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What Law to “Choose” in Commercial Mortgage Loan Docs? Simple.

Posted in 1 Guest Writers, Good Times for Lenders, Training, Workout Issues

Provisions in commercial mortgage loan documents,  where a particular state law is “selected” as the governing law, can drive a deal into a ditch, and take a good (or growing) lending relationship into the emergency room.  In many situations, this topic is a good example of over-thinking, and perhaps over-lawyering. Simply stated, which of these two… Continue Reading

TX Court Pounds The Gavel Again: CMBS Servicer Has Ability To Sue

Posted in 1 Guest Writers, Market Trends, Remedies, Tough Times for Lenders

In many 19th hole country club gatherings across the nation, there is a lot of discussion on whether CMBS loans really are enforceable. Unfortunately, the answer to that question is multi-faceted.  (It has two parts to it.) As part  of his focus on risk management issues for financial service companies, Brian Vanderwoude has this follow… Continue Reading

Can A Servicer Sue On A Defaulted CMBS Loan? TX Court Says “Yes”

Posted in 1 Guest Writers, Market Trends, Tough Times for Lenders

In some (but not all) states, home owners (whose loans have been securitized) are successfully overturning or stopping judicial foreclosures (of their defaulted loan) by questioning the authority of the loan servicer (such as MERS) to foreclosure.  An example of this is the Ibanez case.  While the facts of these cases center around lost notes or missing documents, the legal concept centers around… Continue Reading

Green Building As Collateral: Tips on avoiding a blood-bath after foreclosure (or a note purchase)

Posted in 1 Guest Writers, Insurance & Environmental Risks, Technology (including Green Buildings), Tough Times for Lenders, Workout Issues

Enough of MERS and technology – but, how about technology but from a different angle? The amount of commercial real estate debt in distress is huge: delinquent unpaid balances on CMBS loans exceeding $62 billion (October 2010), and heading toward $70-$80 billion by year end ’10 (per Realpoint) delinquency ratio of 8.04% (September, 2010) (per… Continue Reading

Steering Through CMBS Waters: A Primer for Troubled Loans

Posted in 1 Guest Writers, Tough Times for Lenders

Article Co-Author:  Courtney D. Bristow, Winstead PC It’s Monday morning and you’re getting ready for work with the news on the TV in the background. By now, you’re practically immune to the daily dose of doom and gloom that has become business news, particularly with regard to real estate and mortgage-backed securities. So you’re not… Continue Reading

Change: New Federal Foreclosure Law Gives Residential Tenants 90 Days to Vacate

Posted in 1 Guest Writers, Remedies, Tough Times for Lenders

(More from our "Watch for Change" series . . . .) As you know, the "new" economy is prompting a wide range of new laws and ordinances, all of which present opportunities for the unwary to trip up and mess up in the collection process. This posting will interest you if any of your collateral involves… Continue Reading

Understanding the Primary Duties of CMBS Loan Servicers to B-Note Holders Under a Co-Lender Agreement (Part 2 of 2)

Posted in 1 Guest Writers, Tough Times for Lenders, Workout Issues

Guest Writer - Christopher T. Nixon, Winstead PC In part 1, I covered the relationship between the loan servicer and the B-note holder, and the role of the B-note holder in making decisions about the loan.  This posting addresses a situation where that the B-note holder no longer can participate in decisions, and the replacement of the… Continue Reading

Understanding the Primary Duties of CMBS Loan Servicers to B-Note Holders Under a Co-Lender Agreement (Part 1 of 2)

Posted in 1 Guest Writers, Tough Times for Lenders, Workout Issues

Guest Writer – Christopher T. Nixon, Winstead PC CMBS loan servicers have duties to a myriad of parties in the servicing of a CMBS loan, including the REMIC trust, the bondholders, and the borrower.  With respect to an A/B loan, a CMBS loan servicer also has certain duties to the B-note holder pursuant to the… Continue Reading

The Ox and the Ditch: FAQ – Reduce the Commitment? Monthly Statements? New Written Agreements?

Posted in 1 Guest Writers, Tough Times for Lenders, Training, Workout Issues

Guest Writer: Brenda Brown, Winstead PC More from ourTough Times FAQs series: FAQ #4 –  Do I need to reduce the commitment amount after sending a Notice of Default? Typically, no – once the loan is declared to be in default, or once the maturity of the loan is accelerated, the lender has no on-going funding… Continue Reading

The Ox and the Ditch: FAQ – First Steps in a Loan Default? Types of Default? Alternatives to Calling a Default?

Posted in 1 Guest Writers, FAQs, Remedies, Tough Times for Lenders, Workout Issues

Guest Writer: Brenda Brown, Winstead PC This is a special series of blog entries in which we provide some quick answers tolenders’ frequently asked questions (FAQ).  Two things should be kept in mind. First, none of these questions can be answered in a vacuum. Questions should be considered with a thorough review of the file and an… Continue Reading

The Insolvency Exclusion to Cancellation of Debt (COD) Income; The Effect of Exempt Assets Under the Carlson Rule (Part 2 of 2)

Posted in 1 Guest Writers, Tax Issues, Tough Times for Lenders, Workout Issues

Guest Writer – Mike Cook, Winstead PC 2nd in a series of 2 postings (Part 1: The Insolvency Exclusion to Cancellation of Debt (COD) Income; The Effect of Exempt Assets Under the Carlson Rule) The Court, having determined that the use of “assets” was ambiguous, pointed out that “[t]he stated purpose of the 1980 Bankruptcy Tax… Continue Reading

