Commercial Mortgage Loan Assistance
By: Michael Powers
I’m sure you’ve heard of the widely publicized residential mortgage crisis in the past seven years. However, it is likely that you did not know many commercial mortgages have been impacted as well. The commercial mortgage loan industry has been given little attention across the board. As a result, far fewer law firms and loan modification companies offer commercial mortgage loan assistance. In addition, regulators have given little attention to the commercial segment of the mortgage industry.
The problem was that the commercial mortgage crisis took longer to develop than the residential mortgage crisis. In addition, the commercial mortgage industry was not plagued by the widespread mortgage fraud seen in residential mortgages. However, as the economy fell into recession, American consumers simply had less money to spend. For landlords of rental properties, this meant more frequent delinquency, vacancy and transition. Small businesses began to experience decreased income and often fail all together. Consequently, owners of shopping centers, strip malls and office buildings saw their delinquency and vacancy rates begin to rise. In time, this ripple effect caused many commercial property owners to realize a negative cash flow position. Ultimately, it consumed their cash reserves and their ability to maintain the payments on their commercial mortgages.
Commercial Mortgage Loan Help
So, those commercial property owners began looking for commercial mortgage loan assistance. Unfortunately, most found that securing trustworthy commercial mortgage loan assistance was not going to be easy. First, the laws governing commercial mortgages are different than those governing residential mortgages. Many of the attorneys offering residential mortgage assistance are unfamiliar with the applicable laws. Residential mortgages are governed in great part by the Real Estate Settlement Procedures Act (RESPA). Commercial mortgages are governed by the Uniform Commercial Code (UCC). In addition, commercial mortgages are structured differently than residential mortgages, and performing workouts requires completely different information and calculations.
Commercial Mortgage Loan Attorneys
Because of these facts, the majority of service providers available to commercial property owners today are “loan modification” companies. Unfortunately, loan modification companies offering services for commercial mortgages are not held to the same ethical standards of attorneys, and not regulated by the FTC and their MARS rules. This means that employing them is risky and requires a real leap of faith. In addition, commercial loan modification companies do not have the ability to deploy the legal tactics that an attorney can when appropriate. In some commercial loan cases, there are legal issues with the loan itself that only a licensed attorney can properly address.