More on the topic of the borrower perspective (and tips) on workouts, and in recognition that every lender and servicer needs to understand this perspective as it crafts a strategy and then executes it –

You might or might not have caught this good comment made after reading my earlier blog on the topic of preliminary steps and tips: there are several basic tasks that a lender always undertakes –

  • review the loan documents, both for rights and remedies; but importantly, for "holes" or mistakes (such as improper or incomplete filings; incorrect legal descriptions; failure to receive a lien or security interest in collateral; mistakes in signing the loan documents)
  • review the credit file, and in particular the financial statements delivered at closing (to determine if they were accurate, etc.)

Great comments.  All of this will play a strong role in workout negotiations.

In my review of the preliminary steps and tips from the borrower side, I noted that the lender or servicer should go through the same or similar process.

And the same is true with respect to the two points listed here: these basic tasks of the lender should be mirrored by the borrower.

A workout is a game of cat and mouse.  Some times it is difficult to determine "who" is the cat, and "who" is the mouse.  You might look like a cat in your mirror, but trust that the other side is going through the same process, and sees you as the mouse.

If you have more tips on preliminary steps from either the lender or borrower perspective, please post a comment.