Commercial Modification Industry Update
For The Past 13 Years We Have Trained Attorneys, Realtors, CPAs, Financial Advisors and Mortgage Brokers How to Evaluate and Process Commercial Modifications / Workouts.
There is currently more than two trillion dollars in commercial loans coming due in the next 24 – 30 months. According to the Mortgage Banking Association there is still a total of over four trillion dollars in outstanding commercial loans in the U.S.. with over 21% of hotels, 11% of retail and nearly 5% of apartment delinquent and more trouble on the horizon due to COVID-19.
These maturing loans present a real threat to the U.S. economy if they are not restructured before the forbearances run out or their balloons mature. The U.S. is expected to experience recession through 2023 which will place continued downward pressure on affected property types moving forward.
Banks are unable to re-underwrite new loans for those properties affected because of new stricter guidelines preventing them from lending in high ltv scenarios and fear that the tenants will not recover and start paying again which would force the owner to seek new tenants in order to bring cash flow back in line.
Most lenders are more than willing to create a workout solution for the borrower which typically extends the current maturity date out 1 – 3 years and in some cases provides an interest only payment solution to further pad the decreased DCR (debt coverage ratio).
As the only company providing access to a vast network of commercial professionals and borrowers CREF Xchange is the industry’s pathway to all segments partnering up and solving these remaining loan issues. With proper training and support industry professionals are able to assist commercial borrowers, add more revenue to their businesses and help solve a serious looming problem for their community and the country at large.
While most analysts believe the commercial market has bottomed out there are still serious concerns about COVID’s overall effect on the economy and unemployment. Many states have been hit hard causing high unemployment and businesses slowing dramatically if not completely shutting down.
There is still a 2 to 3 year window before these issues are resolved one way or the other leaving plenty of opportunity for those interested commercial professionals to get educated and then get in the game.