- Everyone is aware of our economic crises and nationwide home foreclosure and commercial loan foreclosures that are having a devastating impact on our financial system. Congress has stepped in and is working to help residential homeowners, but the next crisis that is now upon us, is commercial loan defaults.
- Expected Losses
- This new wave of commercial loan defaults is expected by most economists and other experts to be even worse than the residential crises we are now facing. Experts are estimating that two-thirds of all commercial real estate loans due in the next few years will become delinquent and will lead to foreclosure and financial ruin for banks, servicers and insurance holding companies and for the borrower or property owner as well.
- The market has changed. The commercial vacancy rate has risen to the highest rate since the ‘90s. With vacancy rates high and climbing, landlords not collecting rents, shoppers not spending, real market rents lower than originally forcasted and strong signs that inflation will soon be running rampant. Experts are predicting that, due to these problems and more on the horizon, within the next few years, commercial real estate owners will encounter the same problems currently facing homeowners.
- Hotels, retail shopping centers, warehouses and office buildings cannot escape this fate. There are $1.3 trillion in loans to commercial properties coming due between now and 2013. The coming commercial real estate crisis could be as bad as or even worse than what occurred in the early 90's.
- Top Foreclosure States
- As with the home foreclosures, the highest commercial delinquency rates will likely be in the areas that got most overheated, such as parts of Florida, Nevada and California. Added job cuts will also lead to vacancies in many metropolitan areas throughout the country. These states also suffered from the most overvaluation of property; they have high vacancy rates, and high jobless rates. This combination is the perfect storm and will cause the commercial real estate market to falter.
- What We Need From You
- We will review your current loan documents and financial situation, but before we meet, please gather as much of the following information as possible:
- Anticipated Time Line
- After we meet with you we will prioritze the critical issues to deal with and gather any additional documents needed to fight on your behalf. We may ask for you to create or update some documents (such as your business plan) or gather other important information (such as your marketing data) to help us with our representation. We will also, at that point, audit all loan documents and perform a complete underwriting analysis, in order to determine whether your lender has complied with all Federal and State specific laws. These steps should take less than a month, depending on how quickly you can provide us with documentation and your complete cooperation.
- After we have built your case and decided on the best possible strategy, we will contact the lender on your behalf, and begin the negotiation process with them. We work as diligently as we can to receive the best deal possible for you. Lenders are overwhelmed attempting to manage their portfolios and limit losses, but can still anticipate finalizing negotiations within 90 days.
- Thereafter, we will need around 30 days to draft, and finalize the workout documents and close. Depending on your cooperation and the cooperation of your lender, this entire process may take as long as six months.
