1) Required Paperwork
The required paperwork is gathered from property owners. Documents needed: Rent roll, copies of expenses within the past year, rental agreements, copies of the mortgage note, etc. Not having all of the required documents could delay the whole process.
2) Research Analysis
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 favorable terms. Determining the current market value, rental rates and recent comparable sales are also important factors to consider. After a review of the note 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 mean having your file stuck somewhere in the mail room for weeks or “lost in Neverland.”
4) Negotiation Process
The workout specialist reviews the package and presents a loan modification offer. Sometimes the property owner or third party workout firm will make counter offers until an agreement is excepted with favorable loan terms. The whole process 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 property 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 modified loan documents are signed by both parties to make the changes official.
In 2004, Desmond Primus formed Beckley Associates, an affiliate financial services marketing company which currently focuses on helping commercial real estate owners facing foreclosure through commercial loan workouts. Beckley Associates also markets commercial mortgage loans, business debt restructuring and business credit consulting services. For more information, please go to: http://www.MyCommercialLoanWorkout.com
