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Category Archives: Remedies

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The Long Arm of the FDIC is Even Longer After Recent 5th Circuit Opinion Extends the Extender Statute

Posted in Remedies, Tough Times for Lenders

One of the many tools of the FDIC in resolving failed banks is the Extender Statute which, by its terms, replaces existing statutes of limitation under state law by a period of years.  In simple terms, the Extender Statute creates a longer statute of limitations for bringing a lawsuit on behalf of the now defunct… Continue Reading

The Only Thing Worse Than a Claim in Bankruptcy is Claim Subordination

Posted in Collection, Guaranty Issues, Remedies, Tough Times for Lenders, Workout Issues

Claim subordination is the opposite of alchemy.  In most bankruptcy cases, creditors might look for ways to improve their treatment.  Claim subordination in the bankruptcy code provides a mechanism to force a creditor to receive worse treatment (relative to other non-subordinated claims which is, admittedly, not that great of treatment). In bankruptcy, there are a… Continue Reading

PWC Escapes MF Global, Inc. Class Action Suit Claiming In Pari Delicto

Posted in Collection, Remedies, Tough Times for Lenders, Workout Issues

I have been told that in a traffic jam ambulance drivers are taught to move to the first opening available in traffic and figure out where to go after that.  Sometimes legal strategy takes that same philosophy.  In a recent 2nd Circuit Case, PriceWaterhouseCoopers, LLP (“PwC”) asserted in pari delicto to avoid immediate liability in… Continue Reading

Risks of Over-Sharing or: How I Learned to Stop Worrying and Love the Attorney-Client Privilege

Posted in Discovery, Remedies, Tough Times for Lenders

Believe it or not, when you (the good guy) accidently produce in discovery an internal memo which is subject to attorney-client privilege to the bad guys (the guys suing you), the bad guys might not give back all the copies.  And, if you are really unlucky, the bad guys will distribute it to other bad… Continue Reading

OCC’s Commercial Real Estate Lending Handbook: Misses the List on Legal Issues

Posted in Articles, Good Times for Lenders, Guaranty Issues, Market Trends, Remedies, Technology Notes, Training

Over the last few weeks, I’ve commented on the new version of the OCC’s Commercial Real Estate Lending Handbook (I give it a gentlemen’s C); and I listed a few legal topics that deserve some guidance from the OCC. “Guidance” could even merely be a list of important topics (ending with a warning that the… Continue Reading

Grading the Examiners: OCC’s Commercial Real Estate Lending Handbook gets a “C”

Posted in Good Times for Lenders, Guaranty Issues, Insurance & Environmental Risks, Remedies, Training, Workout Issues

Last month, the Office of the Comptroller of the Currency published the Commercial Real Estate Lending handbook (August 2013).  The 128 page handbook gives guidance to bank examiners and bankers on risks inherent in commercial real estate (“CRE”) lending.  It replaces a 95 page version published in 1995 (and revised in 1998). For this new school year… Continue Reading

Hide and Seek: Service of Process as a New Loan Provision

Posted in Good Times for Lenders, Remedies, Training, Workout Issues

Lenders are refreshing their mortgage loan documents with provisions based on the “lessons learned” during the recent (continuing?) economic experience.  One change is to add a service of process provision. The change is based on this basic lesson learned: when the tough times hit, borrowers and guarantors sometimes are hard to find. A few simply… Continue Reading

Even More Bad Boy Liability Events: My List of Liability for Lender’s Losses or Damages

Posted in Good Times for Lenders, Guaranty Issues, Remedies

In addition to the events that create “full recourse” liability (for the entire loan), bad boy liability also includes losses or damages incurred by the Lender based upon another list of “bad” events or triggers.  I’m sure that Jim Wallenstein will cover this at his presentation during the University of Texas Mortgage Lending Institute. Like… Continue Reading

The List of “Bad Boy” Recourse Liability Events Keeps Growing: My “Roll Up” Version

Posted in Good Times for Lenders, Guaranty Issues, Remedies

Several months ago, I mused that, due to the conservative trending of commercial real estate lending, the list of “bad boy” exceptions (to a “no personal liability” deal) could be viewed as a full recourse deal.  In other words, the exceptions to “no liability” could be so expansive or long, the practical reality equates to… Continue Reading

Why Do Lenders Disdain Bankruptcy Court? 2 Cases Show “Why” and Offer Lessons

Posted in Good Times for Lenders, Market Trends, Remedies, Tough Times for Lenders

Two recent cases are good examples of “why” secured lenders, who hold liens on real property, correctly view bankruptcy court as a very, very, very bad place.  One case has received a lot of attention, including an appeal of the decision and state legislation; and the second bankruptcy ruling was overturned on appeal. The lessons… Continue Reading

MBA Report Shows Good Trends in Bad Numbers; BUT Judicial Foreclosure is a DRAG (I have questions)

Posted in Articles, Good Times for Lenders, Market Trends, Remedies, Tough Times for Lenders

