Expect Commercial Mortgage Loan Defaults to Keep Rising Says Fitch
A recent report by Fitch indicates commercial mortgages backed by securities (CMBS) will continue to rise for the rest of 2010. Managing Director, Mary MacNeill said that liberal underwriting was a contributing factor for loans originated in 2007 to account for about 35% of defaulted principal loan balances. The numbers suggests there is no end in site for an increase in defaulted commercial real estate loans.
Commercial loans issued with 5,7 or 10 years terms and with balloon payments are starting to reset in the first wave. Since almost half of all commercial properties are "underwater", a good number of borrowers won't be able to refinance into new loans.
Commercial loan workouts can pave the way for property owners facing default, or already in default, to modify their current loan terms to prevent foreclosure. Commercial loan workouts can restructure the existing loan by reducing the interest rate and/or principal amount, extend loan terms, reset the balloon payment, lower fees and make affordable payment arrangements. The commercial loan workout approval process takes about two months or so to complete, depending on the situation.
For more information, please click link: http://mycommercialloanworkout.per.fm/
Commercial loans issued with 5,7 or 10 years terms and with balloon payments are starting to reset in the first wave. Since almost half of all commercial properties are "underwater", a good number of borrowers won't be able to refinance into new loans.
Commercial loan workouts can pave the way for property owners facing default, or already in default, to modify their current loan terms to prevent foreclosure. Commercial loan workouts can restructure the existing loan by reducing the interest rate and/or principal amount, extend loan terms, reset the balloon payment, lower fees and make affordable payment arrangements. The commercial loan workout approval process takes about two months or so to complete, depending on the situation.
For more information, please click link: http://mycommercialloanworkout.per.fm/
Comments (4)
Lenders offer several different types of modifications. First step is to convince your lender to reduce interest rate, make it for long term or make some changes depending on situations. Borrowers should not give up hope. Options do exist, especially via the government's Making Affordable program.
Ray Ethell, over 12 years ago
Nice post for Commercial Mortgage Loan. http://www.nonconformingloans.com.au/
nonconformingloan, over 13 years ago
I purchased my investment property in 2005 for $2.1 million dollars. Recently, (over the past 18 months) I’ve had a tremendously high vacancy rate due to the poor economy and it began taking a toll on all my reserves just to maintain the property. I tried to negotiate with my lender (Bank of America) for a modification. I went round and round with the bank, submitting documents and so on and in the end, Bank of America denied me for a modification. I couldn’t understand why they wouldn’t modify my loan when it was clear that the economy hamstringed my ability to service the debt. The only thing that Bank of America could tell me was that the investor was the one who declined the modification. I asked who the investor was and they would not tell me. It was then that I began to look closer at my original loan and I saw on the Deed of Trust that MERS was listed as the Beneficiary. With all the information about MERS in the news I decided to talk to an attorney. My attorney had an auditing company called Lighthouse Consulting Group review my documents for both a forensic analysis of my original loan documents as well as a Mortgage Securitization Audit. It turned out that my loan was securitized in a trust called “Structured Asset Mortgage Investments II Trust 2005- 8. It was in this trust; there is a pooling and serving agreement, which governs the rules of the REMIC Trust. In my loans pooling and servicing agreement, it said specifically that any loan modified would require a buy-back from the servicer. Now, it was about this time that I began to default on my loan and was looking at ultimately losing my investment property. I was already 6 months in default at this point. The individual I talked to that is an attorney and real estate broker immediately ordered a forensic audit for predatory lending. Commercial properties do not have TILA and RESPA violations. The attorney also ordered a securitization audit to verify if the lender that filed the NOD was actually in proper standing. Both audits reveled several issues about my loan. First, the forensic audit proved that my lender had wrongfully calculated my payment it was overstated by $350 per month. Secondly, the loan itself was an adjustable loan based off the Libor Index, which was dropping, but the loan always adjusted up. This was a major development in a very positive way for me. Then, I had the securitization audit show that my loan was never securitized properly and the note and deed were not even with the same party. My attorney drafted a complaint, outlining everything I have mentioned. As soon as the lender was served, they contacted my attorney and settled without going to court. The settlement I got was a principal balance reduction of $400,000; my interest rate was reduced to 4.5% fixed for 30 years.
J Stern, over 13 years ago
Desmond, Nice post. I think we are going to see HUGE amounts of Commercial Mortgages going into default.
James Ward, over 14 years ago