Common things renegotiated in a commercial loan modification and some things to think about
1. Principle Balance, Does the property have more debt on it than it is worth?
2. Interest Rate, Will the property support itself based on the current rate or does it need a lower rate?
3. Balloon Date/Maturity Date; is there a way to pay it off by this date?
4. Amortizing period or to interest only.
5. Release or limiting the Personal Guarantees, Can you get your guarantees off the hook?
6. Money for capital improvements or other new cash need.
7. Amount of monthly payment.
8. Technical Default Reasons/Covenants. All kinds of things that can come back to haunt you.
9. Short Sale, with or without release of Personal Guarantees.
10. How strong are the Guarantors? If lender believes there is a pot of gold for a recovery, how does that affect things?
What will make the lender agree to a modification or not is more than the economic reality, what’s better for them or not, often times outside pressure like regulators, shareholders or there lenders and what happens behind the curtain is as important. It’s important to know if this loan be classified as a TRD or a classified asset and what that means.
Be prepared with data to support your request. They need to have confidence in you.
What makes us different? Our experience level and understanding of being on both sides of the table.