I’m not an expert (but hubby is). Haven’t asked him, but will tonight.
Thinking it has something to do with:
a. the borrower having enough NOI to ensure service of the debt
b. LTV
Yes, it might be that taking a lower rent makes the borrower think the income will be too low to make the loan payments, but if rent isn’t lowered in a bad market, the space sits vacant and you are in even worse shape paying the loan. So it seems to me to be cutting off the nose to spite the face.