Commercial Loan Modification Underwriting

When it comes to commercial real estate lending, lenders understand the high costs associated with the foreclosure process. In addition, despite potential covenant and maturity defaults, lenders see the benefit of continuing relationships with certain customers. A loan modification can keep costs down while continuing, and even building a strong relationship with a customer.

The world has changed dramatically over the past couple of years, and a loan that was originated a few years ago, could be sensitive to these changes. Examples of this include office properties that have seen declining occupancy, restaurant properties with tenants operating on razor thin margins, retail properties competing against e-commerce, multifamily properties with limited rent growth potential, or hospitality properties still recovering from the pandemic. Borrowers that easily qualified for a loan a few years ago might not be able to refinance in today's market. In addition, these same properties that easily met loan covenants such as DSCR or Debt Yield limits, but due to declining revenue, occupancy, or adjustments in interest rates, are in default.

Ancram Consultants does a deep dive into every loan. We can review past and current financials and identify loans that have potential issues. We review each property's tenant base and help highlight potential tenant issues. We uncover market data including what comparable properties are doing in the market. Does it make sense to adjust interest rates or extend a loan? We provide solid underwriting in a format that will assist your institution in making sound modification decisions.