Many have been expecting an increase in the number of commercial mortgage renegotiation deals after the U.S. financial regulators issued a new policy statement requesting that banks and financial institutions sit down and renegotiate with distressed and financially troubled borrowers and try to come up with a viable solution for both parties. The regulators, led by the FDIC, expressed their firm belief that loan modifications could be beneficial for both the bank and property owner. The new policy statement observes that commercial property owners may have been a victim of the crisis and are still willing to settle what they owe. The regulators also stated that the current valuation of commercial properties is actually lower than the commercial loan balance and this should not discourage the lenders from approving their borrower’s request for loan modification.
