A commercial loan modification is very similar to a residential loan modification. However, the mortgage is owed under a business name rather then an individual.  A commercial loan modification is where the lender agrees to “modify” the terms of the original loan. This is usually an interest rate reduction, interest rate freeze (if your loan is adjustable and has not yet adjusted) or a balance reduction.

As the wave of foreclosures continue, many homeowners and businesses are turning to loan modification companies to help them work with the bank. While every company is different, most all will work with you to try and help keep you out of foreclosure.  When a mortgage company forecloses on a property more often than not they lose money, and they lose even more when they have to take ownership of that property. The good news is that there are alternatives to foreclosure that benefit both the borrower and lender.

In November 2007 the Department Of Treasury rolled out new regulations for Real Estate Mortgage Investment Conduits(REMICS) that expanded the list of allowable commercial loan modifications.  The changes allowed two new types of modifications.

One is a modification that alters releases, substitutes, or adds  a substantial amount of the collateral for, a guarantee on, or other form of credit enhancement for a recourse or non recourse obligation, as long as the obligation continues to be principally secured by an interest in real property following such release,
substitution, addition or other alteration.

The other is a change in the nature of the obligation to nonrecourse (or substantially all non recourse) from recourse (or substantially all recourse) , as that obligation continues in principal to be secured by an interest in real property after such a change.

This entry was posted on Thursday, April 23rd, 2009 at 3:33 pm and is filed under Loan Modification. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.