As Riverside County loan modification lawyers, we have always been interested in the reports from the Congressional Oversight Panel responsible for reporting on the progress of TARP -- the "bailout" program. These reports focus on efforts to stabilize the financial system and thus the economy through TARP, and have touched on residential loan modifications in the past. But we were particularly interested in last month's report to Congress, which highlighted a new problem for the financial system: commercial real estate foreclosures. The Associated Press reported that the panel estimates banks could be stuck with as much as $300 billion in losses because of defaults on commercial loans, which could hurt the economy in many ways.
As with residential real estate, the report said, commercial real estate values have plummeted over the past three years -- by more than 40%. Defaults are likely to result, especially because commercial loans are refinanced every few years. This will have a direct negative effect on banks, said COP spokeswoman Elizabeth Warren, that could have ripple effects hurting the entire economy. Commercial foreclosures mean more empty office buildings, reduced access to credit, evictions of renters whose landlords change, more lost jobs and the failure of hundreds of banks. This is particularly true for smaller banks, because commercial loans make up a bigger share of their portfolios. It will also put a strain on the FDIC, which is already stressed by earlier bank failures. The panel said banks were to blame for basing loans on inflated "bubble" values, and on federal regulators for not keeping a closer eye on small banks. It called on the Treasury Department to address the issue.
Senator Chris Dodd, the Banking Committee chairman, asked bank regulators to continue trying to stabilize the commercial markets and report to Congress about their progress. Unfortunately, our Newport Beach loan modification attorneys don't know of any more specific steps the government has taken. If the panel's predictions are right, however, quick and sweeping action may be necessary to stop another economic meltdown from the real estate sector. The government tried to address this problem at the residential level with the Home Affordable Modification Program, only to be stymied by banks' unwillingness to truly cooperate. We believe any attempt to address the commercial real estate problem in the same way should be backed by a regulation that legally requires the lenders to tell the truth and stop dragging their feet on their obligations -- with significant consequences.
Howard Law PC represents commercial and residential borrowers who need legal help negotiating a fair and workable modification to their loans. Our Torrance loan modification attorneys have been involved in this practice throughout the housing downturn, so we understand all of the tricks lenders use to delay and deny loan modifications. We have found that when we get involved, lenders tend to change their minds quickly and in the client's favor. We believe these sudden changes have to do with the fact that we are lawyers -- we understand our clients' rights, and we will sue to enforce those rights if necessary. In many cases, we're happy to say, we can reach a fair loan modification without seeing the inside of a courtroom.
If you're struggling to modify a loan or negotiate a fair refinancing deal to keep your property, Howard Law can help. To learn more or set up a meeting to evaluate your case, please call us toll-free at 1-800-872-5925 or contact us through the Internet.