Extending a commercial loan or refinancing it

A maturing commercial loan has two different exits. The current lender can extend, modify, or forbear. A new lender can refinance and pay the old loan off. An extension that was written into the original note is a contract right, and it usually has a test: a coverage ratio, a loan-to-value cap, no default, or a fee. If you miss the test, the extension is not available just because the maturity feels close. A modification is a new agreement when the old note did not give you the right. Forbearance is a temporary standstill while something is already wrong. People use the three words as if they were the same courtesy. They are not.

On June 29, 2023, the Federal Reserve, the FDIC, the National Credit Union Administration, and the OCC issued a policy statement on prudent commercial real estate loan accommodations and workouts. The agencies' release says the statement updates the 2009 workout guidance, adds a section on short-term accommodations, and tells supervised institutions they may work constructively with creditworthy borrowers. An accommodation, in that release, includes deferring a payment, taking a partial payment, or giving other relief. The statement applies to institutions those agencies supervise. It does not order any lender to extend your loan. A life company, a conduit, and a private lender are not bound by a press release written for banks and similar depositories.

What to compare before you pick a path

Write down the extension test, the fee, and what happens to the rate. Write down the refinance prepay, the new proceeds, and whether today's income clears coverage and debt yield. The Federal Reserve's SR 15-5 letter is earlier interagency guidance on commercial real estate risk. The OCC's Commercial Real Estate Lending handbook is how bank examiners describe the risk. Together they explain why a bank may want a paydown or a guaranty before it extends. They are not a worksheet that approves you. The Mortgage Bankers Association's research pages are the national maturity backdrop. They are not your payoff.

A mini-perm loan is a short permanent loan that was always going to need a second step. That structure is mini-perm loans. Arizona maturities are discussed in 2026 maturities. A balloon that is already on the calendar is balloon payment due. Refinancing out is Arizona refinance. If the property cannot clear a new permanent loan, a bridge is Arizona bridge, sourced from private lenders. How the two ratios interact is debt yield versus DSCR.

No one on this page has promised an extension

Ask the current lender, in writing, whether an extension right exists and what the test is. Ask a new lender whether a refinance can close before the maturity, including the time to clear the old prepay. If both say no, the remaining choices are a paydown, a sale, or a default conversation with counsel. This note does not recommend default. It does not provide legal advice.

Capital Market Funds is not a Fannie Mae DUS lender. The office is 7373 E Doubletree Ranch Rd #255, Scottsdale, AZ 85258. The phone is (480) 495-8072. Capital Market Funds, LLC - CBK-2007014 - Commercial Mortgage Banker and NMLS 1445066. We can arrange a refinance or a bridge. We cannot make your current lender extend.