The Next Financial Crisis: Commercial Real Estate

Several years into the residential real estate crisis, another one looms just around the corner: Commercial Real Estate. Trillions of dollars worth of commercial mortgage loans are about to reset. Problem: Decreasing property values has prevented many commercial property owners from refinancing. But there is some good news.

According to a October 30th 2009 press release posted on the FDIC.Gov webite, the "Prudent CRE Loan Workout Guidance" was adopted by various federal government agencies.

The FDIC press release stated: "This policy statement stresses that performing loans, including those that have been renewed or restructured on reasonable modified terms, made to creditworthy borrowers will not be subject to adverse classification solely because the value of the underlying collateral declined."

This is good news to commercial property owners who are still creditworthy, but can't refinance due to current economic conditions. The Prudent Commercial Real Estate Loan Workout policy gives financial lending institutions the tools needed to be proactive in preventing loan defaults now and down the road.

The new Prudent Workout guidelines also stated factors that a bank would consider during a commercial loan workout:"The borrower’s ability to repay the loan, the borrower’s willingness and capacity to repay the loan under
reasonable terms and the cash flow potential of the underlying collateral or business."

Since a good number of commercial properties, such as apartment buildings have the cash flow but can't refinance and the owners have been paying the mortgage loan on time, they would make good canidates for a commercial loan workout.

For more information, please go to: http://www.MyCommercialLoanWorkout.com