Troubled Loan: Is That Yours? | Commercial Real Estate Blog
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If you are the borrower with a commercial loan that was originated after 2005 or that is maturing during the next 24 months, chances are that you are not sleeping as well as you once did. That's because there is a substantial likelihood that deteriorated market conditions have undermined your property's performance and value to the point that you are no longer able to service your debt, or if your loan is maturing, there is no realistic source of capital to re-finance the maturing debt (even if your property is otherwise performing). In either case, the question is "what can I do"?
To find out what modification/workout strategies are potentially available on a commercial real estate loan (even one that is securitized); read the entire article, Understanding Modification Options Under Portfolio and CMBS Loan Stuctures.
This excerpt (and the full article available by clicking above), was offered to us courtesy of Brian S. Weinhart of Steckbauer Weinhart Jaffe, LLP of Los Angeles. Brian's full contact information is included with the article.
We realize that this subject is becoming of critical importance to a growing number of commercial mortgage holders around the country. Take a scenario in which a building was purchased three years ago for $1 million with an 80% loan to value mortgage. That $800,000 principal amount hasn't reduced much in three years. The lender now decides to have the property reappraised and discovers that current market value is, let's say, $700,000. The lender says they're willing to continue the loan - at 80% of the new appraisal. All the borrower has to do is send a check for $240,000, the difference between the new 80% value of $560,000 and the old 80% value of $800,000.
Whoops, I can't write a check for that amount. What can I do?
Mr. Weinhart's article offers a glimpse into how such loans are often addressed under a portfolio or securitized situation. Our Sperry Van Ness Asset Recovery Team can also help in many cases. Take a look at our web site describing our services for this purpose at http://www.svnart.com/.
And please call us at Sperry Van Ness/ComVest Realty where we can help you locally or start the process with other experts.
Robert L. Yale, CCIM
Sperry Van Ness/ComVest Realty
508-351-7079
bobyale@svn.com
Central Massachusetts Commercial Real Estate