All items from Tough Times for Lenders

Foreclosure Tip #1: Inspections – Do It Before You Own It

In some parts of the country, a recovering local economy means the special asset (or problem loan) groups are reducing staff, as loan production groups come back to life.  Leaving the special asset group under-staffed could be a mistake if the staff is not able to properly complete basic foreclosure tasks.  One basic task is inspecting the property prior to taking title to the property (whether through foreclosure or a deed in lieu of foreclosure [FAQ series for information on deeds in lieu]).  Here’s a decision tree that might help you in deciding if an inspection “really” is needed, and a recent example that should energize you to look before you leap (into ownership of the collateral).

 
Decision tree: verify that your mortgage loan documents give you the right to enter the property, then



From Tough Times for Lenders
Posted 4 weeks 4 days ago

Refresh Your Mortgage Loan Documents with these Tech Topics

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 questions in mind, and ask yourself if the forms are “as old as dirt.”
My bet is that you won’t like the answers to the question.  (Yes, it’s even embarrassing.)
Do your mortgage loan documents cover:



From Tough Times for Lenders
Posted 6 weeks 4 days ago

Business Focus on Connections & Information Ignores . . . Lawyers

As I look around the business landscape, much of the focus of company growth seems to center on leveraging the internet for greater connections (with their trading partners) and for more information (“big data”).
It’s a party.

My perspective is that lawyers soon will be invited to participate in the party.
But right now – despite all of the hype of lawyers as being “important business partner and advisers” –  lawyers are sitting out the dance.
Left behind at the curb.

Think about all of the investment and energy on this topic, yet so little of it is directed at using (what seems to now be a fundamental tool) to achieve greater connection and more information from company lawyers (whether in-house counsel or outside law firms).
In the last month, I”ve talked with two significant companies about ways to include lawyers in this fundamental topic.
Here is a screen shot of my “mindmap” overview.



From Tough Times for Lenders
Posted 7 weeks 4 days ago

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

In 2012, distressed commercial real estate . . . looked a lot like 2011 . . . and 2010 . . . and 2009.
Here are my observations on distressed commercial real estate in 2012:
Lessons from 2012:



From Tough Times for Lenders
Posted 18 weeks 3 days ago

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

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 lending started to come back in 2012.  Finally.
Here are my observations on the distinctive attributes of this come back, and my prediction of what it will look like in 2013:
Lessons from 2012:
 



From Tough Times for Lenders
Posted 19 weeks 3 days ago

Proposed Rules Could Change Penalty Box for Life Company Lenders

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 other 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 the “mortgage experience adjustment factor” or “MEAF”).   In 2013, this probably will change – and life insurance companies will use a “loan level” approach.  This should give more liquidity to the commercial real estate market.
Bad loans go to the penalty box



From Tough Times for Lenders
Posted 28 weeks 2 days ago

Practical Technology: Office Layout & Desktop Designed for Collaboration

Smart use of technology in our work goes beyond mastering the most essential software and using the coolest hardware.  Smart use of technology includes an “old school” focus on one benefit of technology (collaboration) that is grouneed in a thoughtful layout of your office and of your desktop.
Here are some observations on how the layout and desktop of my new office will facilitate collaboration in my team, and helps us be better, smarter and faster.
For those who follow me here at L360, you’re probably asking: “what’s going on this month? Why so few posts?
The answer is two-fold: in the last 3 weeks -



From Tough Times for Lenders
Posted 29 weeks 3 days ago

RE Finance Lawyers & Legal Technology? Rule of Three Requires Change

As I’ve commented on in the past, legal technology is a tough subject for commercial real estate lawyers. Using the “rule of three“, I will offer up a short, historical perspective, in order to merit their attention on Friday of this week, when I’ll be speaking on legal topic at the University of Texas School of Law Mortgage Lending Institute.
The first defining point burdens all lawyers.  The second continues to divide them from their clients or customers.  And the third is simmering and heading to a boil.
Let’s see if you can identify them.
1.  Who said this?  “First thing we’ll do, we’ll kill all of the lawyers.”
With this line, the Bard captured the hostility of the underclasses toward those who understand, and perhaps manipulated, the law; and in turn enriched themselves. It is spoken from the perspective of those powerless to effectuate change.  The next defining point triggered a change that transformed this perspective to almost all buyers of legal services.



From Tough Times for Lenders
Posted 32 weeks 5 days ago

What Law to “Choose” in Commercial Mortgage Loan Docs? Simple.

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 thinkers gets it right on using (or not using) choice of law provisions in a typical commercial mortgage loan?


 
The choice of law topic is a very intellectually rich subject for lawyers.  Much is written about it.  Entire books.  It is a class topic for an entire semester in law schools.  It is a wonderful topic for lawyers.  It “invites” debate and discussion.  And confusion.



From Tough Times for Lenders
Posted 33 weeks 2 days ago

Sell the Company as the “Exit” Strategy? Tips on the Forbearance Agreement

The “forbearance” agreement between a lender and a borrower is an important piece of an orderly sale of a company (as it sells all of its assets and pays creditors).  Whether you’re the creditor or the company, a thoughtful forbearance agreement (balanced with key interests of both sides) must be in place to begin the sale process.  Striking the “balance” between the interests of the company and the first lien lender in the forbearance agreement is not easy.  Below are some tips on the perspectives of the company  and the first lien lender, as they discuss terms of the forbearance agreement.

 



From Tough Times for Lenders
Posted 34 weeks 2 days ago