Is There A Mortgage Double Standard: Commercial and Residential Real Estate

As a mortgage foreclosure defense attorney, it really burns me up that homeowners are once again getting the short end of the stick.  There is a double standard going on in this real estate meltdown.  Lenders are telling homeowners that they have a “moral obligation” to pay their mortgages, and the failure to do so will result in a foreclosure proceeding.  Yet this begs the question:  Are Lenders treating commercial real estate defaults the same way that they are treating residential real estate defaults.

In Southwest Florida, times are tough.  If you take a ride down any street, you will see For Sale and For Lease signs everywhere.  This meltdown is not limited to homeowners.  Strip malls need tenants.  Commercial buildings need tenants.  I was offered a lease on some beautiful commercial real estate (office space) for $5.00 a square foot, which used to lease for $18.oo per square foot.  Yikes!

I recently heard that in the not too distant future, over 800 billion dollars of commercial real estate will have to be re-financed or paid off.  Let’s get one thing straight before proceeding.  The corporate world, with regard to the commercial real estate market, works differently than the individual homeowner who falls behind on the mortgage on his home.  We all know what happens when the homeowner falls behind, or even worse, is instructed to fall behind on his home, the homeowner has to apply for a meaningful loan modification.  I think the homeowners odds are better in Las Vegas.  I’m not advocating taking the mortgage money to Vegas and doubling down.

But ask yourself this question:  What happens when a publicly traded company cannot honor its commitments.  Do they receive harassing phone calls?  Are they threatened with foreclosure?  Probably not.   What really happens is that they are probably invited in for a meeting with some Vice President.  The client gets an opportunity to tell the bank what is going on and what can be done to save the company and the bank.

A deal may be struck at that time or another meeting will be scheduled wherein the company can provide the lender with more information.  This is the typical way a corporate transaction is handled.  It seems that when it comes to commercial real estate, no one wants to get their hands dirty.  However, when it comes to residential real estate, it seems the lenders pull out all the stops to get the no-good homeowners out of their houses.

This post was written by Carmen Dellutri, Esq. of The Dellutri Law Group, P.A.

Related posts:

1. Connecticut Requires Mediation In All Residential Foreclosures
2. Makinghomeaffordable.gov -Real Loan Modifications and Refinancing
3. Chapter 13 Debtor’s Beware: Recurring Problems With Mortgage Companies – Part 1 “Double Dipping”