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
Category Archives: Tough Times for Lenders
Subscribe to Tough Times for Lenders RSS FeedFed Policy on Renting Residential REO Points to . . . no near term recovery
Posted in Good Times for Lenders, Tough Times for LendersA 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
Collateral or REO include Residential Condo Units? New Fannie Mae rules impose burdens on loan servicers
Posted in Tough Times for LendersBob Burton at Common Interests 360 reports on some good news for develpers and resident controlled owners associations if Fannie Mae is holding a loan on a residential condo unit - but it is BAD news for loan servicers. Briefly, the rules impose a litinany of new “must do” items onto the servicer, with a focus on paying… Continue Reading
Workout Tips For Lenders: A Quick “Wish List” (check this list)
Posted in Tough Times for Lenders, Training, Workout IssuesIt’s always good to have the “big picture” in one hand as you deal with the troubled loan with your other hand. Previously, we’ve touched on preliminary tips and steps, and even some tips on the “art” of dealing with a mucked up deal and with “less than friendly” people – and don’t overlook the… Continue Reading
Lenders & Leases: Spotting a “Troubled” Tenant – the need for “forensic” leasing
Posted in Good Times for Lenders, Tough Times for Lenders, TrainingWhether you’re a loan originator, or a loan servicer, reviewing a commercial lease (or amendments) becomes more challenging in tough real estate markets simply because there are more tenants in distress – and you need to identify them. So, are there lease provisions that could indicate a distressed tenant? Below is a short list of… 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 LendersRecently, 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
Hope for Condominium Mortgages or REO in Your Portfolio? Changes to FHA Restrictions Coming?
Posted in Good Times for Lenders, Tough Times for LendersBob Burton over at Common Interest 360 gives some “hope” for lenders and servicers dealing with loans secured by residential condo units – the FHA is being pushed to implement changes to the guidelines used by it in financing condo units owned by residents. Commercial real estate depends upon (and dies with) credit; and current FHA guidelines make… 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, TrainingPeople 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
Insurance Nightmare: As Lawyers Attack Forced Placed Insurance, Lenders Accept “Hope Insurance”
Posted in Good Times for Lenders, Insurance & Environmental Risks, Tough Times for LendersA recent and well-publicized lawsuit against a lender shows our appetite for headlines even extends to insurance issues. Yes, insurance. My comment here is NOT about the merits of the lawsuit. (I’m not evening giving you a link to it.) Instead, I marvel at the headline, and our ability to not focus on another very large and very important… Continue Reading
Buying Commercial Mortgage Loans isn’t Rocket Science? Right. Unless You Overlook the . . .
Posted in FAQs, Tough Times for Lenders, TrainingBuying a commercial mortgage loan is NOT rocket science. There are, however, some very basic aspects of a mortgage loan that should be included or addressed in the purchase of the loan. I list a few of them below. But before we get to them, ask yourself the question that scientists ask all the time: “what… Continue Reading
Why the Co-lender Train Wreck? Lenders Used Wrong Agreement
Posted in Good Times for Lenders, Tough Times for Lenders, Training, Workout IssuesTrain wrecks draw a crowd. Look at this old film from the 1913 California State Fair (click the text). 1913 Train Wreck Unfortunately, many co-lender structures (secured by distressed commercial real estate) look exactly like this train wreck…. Continue Reading
Need to “Reposition” the Distressed Project or REO? Consider a Condominium
Posted in Tough Times for Lenders, Workout IssuesSo much of dealing with distressed commercial real estate is an “out of the box” experience. But my use of the phrase “out of the box” is extremely nuanced: change your thinking; and change the box (the property), too. Here’s an approach that goes out of box and then reverses field to “remake” the box… Continue Reading
MERS Update: NY Attorney General Sues Major Banks Claiming Improper Foreclosures Due to Use of MERS
Posted in Technology (including Green Buildings), Tough Times for LendersBased upon a series of wins by MERS in various courts, it looked like MERS would survive, and we’d avoid the need for a federal solution in suppport of the continued use of the MERS electronic registry, which is a fundamental component of securitized home loans (and some commercial loans). That was yesterday. Today, the New… Continue Reading
Bad-Boy Liability: Courts Find Liability for Violating Solvency or Net Profit Retention Covenants
Posted in Guaranty Issues, Tough Times for LendersWe’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
Defaulted Hotel (California) Loans: Nice Story in Bloomberg; Here are some practical tips
Posted in Market Trends, Remedies, Tough Times for Lenders, Workout IssuesNadja 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
Thanksgiving Reflections: ACC Meeting brings 21 Good “Ideas” – but 1 is GREAT!
