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They can - but that requires both parties to the contract to agree on modification. If I'm a bank holding a commercial mortgage, it's very finely honed to mini
by gwbrooks 4y ago
They can - but that requires both parties to the contract to agree on modification.
If I'm a bank holding a commercial mortgage, it's very finely honed to minimize my risk; as part of that, I contractually limit what can be done with the building.
Why would I, as a lending institution, throw that security away for something much riskier? If the emptying out of commercial buildings that we saw during the pandemic accelerated, that might have provided the incentive. But it seems like that trend line isn't going to continue in force.
I think converting high density commercial properties to residential is a great idea in a lot of cities. But ultimately it's going to be done almost exclusively in buildings that are mortgage free.
- ThrustVectoring 4y agoFar more likely than a mortgage modification is a straightforward sale of the property to new ownership (who then goes on to refurbish as residential and sell or lease the units). The banks have a specific dollar amount that pays off their obligation in full, at which point it's the buyer's problem (and their financing).
- positr0n 4y agoInstead if changing the terms, couldn't the owner of the building refinance with a new bank that does residential property mortgages?
- conductr 4y ago> ultimately it's going to be done almost exclusively in buildings that are mortgage free. Not at all. Your commercial mortgage lender will always help you increase the productivity of your asset. Phone call. Excel docs. Talk terms. Lawyers. Done. If you don't know this, nobody loaned you $#,#00M and you'll never need this advice
- chubs 4y agoThank you! Good to see a bit of that can-do attitude here :) Lots of things are possible if you assume the other guy wants to help, and ask!