Loan Modification is not just for residential homes. Income producing properties such as apartments, Retail Strip Centers, Commercial Bldgs and other investment properties can now qualify for a loan modification. With our nation in financial crises, and with retail market suffering, many businesses on commercial properties are having a difficult time paying their rents and owners are defaulting on their leases at an alarming rate. Because of this, more and more commercial property owners are having a difficult time meeting their financial obligations.

What is a Commercial Loan Modification?

A commercial loan modification is the process of providing for either a permanent or a temporary change in one or more of the terms of a debt obligation or encumbrance because of some type of economic hardship currently affecting the borrower. Because of the rising number of defaults, banks and commercial lenders, and in attempt to minimize their losses, are willing to restructure the terms of their defaulted loans, in the hopes of avoiding a costly foreclosure process and having to show huge losses to their investors.

By modifying a commercial loan properly, a property owner can avoid foreclosure, and greatly reduce their monthly payment and in some cases reduce the principal amount of their debt. Examples of these hardships may include, but are not limited to, reduction in the rent roll, because concessions had to be made to tenants in order to keep them viable; loss of tenants due to the current economic conditions, loss of revenue from sales.

What are the types of Commercial properties can you Modify? Most all commercial properties. For Example:

* Strip-mall
* Shopping center
* Apartment building
* Warehouse
* Multi tenant building
* Investment property
* Business Complex
* Office Building
* Restaurant
* Commercial lots
* Other Income producing property

How does a commercial loan modification differ from a residential modification?

The modification of the commercial debt is being accomplished to assist the “viable” business to continue to operate profitably. By modifying some of the current debt terms, the business or investment can remain at a positive cash flow, thus allowing the borrower the motivation to continue to make payments to the bank or lender during this time of economic uncertainty.

With that being said, generally a Commercial loan modification company will do the following:

* Consultation and analysis
* Pre-qualification
* Qualification
* Negotiation
* Final Modification/ Restructuring of Loan

Who qualifies for a commercial loan modification?

The “viable” business owner or property investor who can demonstrate current or expected economic hardship, but at the same time is able to show that they can meet the proposed financing/modification will qualify for a loan workout. The bank or lender must become very comfortable that the borrower is not just delaying the obvious- foreclosure – but that the modification will benefit both the borrower and the lender. The borrower will be able to make the monthly payments established through the modification/workout.

How long should a loan modification take?

A typical commercial loan modification should take between one and three months, but it could take longer if the borrower or lender cannot agree on the terms. The time for the modification will depend upon how rapidly the application is processed and how quickly the debt instrument holder responds.

The biggest part of the process is research and analysis. Once all the components are put together to get a precise picture of the borrower’s financial situation, the next step is to review the current loan and come up with options that will work with the borrower’s situation today.

Experience shows that when the borrowers talk openly and honestly with us about their situation, many problems can be avoided in the modification process. This is not a situation where one signs up for a modification and then the modification company take it from there. The borrower and loan modification company must work together to make the application process go smoothly. Documents will be requested, forms signed, conversations about the current loan. Once everything is in place and agreed, the modification application is presented to the bank for approval.

Will I or my property qualify for a loan modification?

There are many factors that determine on what basis a lender will modify a loan. Equity, income, payment history, debt ratio and many other factors. Every case is different. If your property is producing income that you can prove, then you probably will be able to come to a resolution.