CMBS Loan Workouts: Why Some Lenders Do Things that Don’t Seem to Make Sense

Depending on the status of the property, a loan workout could put the lender in a significantly better position than if the lender were to foreclose on the property. Yet, many times a lender declines to accept the borrower's workout offer.

You have probably heard the following frequently with regard to trying to successfully complete loan workouts of commercial real estate loans: “What the lender did just does not make any sense.”

This could be in the context of an offer to buy your own note from your lender or an offer to continue making loan payments, but at a reduced monthly amount. Depending on the status of the property, a loan workout could put the lender in a significantly better position than if the lender were to foreclose on the property. Yet, many times a lender declines to accept the borrower’s workout offer.

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