Commercial Loan Workout – The Problem

The Mortgage Bankers Association’s Delinquency Report is showing the 30-plus-day delinquency rates on commercial mortgage securities (CMS) loans are rising.  In addition,  Trepp – a commercial research provider found that defaults in  CMS has jumped 85 basis points by the end of November 2009.  A commercial loan workout may be the only solution.

What we are seeing now is a recipe for disaster in the commercial real estate market for 2010.  A large number of balloon loan payments for commercial property loans are coming due in 2010 and 2011. In the residential arena we know pay option arms are also due to recast in 2010. The vacancy rates are at high levels for multi-family, the unemployment soaring and commercial property values plummeting, commercial property owners are not going to be able to service their debt without serious commercial loan workouts of their loans and business. Property owners need to prepare now in order to avoid default.

According to government officials, the US has about $300 billion in negative equity overhang what will need to be refinanced in the next two years. Refinancing is a big fat if, that is if the Banks are lending of course. The numbers will only continue to increase as approximately $2 trillion or more in commercial mortgages are expected to come due for payment within the next five years.

If you are a business owner seeking help for a commercial loan workout or commercial loan modification, be careful. As many companies populated the residential marketplace, the same is happening in the commercial sector. Just Google “commercial loan modification” and you will see for yourself the proliferation of the so called business opportunity as they are being touted by so called “experts or affiliated with a attorney. The problem becomes that a legitimate organization like Titan Financial Solutions that have the expertise and wherewithal to develop a responsible and well laid out commercial loan workout that is acceptable to the lender and client are being squeezed out by the “pretenders” of the industry.

Eventually these pretenders or affiliate attorney companies will get the attention of the attorney generals of their respective states. For example in Florida Attorney General announced yesterday he has filed a lawsuit against three business and their principles and affiliated attorneys on allegations of deception practices regarding their involvement in residential foreclosure scam.