Commercial Mortgages 101: Everything You Need to Know to Create a Winning Loan Request Package

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.

Property Name

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.

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Commercial Mortgages 101