Recently, the Mortgage Bankers Association published its “National Delinquency Survey” for the fourth quarter of 2011.   The report covers the delinquency and foreclosures  rates on first-lien mortgage loans, and includes @ 88% of all single family homes in the US.  Although the survey does NOT cover commercial mortgages, the data gives us important incite on trends AND information on the… Continue Reading

Foreclsoures Mimic Life: New Focus on Fees & Data (How They Met – Natur’lly)

Posted in Remedies, Technology Notes

The importance of data and the public sector’s need for cash is a marriage of convenience, and necessity.  It just will be. (Annie Oakley calls it “natur’lly.”) In the not so distant future, pairing the two will be assumed; and there will be a short diversion in special asset training programs, where the “wise” will… Continue Reading

Defaulted Hotel (California) Loans: Nice Story in Bloomberg; Here are some practical tips

Posted in Market Trends, Remedies, Tough Times for Lenders, Workout Issues

Nadja Brandt and Kara Wetzel with Bloomberg have a nice piece on the scope of and challenges in dealing with defaulted hotel loans in CMBS pools.  It is a good read.  And it has been picked up or syndicated in other news media. As I’ve noted before, with a hotel or motel securing the loan,… Continue Reading

Collection Plate: Litigation Against Guarantors or Indemnitors Points to Lessons Learned – Tips on Underwriting & Loan Document Terms

Posted in Guaranty Issues, Remedies, Tough Times for Lenders

(More on the Collection Plate collection, which focuses on the recovery side of our work – the bottom line, nitty-gritty, work of getting "back" the money.) Our economic eddy is at the stage where law suits against guarantors or indemnitors, on full payment and performance agreements or on "bad-boy" agreements, are reaching final judgment –… Continue Reading

Foreclosure Myths: Urban Myths on how to STOP a Foreclosure or Void the Loan (really??)

Posted in FAQs, Remedies, Tough Times for Lenders

The topics of "stopping the foreclosure" or "voiding the loan" have a life of their own, and many in reality simply are urban myths. They are good examples of "when" and "why" a lawyer should be consulted. I hear these topics all the time – in the context of both consumer debt and commercial debt: "If you… Continue Reading

Foreclosure Myths: There Should Be No Mystery About Foreclosing CMBS Or Agency Loans (Here are a few tips)

Posted in Market Trends, Remedies, Tough Times for Lenders

Tommy Bastian has a great presentation on the "myths and reality" of foreclosing in Texas. He addresses several very important and unique attributes surrounding the foreclosure of securitized real estate loans.  It is a very popular topic of readers of TT4L. Indeed, Courtney Bristow’s article is a top 5 download on the topic (published here almost… Continue Reading

Why No (little) Mention of UCC Foreclosures In Dispute?

Posted in Market Trends, Remedies, Tough Times for Lenders, Training

Question: so, what is the deal with so little (OK, almost zero) mention of law suits, disputes and muck-rucking involving UCC (personal property) foreclosures and commercial loans?  Answer: because a UCC foreclosure sale can be, depending upon the facts, just . . .  a bad place for a lender to be.  Bad. If Your Collateral is Personal… Continue Reading

Moody’s Report on Increase Use of Short Sales of Residential Loans: What About Commercial Real Estate?

Posted in Market Trends, Remedies, Tough Times for Lenders

The National Mortgage News recently commented on a Moody’s finding that short sales (described below) increasingly are being used as a tool to mitigate losses on distressed residential loans.  Faced with increased liquidation costs due to lengthy foreclosure processes and advances for taxes, insurance and maintenance or repair costs, National Mortgage News notes (from the Moody’s report)… Continue Reading

Tips on Bad Boy Carveouts: Don’t Overlook These (Surprising?) Sources of Liability

Posted in Remedies, Single Purpose Entity, Tough Times for Lenders

Recourse against individual owners or sponsors (andor their operating companies) is a significant leverage point for any lender in a distressed commercial real estate loan. Both CMBS loans and portfolio loans (typically life company) technically are “non-recourse” in that the lender agrees to look to the collateral for the ultimate recovery of the loan. However, the… Continue Reading

Receiverships: Federal Court Receiver or State Court Receiver? Which is Better? (part II)

Posted in Remedies, Tough Times for Lenders

This is a continuation of my focus on receiverships, and the elementary decision of whether to seek a receivership from a Federal Court or a State Court. Brian Vanderwoude deals with receiverships on a regular basis, and this is his list (part II) of questions that come into play as a lender or servicer makes this… Continue Reading

Receiverships: Federal Court Receiver or State Court Receiver? Which is Better?

Posted in Remedies, Tough Times for Lenders

Receiverships are a common remedy for commercial real estate lenders and servicers.  (Nice summary by Christy Myatt and another one from CCIM.) In an  earlier blog, Talmage Boston gave us some guidance on receiverships in Texas. As Talmage noted, a key decision is the choice of whether to pursue the appointment of a receiver in… Continue Reading