A commercial short pay refi enables the borrower who currently has an underwater commercial property loan to qualify for a new loan through either their existing lender or an entirely new lender.

How Can a Borrower Qualify for Commercial Short Refinancing?

In a short pay refi, the loss mitigation negotiation process can drastically reduce the principal amount on the loan so the value of the property is adjusted to meet with today’s lower real estate market values. By eliminating the negative equity in the property, the borrower can now qualify for a new loan for a significantly lower amount.

Are There Any Other Requirements for a Commercial Short Pay Refi?

It’s important to note that among other requirements, mortgagees must be current on their existing loan payments for at least the last 12 months in order to qualify for commercial short refinancing.

How Is Commercial Short Refinancing Different From Traditional Refinancing?

In traditional business refinancing, a business owner can borrow against the positive equity they have in their property. In a short pay refi, the commercial loan is upside-down, meaning that the amount owed on the loan is much higher than the current market value of the property. Because a short pay refi involves loss mitigation negotiation, a borrower cannot take cash out at closing.

Just over a year ago, the nation expelled a sigh of relief as our new Commander in Chief was sworn in under the bright blue skies of hopes and dreams. With the country facing economic crisis and real estate a primary concern, our spirits raised as we listened to President Obama’s uplifting speech in which he promised to attack our troubles head-on, starting with the nation’s skyrocketing foreclosure rate.
 
And thus, the government’s loan modification program was born.

Government Loan Modification and Refinance Program Overview

The Obama Administration put into effect the Making Home Affordable Program, with two targeted plans designed to help Americans get back on track: the Home Affordable Refinance Program and the Home Affordable Modification Program. These government backed loan modification and short refinance plans were expected to help between seven and nine million Americans reduce their monthly mortgages to more affordable levels.

The Home Affordable Refinance Program targeted underwater homeowners with mortgages through Fannie Mae and Freddie Mac. The program was supposed to help between four and five million Americans refinance into more manageable mortgages.
 
In terms of foreclosures negotiation options, the Home Affordable Modification Program has dedicated $75 billion to helping between three and four million additional mortgagees restructure their loans. The Making Home Affordable loan modification program has aimed to help American homeowners avoid foreclosure with loan adjustments that can include a reduced interest rate and lowered monthly payments.
 
So, how is the government’s loan modification program doing? According to some industry experts, the program has done more harm than good.

Nearly a year into the program, and the federal real estate/economic recovery plan, the Home Affordable Refinance Program (HARP), is being considered a dismal failure. After great pomp and circumstance, the program has simply fallen short of the objective to provide permanent relief for the number of people it was originally intended to help.
 
The Home Affordable Refinance Program was expected to assist between three and four million homeowners get out from underwater mortgages through government-approved refinance. As of September 2009, HARP has only been able to permanently refinance less than 120,000 mortgages.
 
Under HARP, the process of debt negotiation refinance is excruciatingly slow, the program is voluntary for lenders and qualifications are tight. However, these aren’t the only reasons why a HARP refinance falls through.

HARP Overview

The Obama Administration initiated the Home Affordable Refinance Program in order to help Fannie Mae and Freddie Mac mortgagees reduce their monthly mortgage payments by taking advantage of record-low interest rates. A HARP debt negotiation refinance allows homeowners to qualify for a new mortgage with a fixed low interest rate, thus reducing the amount due over the life of the loan. HARP doesn’t shrink the existing value of the loan, just the interest rate assigned to it.

 

Commercial loan modification may be the saving grace for the mass of American business owners out there who are struggling to stay afloat under the bleakest economic conditions experienced in decades. Learn about the features and benefits of commercial loan modification. Find out what it takes to qualify and discover how M3 Strategy can successfully navigate loss mitigation negotiation on your behalf.

Benefits of Commercial Loan Modification

A commercial loan modification is a loan restructuring that tips results in favor of the borrower. The impetus for loan modification is to avoid foreclosure and to stabilize the mortgage situation for both the lender and the borrower.

The mortgage crisis has crippled business owners with lowered property values, high interest rates and ballooning loan payments. Given the circumstances, commercial loan modification can make the difference between closing up shop and getting back to business as usual.

Commercial loan modification can lead to a number of favorable outcomes, including the removal of equity loss by reducing the principle amount due on the loan, lowering the interest rate, deferring payments for a set duration, allowing interest-only payments or forgiving past due payments and associated fees. M3 Strategy can enter loss mitigation negotiation with your lender and bring a commercial loan modification to the best possible terms.