Commercial Loan Maturing – What To Do

According to industry sources, an astounding $150 billion in CMBS loans are expected to mature in the next three years, with $62 billion of those happening in 2012 alone. With so much at stake, many find themselves wondering what to do when they have a commercial loan maturing. If you’re one of those borrowers who has a commercial loan set to mature, you may be at a loss as to what you should be doing – or you may be doing the wrong thing.

So your loan is set to mature, you’ve attempted to contact the lender, but you’ve had no luck in getting some answers. What do you do now? The key is to understand your options and knowing how to best communicate with all parties involved.

First, you must understand that timing is everything. The sooner you explore your options and take action, the better it will be for both you as the borrower and for the lender. What is the timeline, then, for restructuring a commercial loan that is maturing?

Timeline for maturing loans

 

At 90 days before maturity, your Primary Servicer should have already contacted the Master and the Special Servicer both to set some expectations as to how the process will go.

At 30 days before maturity, a detailed outline of a plan should be in place, and presented to all of the parties involved.

At maturity, the lender, the borrower and the Special Servicer should be ready for negotiations, exploring one of these three options for resolution of the loan:

1. Extend the loan. Extensions can be granted, usually for a period of one to two years. Typically, extensions require the borrower to pay down on the loan.
2. A discounted payoff. This option can happen so long as you are cooperative and completely honest with your lender. Supporting documentation to back up your reasons for not being able to pay off the loan at its current rate are helpful in helping the Special Servicer understand your extraneous circumstances.
3. A review of options for a short sale or a note sale. The key to this option is providing exposure to the market in order to justify value. There are several options for this type of execution.

Your commercial loan maturing shouldn’t be a source of worry for you. With the right help to understand the process and the deadlines involved with all of the parties in a CMBS loan, you should be able to navigate through this period of uncertainty with no problems. Find out more about how 1^st Service Solutions can help you resolve your maturing loan restructuring by visiting www.1stservicesolutions.com or liking our Facebook page.