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Tag Archives: bad boy event

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

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

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

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

Minority Owner Exiting an Under Performing Deal? Don’t Need Lender Approval? Right . . . Wrong (or “oops”)

Posted in Guaranty Issues, Tough Times for Lenders, Training

People don’t “connect” their ownership (even a minority ownership) with their liability under bad-boy or non-recourse carveout agreements (whether in the form of an indemnity, or as a guaranty).   So, minority owners often transfer ownership without getting a release from bad boy liability .  It could be a costly mistake. With deals under water… Continue Reading

Bad-Boy Liability: Courts Find Liability for Violating Solvency or Net Profit Retention Covenants

Posted in Guaranty Issues, Tough Times for Lenders

We’re in that part of the cycle where many of us are focusing on guaranty agreements, which run the full spectrum from full payment and performance guaranties to “bad boy” indemnification agreements (my recent comment). One issue being litigated is the bad boy or recourse event tied to a breach of these types of covenants… 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

CMBS 2.0: What Is It Looking Like? Cash Management & New Recourse Events

Posted in Good Times for Lenders, Market Trends

Andrews & Kurth has a nice "high level" piece on the CMBS market – covering challenges and changes in CMBS since the market crash. And periodically (perhaps too frequently!), I’ve offered up my broader insights on these same subjects (search TT4L using the terms "CMBS" or "2.0"). However, it is important to get very, very… 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

Lessons Learned: Loan Documents Could Include These New Recourse Events

Posted in Good Times for Lenders, Market Trends, Remedies, Technology Notes

I’m keeping a list of "lessons" learned about loan documents, as I deal with all of these distressed commercial real estate loans.  It is a topic sometimes covered in various conferences. One danger in adding all of the "lessons learned" from these dark days into the the loan documents is this: loan documents will be… Continue Reading