AFP and other media sources are reporting that “Major mortgage lenders Bank of American, JPMorgan Chase and GMAC have in recent days announced they were suspending tens of thousands of foreclosure processes across the country due to apparent improper handling of documents.” These lenders might also be facing future lawsuits and fines as more and more cases of improper documentation follows.

It is important to note that these documentation problems will not stop a foreclosure or release the borrower from the debt owed. (No free house) However, it should definitely serve as leverage to negotiate with the lenders for a more favorable compromise or solution, whether you are the investor or the homeowner. For instance, lenders might be more motivated to consider a loan modification or short sale, which they would not have considered otherwise. In finding these documentation flaws, use a competent attorney who is already intimately familiar in examining mortgage documents for irregularities. A competent attorney will not only go over the mortgage documents, but will also check the lender’s other documentation for maximum leverage. Since many loans were bundled as a security or sold to a third party, Lenders have to keep proper documentation in those transactions as well. If there is a problem in the mortgage documents, there is good chance there will also be a problem with documents concerning the sale of the loan, which means more leverage for your negotiations.

Will the lenders bend over backwards over these documentation problems? Yes, but to only a certain extent. In order to correct these problems, the lenders have to bear additional costs due a more lengthy and troublesome foreclosure process which is already quite expensive. If the problem is serious enough, lawsuits and fines can also be a concern. While these documentation problems are enough to get the lender’s attention, you will only be able to negotiate better terms to the point that the lender is convinced it is in their interest to do so.

It is of common structure under this type of loan to make the mortgage ‘nonrecourse’. This simply means that the lender can legally seize the collateral in the event of non-payment, without further demanding from the borrower any remaining deficiency. The reason for this is that major laws disable creditors to go after the borrowers for their loans. Mortgages also provide a clause that permits lenders to immediately take possession of the collateral as these mortgages are to be sold as bonds and are given high priorities.

In the United States, a commercial mortgage loan frequently requires affordable monthly payments. The usual time frame for payment, or the term of the loan, ranges from 20 years to 30 years. A shorter term can be enjoyed if a borrower is willing to make a balloon payment, paying off the total in full to cut short the loan term. The interest rates for a commercial loan is relatively higher than those of residential loans, but a good point is that they are fixed, or unchanging, throughout the term.

The purpose for taking on a commercial mortgage loan varies, but it is generally geared toward business enhancement. Commercial properties or a commercial land is acquired to be used for industrial purposes. Others use this loan to develop an existing business by extending the premises or by property improvements. It is a crucial fact that as with any type of loans, prompt payment is a guarantee to avoid the risk of losing one’s business property in this kind of mortgage.

Lenders, in the form of banks and in some cases, building entities, have set a criteria in deciding to grant loans. These qualifications must be satisfied if one intends to make use of a mortgage loan. The first criterion being assessed is the borrower’s debt service ratio. This ratio represents the actual cash available versus the loan payments required. Those with adverse credit history will have a very slim chance of being approved, as lenders will definitely favor those borrowers responsible enough in handling their credit dealings. A positive credit rating reflects creditworthiness not only of the individual but also of the business being represented. Consequently, businesses seeking this loan should be profitable and stable. Lenders will even request for evidence that the business can successfully gain revenues to shoulder repayment obligations.

A final yet weighty piece of advice to make the most out of a commercial mortgage loan is to get it directly from the lenders. Be sufficiently informed of how the process works to save unnecessary broker fees.