The owner of a strip mall, shopping center, office building, apartment complex, multi-tenant building and other kinds of commercial properties, can workout with the lender a commercial loan modification agreement.  the changes to the commercial loan may cause a reduction in the interest rates, the lengthening of the loan term,  interest-only payments for a certain period of time, or a discount in the outstanding amount.  However, before the talks on possible modifications to the terms of the loan agreement can be held, the lender has to conduct a commercial loan review.  This review will entail the examination of the various documents of the borrower and  various information. 

the commercial loan review will involve both the borrower and the lender and is necessary before a commercial loan modification could be agreed upon by both parties.  it should be pointed out that the bank regulators are encouraging the restructuring of the loans because they know that a large number of the borrowers do not desire to default on their payments but the economic situation has only made them temporarily incapable of coming up with the payments.  Several of the owners of commercial properties may only need some time to get back on track while others may require a permanent adjustment to the loan terms.  the restructuring of the commercial loan will be beneficial to the property owner because it will prevent the foreclosure or repossession of the commercial real estate.  it will be advantageous for the lender because the borrower continues paying although at lower amounts and the costs of foreclosure are avoided.  during the crisis in the commercial real estate market, the lender also avoids being stuck with assets that are very difficult to sell if a commercial loan modification is allowed.

the lender utilizes the commercial loan review to ensure that the business has the capacity to provide for the mortgage payments in case the adjustments are allowed.  the bank or lender will examine various factors during the process such as the availability of guarantors, the conditions of the market, the payment history, and the business cash flow.  

from the point of view of the borrower, the commercial loan review process is quite different.  This process is often facilitated for the property owner by loss mitigation experts and lawyers who will carefully examine the text found in the initial loan contract.  the reason for this is that many agreements that were made during the times when commercial real estate was booming contained flaws or violations of laws and regulations that were created to protect the rights of the borrowers.  if violations are found in the documents, this would mean that the provisions in the contract, such as foreclosure, cannot be enforced.  the lender may even be required to return to the borrower the interests that have been paid from the beginning of the loan.  This means that the commercial loan review can unearth potential negotiation tools for the borrower that can speed up the approval of the application for loan restructuring. for further details visit the commercial loan blog

What Is the Commercial Loan Review? – Realtor Marketing Solutions