CAN YOU SEE THE DIFFERENCE IN THE TWO PICTURES?

Workout, Modification, Restructure

“This is actually a trick. Not only are the pictures exactly the same, but so is the use of the word “modification”, “restructure”, and “workout” within the CMBS industry!

DEFINITION Workout, Modification, Restructure:
A mutual agreement between a lender and borrower to renegotiate terms on a loan that is technically in default, so as to avoid foreclosure or liquidation. The renegotiated terms will generally provide some measure of relief to the borrower in terms of reducing the debt-servicing burden through accommodative measures provided by the lender, such as extending the term of the loan, rescheduling repayments and so on.

DEFINITION Workout, Modification, Restructure:
The process of working with a lender to explore alternatives to foreclosure or bankruptcy after a default.This may involve the lender receiving additional collateral,lengthening the term of the loan, writing down part of the principal balance, providing minor additional lending to make the repairs necessary to sell the property at its best price, or any number of negotiated terms and conditions.One of the keys to a mutually beneficial workout solution is for all parties to be well educated regarding the consequences of bankruptcy.One example is the ability of a bankruptcy court to reduce the principal balance of a mortgage loan under certain circumstances. It is also wise for borrowers to understand the limitations of bankruptcy,however,so they don’t take an imprudently aggressive stance with their lender.