a balloon payment coming due, defaulted on their mortgage or facing foreclosure, a commercial loan workout can accomplish one or more of the following:
1. Reduce interest and/or principal amount
2. Extend reset period or maturity date to delay balloon payment
3. Defer payments
4. permanent interest-only payments
5. Avoid foreclosure
Please review the following five steps:
1) Required Paperwork
The required paperwork is gathered from character owners. Documents needed: Rent roll, copies of expenses within the past year, rental agreements, copies of the mortgage observe, etc. Not having all of the required documents could delay the whole course of action.
2) Research examination
Before a commercial loan workout is submitted to the lender, a financial snapshot of your situation is needed. The lender is mostly concerned with your ability to pay each month if your loan was restructured to more popular terms. calculating the current market value, rental rates and recent comparable sales are also important factors to consider. After a review of the observe is complete, a workout package is generated.
3) Lend Submittal
Once a confirmation of delivery is received from the lender, the submission package is forwarded to a workout specialist. Not confirming receipt of the workout package by the lender could average having your file stuck somewhere in the mail room for weeks or “lost in neverland.”
4) Negotiation course of action
The workout specialist reviews the package and presents a loan alteration offer. Sometimes the character owner or third party workout firm will make counter offers until an agreement is excepted with popular loan terms. The whole course of action from start to finish could take between 2 or 3 months to complete. Keep in regular contact with the workout specialist at the lender until a proposal is received.
5) Final Approval
Once the lender approves the newly restructured mortgage loan, a proposal is presented to the character owner for review. The owner can expect the following options: Deferment of payments, lower interest rate, extended maturity date, greater cash flow or reduction of principal. The lender can propose any combination of options. Lastly, the alternation loan documents are signed by both parties to make the changes official.
Because so many commercial character owners are not able to meet their mortgage obligations, commercial lenders are now willing to modify their existing mortgage loans to prevent avoid foreclosure. The meaningful to preventing a default is to be proactive by contacting your lender or seek the assistance of a third-party, specialized commercial loan workout firm.
Commercial mortgage loans are much more complicate than residential mortgage loans. Hiring a specialized commercial loan workout firm can help you navigate by the negotiation course of action with your lender.