Commercial Loan Modification

Owners of commercial properties, such as warehouses, apartment complexes, strip malls, shopping centers and retail shops, can take advantage of commercial loan modifications if they find that their cash flow is not sufficient for the monthly payments.  However, it should be noted that one requirement for a loan restructuring is a commercial loan review.  The two parties have different purposes for a review so that a loan workout could be reached that would be a win-win situation for both lender and borrower.  For the borrower, this review is required to analyze the various details of the original loan contract to discover any violations made by the lender against certain regulations.  Meanwhile, the lender will need a commercial loan review to evaluate the capacity of the borrower to repay the mortgage after the adjustments have been made.

The lender usually conducts a commercial loan review first before permitting the negotiations for the restructuring of the debt to start because this will show if the individual or business can really afford the monthly payments after they have been reduced.  This particular review will examine various data with regards to the borrower, such as the payment history, the business cash flow, and whether there are any guarantors.  This review is one of the deciding factors for bank on whether to allow the restructuring of the loan.  In other words, the lender will not waste any time negotiating and then allowing the changes if in the end, the borrower will just default on the mortgage.

Meanwhile, a commercial loan review has a vital and different

purpose for the borrower.  The property owner often gets the services of loss mitigation experts and professionals to examine the details of the original loan contract to see if the lender had violated any laws and regulations on the protection of borrowers’ rights.  It has been the observation of many that during the years when commercial loans were being provided in large numbers, many lenders had cut corners and in the process had violated certain laws and regulations that are supposed to prevent lender abuse.  If the contracts are found to contain such violations, it would be illegal for the banks to apply any of the provisions that are found in them, such as foreclosure.  Thus, this is a vital negotiating tool for the borrower that could facilitate the approval of the application.

A commercial loan review may also be helpful when foreclosure proceedings have already been started.  If any violation is found in the original agreement, the court may order that the foreclosure process be stopped until such time that a decision has been rendered on the allegations.  The property owner may even halt mortgage payments although it is advisable to set aside these payments and let them accumulate in a separate account, just in case the court rules in favor of the lender.

Therefore, a commercial loan review is important for both borrower and lender although they have divergent purposes.  For the lender, it is a tool for evaluating the creditworthiness of the borrower but for the borrower, it is a negotiating tool in the event that violations are discovered in the original loan contract.

For further information visit http://www.commercial-modification.com

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