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Category Archives: Good Times for Lenders

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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 (including Green Buildings), 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

A Familiar Shadow: Anticipating CFPB’s Impact On Commercial Lending

Posted in Articles, Good Times for Lenders, Market Trends, Technology (including Green Buildings)

The July 2013 issue of the “Mortgage Banking” magazine focuses on the Consumer Financial Protection Bureau (or “CFPB”).  The coverline  is this: “CFPB – A Powerful New Overseer.” Why my interest in this issue and coverline? In the past, commercial lenders (and their lawyers) blissfully ignored anything involving consumer lending.  We quickly distanced ourselves from… Continue Reading

Real Estate Title Review: Don’t Miss These Stealth Restrictions

Posted in Good Times for Lenders, Insurance & Environmental Risks, Training

In many cities, urban growth now fills the farmland that once surrounded Navy and Air Force airfields.  Real estate development and finance near Navy and Air Force runways, however, requires special attention to a special set of restrictions called “AICUZ.”  These Department of Defense regulations severely restrict land located near military runways.  It is easy… Continue Reading

Refresh Your Mortgage Loan Documents with these Tech Topics

Posted in Good Times for Lenders, Technology (including Green Buildings)

Most commercial real estate loan documents give meaning to the phrase “real estate is old as dirt.”  Why? Because just as dirt doesn’t change, commercial mortgage loan documents largely ignore the impact of technology on the physical attributes, use and operations of the property.   Take another look at your mortgage loan forms with these… Continue Reading

Commercial Real Estate Lending: Lessons from 2012 and Predictions for 2013

Posted in Articles, Good Times for Lenders, Market Trends

The combination of 4 speaking engagements and working on 4 new (or revived) lending products buried me during the last several months.  Fortunately, I’ve navigated the course, and it is a new year.  It is time to take a look back at 2012, and step out with some comments on 2013. New commercial real estate… Continue Reading

Proposed Rules Could Change Penalty Box for Life Company Lenders

Posted in Articles, Good Times for Lenders, MEAF

As commercial real estate lenders, life insurance companies have a unique approach on dealing with potential losses or loan loss reserves in their mortgage loans holdings.  Unlike bank mortgage lenders, who apply their risk based capital requirements on a loan level basis, life insurance companies use an approach that applies at the portfolio level (called… Continue Reading

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

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

List & Links to “HOTTEST” Topics on L360 Point To: new lending, bad loans & iPad tips

Posted in Articles, Good Times for Lenders, Technology (including Green Buildings), Tough Times for Lenders

My latest resolution is to be better at giving lists of the “hottest” or top topics on L360 – as selected by you. It gives me a rough sense of the direction we’re heading. The summer 2012 list now has several topics on “positive” lending issues, which reflects the general up-tick that I’m seeing in… Continue Reading

Construction to Permanent Loan on the Return: Tips on Due Diligence and Loan Documents (part 1)

Posted in Good Times for Lenders, Market Trends, Training

Credit seems to be more available for commercial real estate.  For example, I know of one commercial real estate lender working on a construction to permanent loan program.  This type of lending blends two types of loans: a construction loan to build the project and a term loan to finance it once the project hits… Continue Reading

Credit Availability Increasing? . . . “Yes” for Employee Stock Ownership Plans (part 2)

Posted in Articles, Good Times for Lenders

Credit availability seems to be improving in the commercial markets.  One common (and obvious) test for new commercial lending is “how will the borrower fare in the tough times, or a stress test?”  Generally, loans to employee stock ownership plans (called an”ESOP”) do well.  So, loans to ESOPs will have access to credit. Starting about… Continue Reading

Prospecting for a Niche Commercial Borrower? An ESOP Loan Might Be Your Punch

Posted in Good Times for Lenders

“ESOP” loans can be both an “exit” strategy for a company in distress (and its lenders), and an “entrance” opportunity for lenders targeting the right prospect.  Lending to an ESOP company can hit the mark coming (good times) and going (tough times): a one-two combination. The formula behind high-level statement, however, includes a deadly work: taxes. So, I reached out… Continue Reading

Construction Lending: Trend toward Guaranty “burn off” brings new list of hot conditions

Posted in Good Times for Lenders, Guaranty Issues

Credit enhancement of commercial construction lending has a new, important twist to the traditional (full) payment and performance guaranty: the burn-off events go beyond valuation and debt service thresholds to also include many of the check list items utilized by permanent lenders.  The burn off has a new price.   Finally, construction loans are bubbling… 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

Fed’s New “Market Risk” Rule on Regulatory Capital for Banks Expected Soon: how will it impact liquidity for commercial real estate?

Posted in Articles, Good Times for Lenders, Market Trends

Answer: badly. The Federal Reserve’s new rule on regulatory capital requirements for banks will be announced in the next couple of days.  It probably will mean less money for commercial real estate. The scope of this new rule will help the banks (by requiring them to hold more in reserve) but it could hurt the… Continue Reading

Lender or Servicer Looking to Follow Litigation Trends & Cases? Follow the “Financial Appellate Voice”

Posted in Good Times for Lenders, Tough Times for Lenders, Training

David Johnson and Joe Regan are sharing their knowledge and experience in the Financial Appellate Voice, a new blog focusing on litigation involving the financial services industry in Texas. They start strong with a webcast and posts on these topics (these are just a few that jumped out at me): a webcast with an update… Continue Reading

Dead Debtor (tortoise) v. Living Lender (hare): Which One Correctly Values On-line Information?

Posted in Good Times for Lenders, Technology (including Green Buildings), Tough Times for Lenders

The dead are beating their lenders in recognizing the value of, and then protecting, their on-line lives – I mean assets. Does the tortoise beat the hare (again)? Even when the tortoise is dead? This perspective rings out in this: The Dead: on-line assets (accounts, sites and materials) are recognized as an important asset by… Continue Reading

As “Bad-Boy” Recourse Liability Spreads to Construction Lenders . . . Is the End Near for Non-Recourse Liability??

Posted in Good Times for Lenders, Guaranty Issues, Market Trends

Once upon a time and in a very simple time,  construction lenders required full payment and performance guarantees, and only permanent lenders offered non-recourse financing (with “bad-boy” liability).  Now, even some construction lenders include a variation of non-recourse liability (with “bad-boy” events) in their structure.  And, the list of “triggers” or events that form the… Continue Reading

Fed Policy on Renting Residential REO Points to . . . no near term recovery

Posted in Good Times for Lenders, Tough Times for Lenders

A recent policy statement issued by the Federal Reserve “reminds” banks and their examiners that renting residential property, after the bank obtains title, can be part of the bank’s process of returning the property to the market place.  The statement acknowledges that although banks “should make good-faith efforts to dispose of OREO properties at the earliest… Continue Reading

Lease Reviews & Surveillance: “Green” Lease Provisions in “Green” Buildings

Posted in Good Times for Lenders, Technology (including Green Buildings)

Back in December of ’10, I gave you a list of lease provisions that are crafted to address topics unique to “green” buildings. Here’s another version or update on the list: insurance provisions annual environmental performance report (access to space, access to the report, etc.) carbon credits (they belong to Landlord!) building operations (in compliance… Continue Reading