GRAPEVINE, TX-During the credit-frozen days of 2008 and 2009, when practically no one could get any kind of refinancing, special servicers were generous with modifications as existing debt matured. There was good reason for this: Frozen credit markets meant no money could be had, and extending the terms of a loan meant an asset could stay out of default or foreclosure for awhile longer.
That was then. During the RealShare Distressed Assets “Special Servicers Power Panel,” produced by Real Estate Forum and GlobeSt.com, it was very clear that loan modifications are fast becoming things of the past. “There are better alternatives out there to modification,” noted Kevin Donahue, senior vice president, Midland Loan Services Inc. during the “Special Servicers Power Panel.” As a result, “Borrowers are under more pressure to come off modifications,” he said.
Matt Stewart, senior vice president with TriMont Real Estate Advisors acknowledged his company engages in modification. However, “We hold the borrower’s feet to the fire to ensure they’re working to add value to the asset,” he said.
Why the turnaround? Are servicers becoming more selfish? Not necessarily – but they are becoming fatigued. One thing they’re getting tired of is borrowers who are demanding modification without wanting to give back. Joe Greenhaw Jr., executive vice president, loan administration with Cohen Financial said it: “If the borrower doesn’t want to add value, he’s gone.”
This is not to suggest that all modifications have gone the way of those clich
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