Commercial loan modifications possible

It's entirely possible for struggling commercial-property owners to obtain a loan modification, according to Kevin Kopp of 1st Service Solutions, a commercial-foreclosure-prevention firm. The problem is that most commercial-mortgage borrowers don't know the proper way to ask, he said. It's not the borrowers' fault, said Kopp, director of the company's Scottsdale office, which opened in December 2009. 1st Service Solutions is based in Dallas. Obtaining a loan modification can be difficult, especially if the loan is what's known as a commercial mortgage-backed securities loan, or CMBS loan. CMBS loans are often tricky to modify, because the original issuer of the loan is no longer involved and the beneficiaries are individual and institutional investors, often scattered across the globe. Once in default, a CMBS loan usually is managed by a loss-mitigation specialist known as a special servicer. Kopp said it's easy for commercial-property owners to get discouraged when trying to obtain a loan modification from a special servicer, because the negotiation process can resemble talking to a wall. Kopp, who has 10 years' experience in the commercial-real-estate industry, said special servicers were essentially limited to accepting or rejecting the borrower's offer. They usually are prohibited from making a counteroffer or disclosing why a borrower's offer was rejected. As a result, borrowers often give up after a couple of rejected offers, he said.

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