Commercial loan modification 101

Commercial Loan Modification Can Rescue Businesses

Commercial loan modification can rescue floundering business ventures or established companies which have fallen on hard times. Many business related or income producing properties may qualify for loan modification and allow business owners to keep their doors open. 


Commercial loan modification can offer:

Extensions or Refinancing Options

Term extensions (maximum 5 year balloon)
Cash advances for tenant improvements or completion of rehabilitation of property
Conversion from adjustable rate to fixed long term amortization
Short term refinance authorization followed by new financing

Fee or Penalty Forgiveness

Prepayment
Lock-out
Defeasance
Yield maintenance
Late fees

Lowered Interest Rates or Balances

Reduced interest rates
Convert to interest only payments for short time periods (up to 2-3 yrs)
Adjustments to the principal balance

'Walk Away' Options

Short sale authorization
Deed in lieu of
Cash for keys


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Commercial or business properties that qualify for loan modification include but are not limited to:

Income Producing Residential Properties.  These include both single tenant properties and most mutli-family units consisting of 5 or more units as well as mixed use properties and mobile home parks.

Income Producing Commercial Properties encompassing such businesses as bowling alleys, mini-storage units and nursery/greenhouses, as well as car washes and auto service/repair stations.

Other Retail Properties such as groceries, markets and gas stations (including those with convenience stores) and anchored or unanchored retail centers.

Industrial Properties including light, medium or heavy industrial facilities, warehouses/manufacturing structures, industrial condos and multi-use properties.

Office Properties - both buildings and independent office space

Hospitality Properties - both flagged and unflagged.

Food Service Establishments, such as restaurants, cafeterias, bars/saloons or catering headquarters

Healthcare and Related Facilities including daycares, health spas, medical and dental facilities, hospitals and hospices, as well as funeral homes and assisted living centers or nursing homes.

Educational, Charitable and Religious Properties such as churches, mosques, synagogues or temples; schools and other educational facilities; and 501(c)3 not-for-profit owned properties.

Commercial or business properties that may or may not qualify for loan modification are considered on a case by case basis and include but are not limited to:

Entertainment properties, including amusement or theme parks, sporting facilities and arenas, or adult entertainment venues with interior non-structural poles

Recreational properties, including campgrounds, RV parks, marinas, golf courses and retreats

Miscellaneous properties such as agricultural properties or those which are vacant or owned by real estate, mortgage, finance, title or escrow companies

Commercial or business properties that do not qualify for loan modification include but are not limited to:

ALL Property Outside the USA

Any properties involved in bankruptcy (Businesses which have filed for bankruptcy are not eligible; neither are individuals who have filed bankruptcy and included business holdings in the bankruptcy. Bankruptcy places an automatic 'stay' on all aspects of the business.)
Shared Properties such as timeshares or condo-tels

Undeveloped Properties, such as raw or entitled land or tracts, lot loans, construction sites and projects under development or rehabilitation projects.

Properties Financed under certain programs - this includes all SBA financed properties (including 504 and 7(a)); USDA financed properties (B&I programs) and non real estate secured loans (including SBA, 7(a) and FFE)..

Dealership properties (auto, boat, RV and motorcycle).

State specific exclusions may apply (for example, in New Jersey, multi family properties consisting of 6 units or less are not eligible for commercial loan modification regardless of ownership title. In Florida, commercial properties held in the name of entities (Corp., LLP, LLC, etc) only are eligible; properties held as a sole proprietor, by in joint tenancy, community property or tenants in common are not eligible for commercial loan modification.)

A commercial loan modification will generally take 45-90+ days to complete (from date of submission). They are handled through 'special servicing', 'master servicing' or 'special asset' units, which have extended authority allowing them to streamline and expedite loan modification requests.

Commercial loan modification program attitude

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