Posted in Good Times for Lenders, Technology (including Green Buildings), Tough Times for Lenders, TrainingThanksgiving week is a good time to take a breath, relax and reflect – which is what I offer up here: It also brings to end the industry meeting circuit for 2011. Fred Krebs has a nice posting on the Association of Corporate Counsel blog. As his takeaway from the ’11 annual meeting of ACC, his… Continue Reading
Navigating Distressed Co-Lender Loans: Just Another (Dysfunctional) Modern (Finance) Family?
Posted in Market Trends, Tough Times for Lenders, Workout IssuesEarlier, I offered up some advice that in a workout, you really can’t take it personally. If that didn’t work for you, then here’s another approach that should resonate (I can’t get it out of my head): if you’re in a loan with other lenders, the co-lender structure probably has some real, real, real dysfunctional aspects to it … Continue Reading
Watch for Change in Your City: As Cities Pass Foreclosure Ordinances, One Industry Group Keeps Tally
Posted in Lender Liability, Tough Times for LendersChange for the common good? As in . . . A penny here . . . a penny there . . . to pay for making lenders take care of vacant property after foreclosure. In May of ’09, I asked you to watch for change at your State House, based upon a growing number… Continue Reading
Leases, Lenders & Letters of Credit: Lenders Taking New Approaches With Tenant Letters of Credit (lessons learned)
Posted in Good Times for Lenders, Tough Times for Lenders, Training, Workout IssuesWe know commercial real estate is all about the rents – and the credit of the tenant, which some times is enhanced by the tenant giving the landlord a letter of credit. David Staas and Michael Thomas recently clued me in on several lessons learned by commercial mortgage lenders, on the topic of letters of… Continue Reading
Who Are Those Guys? New Use of Adverse Possession
Posted in Market Trends, Tough Times for Lenders, Workout IssuesPerhaps you’ve noticed this legal phrase cropping up on the national evening news, or in your local paper: adverse possession. Generally, most states have laws which allow a person to obtain legal title to real property based upon taking physical possession of it over a specified period of time, and doing so in a manner… Continue Reading
Baseball Reflects Life: Guidance on Calling it Fair or Foul in Dealing with Distressed Loans
Posted in Tough Times for Lenders, Training, Workout IssuesWith Game #6 of the 2011 World Series (Texas Rangers v St. Louis Cardinals) scheduled to play tonight after a rain-delay day, baseball is on my mind. As we’ve seen in Games 1-5, baseball is a game of – inches: as in Cruz catching a Pujols fly ball with his back to the outfield fence… Continue Reading
2011 World Series: Rangers v. Cardinals game #3 – Big Records Go Beyond Tough as Pujols Plays it Again & Again
Posted in Market Trends, Tough Times for LendersWhat world was I in this past Friday, when I blogged "Games are close but differences are huge"? With a final score of 16-7 (Cardinals over my Texas my stRangers [Rangers but strange]), the game was NOT close and the differences are HUGE. (Pictures) I witnessed a record tying and making day by Albert Pujols… Continue Reading
2011 World Series: Rangers v. Cardinals – Games are Close but Differences are Huge
Posted in Market Trends, Tough Times for LendersIf you’re watching the 2011 World Series (and if you’re not, you’re missing some great baseball), you need to step back from the personal distress caused by the one-run differences in the first two games, and focus on the incredible differences between the two teams and their cities. The St. Louis Cardinals have been to… Continue Reading