Commercial Real Estate Cincinnati Area
Avoid Foreclosure With A Commercial Short Sale
Lenders and Lenders holding Commercial Property Mortgages for income-producing properties are expected to have severe problems by 2010 when many of these Mortgages reach the end of their terms. Many of these properties were purchased using Commercial mortgage backed securities (CMBS) Mortgages that had very aggressive terms with as high as 90 percent financing with a term of only five years. The problem is that a balloon payment is due at the end of the term and property owners will not likely be able to come up with the required amount.
Ordinarily, the property owner will either sell the property or seek refinancing but with the financial crisis, this would not be much more difficult. Moreover, the market values of these properties have been sliding down and have been reduced by as much as 30 percent. On top of these, there are legal restrictions to making any changes in the terms for CMBS Mortgages, although negotiations for a Loan Modification could still be made.
A possible solution for both property owner and lender to avoid a foreclosure is through a Commercial short sale. This is quite similar to the short sale in the residential housing market where the lender agrees to the sale of the property at the price that is lower than the outstanding balance of the property owner. The negotiation process for the short sale usually requires a lot of time and effort. Thus, a Commercial loss mitigation professional is usually called in to locate buyers and to transact with the bank or lender.
SOURCE: Commercial Loan Review
CoStarGo™ App Wows Cincinnati Commercial Real Estate Brokers