A workout commercial loan can help you avoid foreclosure

Owners of commercial properties like malls, hotels, restaurants, resorts, warehouses etc. are facing a tough time in repayment of their commercial loans. The difficult financial scenario of the past few years has eroded the value of a lot of properties, which in turn, has increased the number of foreclosed commercial loans. A lot of commercial property owners are hence looking for workout commercial loan opportunities, which will go a long way in retaining ownership of the property and avoiding foreclosure. As part of the workout commercial loan process, the borrower and the lender re-negotiate the terms of the commercial loan, so that the payment terms become easier for the borrower and he/she can avoid bankruptcy or foreclosure. A commercial loan workout is hence extremely helpful to loan owners who want to avoid defaults or foreclosures. Renegotiations to avoid a foreclosed commercial loan may include a lower interest rate, elongating the loan period and other special payment agreements as agreed mutually by the lender and the borrower. A lot of special servicers are offering their expertise as a go-between for both parties during negotiation rounds.

A workout commercial loan not only ensures that the borrower can continue with the payments, it also ensures that the loan doesn't go in the distressed category. A workout commercial loan is also useful to banks, financial institutions and other lenders who want to reduce the number of foreclosed commercial loans in their books at the end of the year. Such institutions are now offering commercial loan workout opportunities which offer the borrowers a chance to prevent defaults in payments or foreclosures. If you are looking for a workout commercial loan, take the help of a special servicer, who will not only know the whole process in detail, but will also help in the negotiation procedure.

Steps to follow if you want a workout commercial loan

Workout commercial loan opportunities are becoming a popular choice for both borrowers and lenders who have considered the impact of the potential delinquencies in the current financial scenario. Terms of a workout commercial loan give banks and financial institutions a chance to lower the number of foreclosed commercial loans in their books. At the same time, such a setup offers the borrower the chance to retain ownership of the property or business for which they had taken the loan in the first place. Change in the terms of a commercial loan as part of a workout commercial loan may be anything from special payment agreements, a low interest rate to an extension of the deadline for payment, as per the agreement reached by both parties.

The main purpose of a workout commercial loan is to make the terms and conditions as beneficial to the borrower and lender concerned. A crucial factor in determining the conditions of the workout is the financial condition of the loan owner. The borrower takes into consideration the current cash flow of the borrower in order to agree to any terms of the workout commercial loan. This and a lot other factors need to be considered in order to avoid a foreclosed commercial loan.

A workout commercial loan has a complicated and lengthy process to be followed. Consider these steps if you want to be well prepared to avoid a foreclosed commercial loan:

• If you are a loan owner looking for a workout commercial loan, the first step you need to be prepared for is the paperwork. Documents required may be detailed papers related to the loan and its terms, your financial details, loan maturity details etc. Such papers will help determine if a workout commercial loan can be agreed upon. Without this documentation, the process cannot start. An expert like a special servicer can help you with such documents.
• As a loan owner, you need to submit a financial snapshot of your condition to the lender before you can submit the workout commercial loan. This will enable the lending bank determine if you will be able to fulfill the conditions of the deal. Again, a special servicer will come handy when you prepare this financial snapshot. After this is done, the paperwork is forwarded to a workout commercial loan specialist.
• Next comes negotiation. A workout specialist analyses your paperwork and then takes a call on which terms to change in the commercial loan. You, along with your special servicer should try to make the final terms as favorable to you as possible so you can avoid a foreclosed commercial loan. Negotiations may stretch out to a long time, so have patience when you are dealing with the bank or financial institution.
• Once the conditions are formalized, you will get the changed conditions of the loan and other details of the workout commercial loan for review. Check the documents carefully to include all the conditions discussed. After you sign this new document, your workout commercial loan will be considered final and successful.