A commercial loan modification company can assist you with negotiations with your lender to obtain a modification on your existing commercial loan. Most commercial loan modification companies employ business and financial experts or attorneys to assist you with your modification. Many employees are licensed mortgage brokers. Commercial modifications are complicated. It is also recommended that you speak with a commercial loan modification attorney to obtain legal advice.
Determining Factors in Hiring a Modification Company
You should interview a few modification companies, and find out the following information before you hire one:
- How much they charge? Avoid paying a large upfront fee.
- Will they give you a guarantee that you can receive your money back or a portion of it back if the company is unsuccessful in obtaining your loan modification?
- Get a detailed proposal in writing of all the services that the company will perform for you.
- Ask for references of satisfied clients who the company has recently obtained a successful loan modification on their behalf.
- Find out the name of the person who will actually be handling the negotiations, their experience, qualifications and success rate.
Be sure to only work with a reputable company to avoid becoming a victim of a loan modification scam. It is a good idea to ask your commercial real estate broker, accountant or attorney for a reference.
The Process
A commercial modification is the process of negotiating with your lender to provide you a permanent or temporary change in your loan terms or interest rate because you are experiencing some form of financial hardship. Hardships include:
- Reduction in rental income
- Loss of tenants due to hard economic times
- Loss of sales revenue
The average commercial modification takes between one and three months because it takes awhile to get approval from your lender’s loss mitigation and legal departments and others involved in making financial decisions regarding your modification. In order to get your lender to approve your modification, you have to demonstrate that your hardship is temporary and that you can meet the modification guidelines and afford to make your new mortgage payment. The modification will help you from defaulting on your loan and losing your property to foreclosure.
A loan modification company representative will meet with you and prepare a loan workout to determine if you are eligible for a modification. Once they determine you are eligible, then they will help you complete the application, submit your financial documentation and start negotiating with your lender. You will need to provide your net operating income information, an income and expense state, copies of your current rent rolls and past two year’s rent rolls and information regarding your tenants. The lender considers your ability to pay back the loan, your net operating income and your vacancy factors in determining whether to approve your modification or not.
Since a modification company is experienced at handling modifications and getting results, they can address any concerns or objections your lender may have in a professional and expert manner. They understand how to deal with difficult lenders. The negotiator has established relationships with loss mitigation departments and knows who to speak with to get the application approved quicker and to avoid delays. It is smart to use an experienced negotiator because your lender will take your request more serious.
Hire an Attorney
A modification attorney can explain the process and give you legal advice. The attorney can review your loan documents and conduct a forensic loan audit to determine if your lender followed the laws. If your attorney finds that your lender violated the lending laws, the attorney can use this as leverage in helping you obtain your modification.
