Service
Credit Risk Addendum
A short, independent memo attached to a single commercial real estate credit file. It states whether the appraised value is supported by the debt the loan will carry.
Why it matters now
Cap rates have held near 7% while loan rates rose. A property can appraise at a value the debt market will not finance. The addendum puts debt-supported value beside appraised value so the loan committee sees both numbers before it votes.
What the memo covers
- Supportable loan at the lesser of DSCR, LTV, and debt yield.
- Debt-supported value compared with the appraised value.
- Coverage at today's rate and at a stressed rate.
- Break-even rate for the requested loan.
Best for
Loan committee, renewals and maturities, workouts, and problem credits.
Questions
Credit Risk Addendum, answered
Flat fee, quoted before work starts. Coverage in all 50 states and Puerto Rico.
Is the Credit Risk Addendum an appraisal?
No. It is an independent observation on the relationship between the appraised value and the debt, attached to the credit file. It does not replace the appraisal or the review.
Can I test the numbers myself first?
Yes. The free loan sizing calculator runs the same sizing tests.