Commercial loan modification services companies and attorneys often offer a variety exciting promises to commercial building owners. Unfortunately, these services often fail to produce the results they promise. In most cases, the services that commercial loan modification service companies can offer will be limited to document review and follow up.
Challenges with Commercial Loan Modification Services
Commercial loan modification services are typically much more difficult than residential loan modifications. As a commercial building owner, when endeavoring into commercial loan modification services, there are some significant challenges that should be disclosed and addressed.
HAMP and Other Government Programs Do Not Apply
The programs set up by the Federal government such as HAMP and MHA (Making Home Affordable), simply do not apply to commercial loan modifications. Any commercial loan modification offered would be a lender’s “in house” program, which are often less favorable and typically take longer to qualify for. That’s not to say commercial loan modifications can not be done, they just can’t be done under HAMP like residential loan modifications.
Commercial Loan Modification Document Requirements
Commercial loan modification services typically require the production of a great number of documents that residential loan modification does not. This includes everything related to the income generated from the property (leases, advertising, other sources of income) as well as documents related to the expenses of operating the building (utilities, maintenance, management, etc.). The commercial loan modification services decision will be made largely on cash flow and income generated from the building, so those documents are critical.
Favorable Aspects to Commercial Loan Modification Services
With a commercial loan modification, the stakes are generally much higher for the lender, which can work in the borrowers favor. Since commercial loans are, on average, much larger than residential loans, the potential loss for the lender can also be much higher. The cost of foreclosing on a commercial property is much higher, if the property becomes an REO after foreclosure the lender will have to carry it longer and also faces having to manage it in the interim, pay maintenance and property taxes and become a landlord. All these factors make it much more favorable for a lender to continue generating income from the commercial asset “as is,” even if it’s slightly less income, than to go through the foreclosure process. There are many good reasons for a commercial lender to offer commercial loan modification services, it just takes the expertise of the right professional to make them see it that way.
California Commercial Loan Modification Attorneys
McFarlin LLP attorneys handle all aspects of commercial loan modification for borrowers in Los Angeles, San Diego, San Francisco, Long Beach, San Jose and throughout California. Our attorneys are available to provide you with honest reliable advice at our Los Angeles or Orange County offices, or over the phone. With a matter as important as commercial loan modification and foreclosure, it is a very good idea to consider hiring qualified commercial loan modification lawyers to represent you and protect your interests. Call us today at (888) 728-0044.