December 2009 saw the largest ever liquidation of commercial mortgage backed securities. Over half a billion dollars in loans were removed from REMICs (real estate mortgage investment conduits) books. This represents a five fold increase over the same period last year.
Investors in these CMBS bonds lost hundreds of millions. Most of the loans were sold for less than 50% of their face value and some even sold for less then 10 cents on the dollar.
2009 ended with loans over $60 billion in special servicing, up from only $12.8 billion 12 months earlier. A loan that is in special servicing is a loan that is either in default or likely to default soon.
Over $40 billion of CMBS loans were behind in payments as of the end of December, according to Realpoint, a nationally recognized credit-rating agency.
Showing posts with label note buyer. Show all posts
Showing posts with label note buyer. Show all posts
Thursday, February 4, 2010
Wednesday, February 3, 2010
Commercial Loan Modifications and Other Favorable Outcomes
When a commercial property owner hires a commercial modification consultant, a permanant modification is only one of many possible outcomes. Often the property owner is focused on one particular outcome without regard to other possibilities that are often more realistic.
Take a recent example of an owner of an apartment complex that was hell-bent on getting the mortgage holder to grant a principle reduction so that he could sell the property for a profit. He said he could get nowhere with the bank (no surprise there) and wanted to hire a consultant to negotiate a short payoff.
The reality is that the bank won't go for that kind of deal, it just stinks for them. The only way to get the note holder to reduce the principal is to pay him off prior to the sale of the property. One way this could be accomplished is to make a bonafide offer on the note.
A friendly note buyer would then allow the owner of the complex to sell it to a third party and share the profit. Another option would be a short refinance in which a friendly note buyer would buy the mortgage and restructure the terms with the current owner.
Every situation is different. In order to make a recommendation of the best course to take as an owner, an in-depth study must be preformed in order to uncover all of the facts that are relevant.
CommercialModificaiton.com offers consulting services to business owners. Click or call for a thourough evaluation of your situation.
Take a recent example of an owner of an apartment complex that was hell-bent on getting the mortgage holder to grant a principle reduction so that he could sell the property for a profit. He said he could get nowhere with the bank (no surprise there) and wanted to hire a consultant to negotiate a short payoff.
The reality is that the bank won't go for that kind of deal, it just stinks for them. The only way to get the note holder to reduce the principal is to pay him off prior to the sale of the property. One way this could be accomplished is to make a bonafide offer on the note.
A friendly note buyer would then allow the owner of the complex to sell it to a third party and share the profit. Another option would be a short refinance in which a friendly note buyer would buy the mortgage and restructure the terms with the current owner.
Every situation is different. In order to make a recommendation of the best course to take as an owner, an in-depth study must be preformed in order to uncover all of the facts that are relevant.
CommercialModificaiton.com offers consulting services to business owners. Click or call for a thourough evaluation of your situation.
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