Author Ted Karsch

Commercial Real Estate
8 Attorneys for Commercial Loan Modification. What You Need to Know.

Commercial real estate owners who are considering hiring an attorney to handle their commercial loan modification should investigate the background and experience of the person they hiring so that they know in advance what to expect.

In my experience as a commercial loan modification specialist I have found that many attorneys who advertise themselves as commercial loan modification attorneys actually have very little experience performing successful loan workouts. Unfortunately, as many people know, there is an over supply of attorneys in the United States. This forces many lawyers to follow the latest and hottest trends in order to get new business and survive. You may see the same people who used to do accident and injury work now advertising their services as loss mitigation specialists because it has become such a needed service. For this reason the commercial real estate owner should definitely do their homework and research the actual experience of the person they are hiring.

Commercial Real Estate
3 How to Choose a Commercial Loan Modification Company

The vast majority of companies that facilitate loan modifications in the United States are solely dedicated to helping residential homeowners. It can be difficult for the commercial property owner who needs a commercial loan modification to actually find a company that has experience and knowledge in processing successful commercial loan workouts.

The commercial property owner who is facing the prospect of foreclosure has a few different options when he or she is attempting to modify their loan. For an illustrative example I will use a real life situation of a client of mine in Tampa, Florida. We won’t use their real names for privacy purposes and we will use the fictional name of Blue Harbor Apartments for their property.

Commercial Loan Modification: a Hypothetical

They own a 250 unit apartment building that they purchased for 8.3 million dollars in 2006. In the last year they have seen occupancy drop to 65%. This increase in vacancies has severely hurt their net monthly income. Their monthly rental income is now $92,000.00. Their expenses, including the mortgage payments are $118,000.00 a month. They are currently coming out of pocket over $20,000.00 a month just to hold on to the property. The loan they have is held by a major international bank and is amortized over 25 years at an interest rate of 7.5%. They are in a tough situation because the value of their property on today’s market is approximately 6 million dollars. They are unable to refinance with another lender because they don’t have any equity in the property. The only choice they have is to try to modify the commercial loan.

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