The Other Shoe Is About To Fall- Commercial REO
While everyone is talking about the flat residential housing market, there is growing evidence that the other shoe is about to fall. Analysts are warning the foreclosure onslaught that hit the residential market in 2008 is set to hit the commercial real estate market by the end of 2009 and extend through 2012.
Conservative estimates indicate commercial property values have fallen 30 percent to 40 percent and even higher in some markets. Loan defaults are already rising. “For Lease” signs are hanging in almost every strip center, office park and mall. Rising vacancy rates, together with rapidly declining rents, are diminishing cash flow. The resulting problem is empty buildings, no income, and low appraisals.
Lenders are then faced with the inevitable decision of writing down loans because of lower appraisals and taking a loss on the difference. With lenders either unwilling or unable to modify the loans by extending the due date or rewriting them at lower rates, the only decision is foreclosure or deed-in-lieu of foreclosure.
Unfortunately, this is the harsh reality we are faced with. The REO departments for the lenders are being overwhelmed with defaults, requests for “work outs” and notices of bankruptcy.
If you are the decision maker for one of these lenders or an attorney working with the lender then consider partnering with First Nebraska Title and let us carry some of the burden.
1. We can participate in the due diligence process with tax, lien and other search information, both pre-foreclosure and post-foreclosure.
2. We can search the appropriate government records to insure you receive good title in the event you want to accept a deed-in-lieu of foreclosure.
3. We can monitor bankruptcy proceedings and let you know when it is appropriate or necessary to obtain relief from the bankruptcy in order to initiate or continue a foreclosure or deal directly with your borrower again.
4. We can issue pre-sale commitments with the buyer “to be determined” once you have taken possession of the property and assist with the sale and escrow closing in order to minimize the time you have ownership of the property. This will result in substantial savings relating to ongoing utilities, real estate taxes and other liabilities that come with REO’s.
We have knowledgeable attorneys on staff and can assist you in making sure you maximize your opportunities in overcoming the challenges that come with REO’s. Call us at 402-691-9933.