An Increased Lender Willingness To Modify Some Commercial Loans
Commercial lenders across the country are becoming increasingly aware of their need to enter into modification agreements with their borrowers, according to Kevin Levine, executive vice president of Strategic Asset Services, Woodland Hills, Calif.
Commercial mortgage values are falling in most markets, and office buildings, retail centers and multifamily residences are losing tenants at an increasing pace due to the economic recession.
As a result, borrowers are experiencing compressed cash flow and are unable to meet their loan payments, Levine said.
"Unless the loan is modified to reduce the payments, the lender inevitably will be forced to commence foreclosure proceedings.," he said
But balance sheets of banks and other lenders are only able to absorb a limited number of foreclosed properties, and that limit is being approached or exceeded by many lenders."
Just as the residential lenders were forced by declining circumstances to cooperate with the homeowners, commercial lenders are now being compelled to negotiate with their borrowers, he added.