The Insolvency Exclusion to Cancellation of Debt (COD) Income; The Effect of Exempt Assets Under the Carlson Rule (Part 1 of 2)

Posted in 1 Guest Writers, Tax Issues, Tough Times for Lenders, Workout Issues

Guest Writer – Mike Cook, Winstead PC Part 1 of 2 During the current economic crisis, debtors will be negotiating workouts with lenders and if the debtors successfully obtain debt relief, they will also be seeking tax relief from the taxation of COD income. The ability to use the broadest exclusion from COD income, the insolvency… Continue Reading

Evaluating Material Adverse Change (MAC) Clauses in the Loan Default Context (Part 2 of 2)

Posted in 1 Guest Writers, Good Times for Lenders, Tough Times for Lenders

Guest Writer – Christopher T. Nixon, Winstead PC In my earlier posting, I introduced this topic, and addressed several “challenges” in the meaning of the MAC clause itself in the particular factual setting of a distressed debt: is the change “material?” is the change “adverse?” I then noted that a lender should be prepared for… Continue Reading

Evaluating Material Adverse Change (MAC) Clauses in the Loan Default Context (Part 1 of 2)

Posted in 1 Guest Writers, Good Times for Lenders, Tough Times for Lenders

Guest Writer – Christopher T. Nixon, Winstead PC In an earlier posting we briefly covered the importance distinction between a “monetary” default and a non-monetary default. One non-monetary clause getting increased attention in the “material adverse change” clause. This is the first of a two-part series on this topic. Commercial lenders often include Material Adverse… Continue Reading

What is Your Lender Doing with Your Receivables? (Part 2: Funds in Deposit Accounts and the Account Control Agreement)

Posted in 1 Guest Writers, Remedies, Tough Times for Lenders, Workout Issues

Guest Writer – Nelson Block, Winstead PC 2nd in a series of 3 postings (Part 1: Establishing a Security Interest in Receivables) But the ordering created by the filing of financing statements only provides protection when the collateral is accounts. When the customer who owes on the account – the “account debtor” – pays by sending… Continue Reading

What is Your Lender Doing with Your Receivables? (Part 1: Establishing a Security Interest in Receivables)

Posted in 1 Guest Writers, Remedies, Tough Times for Lenders, Workout Issues

Guest Writer - Nelson Block, Winstead PC 1st in a series of 3 postings A business’s accounts receivable are one of its most valuable assets, not only to the business but to its lender. In an ongoing business, the continual turn of accounts receivable on a frequent basis make them a reliable source of revenue and,… Continue Reading

Falling Markets Require Borrowing Base Reductions

Posted in 1 Guest Writers, Tough Times for Lenders, Training

Guest Writer – Dan Susie, Winstead PC A "borrowing base" is a financing structure where loan funds are disbursed NOT on a "cost incurred" basis, but rather are disbursed based upon a limited audit or information from across the collateral pool. This structure often appears in oil and gas financing structures, and some times in… Continue Reading

Should a Borrower Intentionally Default on a CMBS Loan?

Posted in 1 Guest Writers, Remedies, Tough Times for Lenders, Workout Issues

By Guest Writer – Christopher T. Nixon, Winstead PC CMBS Master Servicers typically lack the ability to modify a CMBS loan to preemptively address a potential loan problem. A CMBS borrower frustrated with such inability may elect to purposefully default on the loan to circumvent the restrictions placed on the Master Servicer and force the… Continue Reading

Key Differences Between CMBS Loans and Portfolio Loans in the Loan Default Scenario (Part 2)

Posted in 1 Guest Writers, Tough Times for Lenders

Guest Writer – Christopher T. Nixon, Winstead PC (2nd in a series of 2 postings) In my prior posting (Part 1),   I covered some of the key differences between a workout of a CMBS loan and a workout of a portfolio loan. Here are some more: Flexibility.  Due to REMIC rules and the restrictions and limitations… Continue Reading

Key Differences Between CMBS Loans and Portfolio Loans in the Loan Default Scenario (Part 1)

Posted in 1 Guest Writers, Tough Times for Lenders

Guest Writer – Christopher T. Nixon, Winstead PC (1st in a series of 2 postings) In the commercial loan default scenario, CMBS Special Servicers are not able to provide to borrowers many of the accommodations that may be provided to borrowers by portfolio lenders. CMBS Special Servicers are subject to many more restrictions and limitations… Continue Reading

Stay in Banker’s Good Graces by Coming Clean When Money’s Tight (Part 3)

Posted in 1 Guest Writers, Tough Times for Lenders, Workout Issues

Guest Writer – Nelson Block, Winstead PC (3rd in a series of 3 postings) The strategies: Be realistic Borrowers sometimes suffer from terminal euphoria, believing that current market conditions will change, the business climate will improve, a new investor can readily be found, or the company can be sold quickly. Jump these hurdles quickly. Be… Continue Reading

Stay in Banker’s Good Graces by Coming Clean When Money’s Tight (Part 2)

Posted in 1 Guest Writers, Tough Times for Lenders, Workout Issues

Guest Writer – Nelson Block, Winstead PC 2nd in a series of 3 postings When market conditions worsen, the business’s deficiencies can outstrip the accumulation of assets that supports new loans.  Assume that on January 1, the borrower’s accounts receivable are $100,000, and the lender, using an advance ratio of 75%, lends $75,000.  The borrower… Continue Reading