equity in real estate that a commercial lender is most interested in.
S ince a borrower is presumed to be engaged in the commercial real
estate business full time, it can be safe to assume that a borrower’s net
worth is mostly vested in real estate assets. A high net worth is good,
but a high net worth in real estate is even better, and that’s the reason
that the property value section is extremely useful to the lender.
When attempting to complete the REO Schedule, it’s usually a
good idea to move from left to right across the table. The first few
column headings are self-explanatory and can be completed quite
easily. However, beginning with the Date of Acquisition column, the
requested information becomes specific and detailed and may
require a little research. Most likely, the borrower will not remember
such detailed information and will need time to reference property
files in order t o correctly and accurately complete the schedule. The
importance of being accurate cannot be stressed enough, and any
attempt to fudge or guess at the information may result in the
lender’s rejection of the REO Schedule, causing further delay in pro-
cessing the loan.
Commercial properties are usually assigned project names such as
Oak Tree Apartments or Highland Village Shopping Center. A prop-
erty name is not a legal name for the property but merely a trade
name or signature used by the owner. Property names are often
omitted, making it difficult to differentiate one property from anoth-
er. It’s not absolutely necessary, but lenders like details, so be sure to
include the property name or, if there i s no official building name,
make one up for easy reference. For example, if the property is an
office building located on Jackson Street but doesn’t have an official
building name, make up a reference name like “Jackson Office
Building.” Sometimes a property is referenced by using the actual
name of the partnership, such as Tree Top Apartments, LP.
Commercial Mortgages 101