Commercial Market Meltdown©
Once upon a time, if you had a commercial loan with a bank and you didn't like the interest rate or other facet of your loan, all you had to do was move to another bank. But as I said, that was once upon a time, although not so long ago.
Remember the financial woes of the 80s? Well, it's déjà vu in spades. The commercial foreclosure market is running a race with the residential one, and it's anyone's bet which one's going to win.
Many clients of law firms have been severely affected by our ever-worsening economy and depleted capital markets. The good news is that these firms drawn on the lessons learned from the 80s, and are there to help clients avoid the foreclosure process.
Law firms help lending institution clients by aggressively working out arrangements with borrowers who are still credit-worthy and have the ability to pay. Two primary ways of doing this are 1) shorten the maturity dates on notes or 2) have the borrower pay down the line of credit. The goal is to do everything possible to ensure that these loans remain intact, and avoid the foreclosure process.
Clients who are landowners and developers utilize the help of attorneys to bring a win-win proposition to their lenders. Several clients are financially sound, influential and prominent people who have become involved in numerous ventures at once rather than just one or two. In previous times, having multiple business deals wasn't a problem, but in today's financial world, it can be devastating. With fifteen to twenty ventures going at one time, these clients are now unable to meet their financial obligations, no matter how successful they've been in the past. We're arguably in the biggest financial crisis since the Great Depression, and it takes attorneys with experience, know-how and business savvy to help people through these tough times.
When a real estate property goes into default in today's economy, the lender often wants to call the entire loan, not just the payment due. The philosophy now is that every borrower is a risk, regardless of their past good credit and payment history. That's where a law firm comes in. Its attorneys will attempt every possible strategy to work out a payment plan. If they can't come to terms with the lender, they'll look for flaws in the loan documents or foreclosure process prior to its implementation. Often, they'll attempta temporary restraining order (TRO) against the lending institution prior to the foreclosure. If all else fails, a Chapter 11 bankruptcy may be necessary to prevent the foreclosure.
For the past three years, nonsensical real estate deals have been made in both the commercial and residential real estate markets. These deals were doomed from the start, and now many clients have no other alternative but to default on their loans.
Write to Angel Reyes at angel@reyeslaw.com
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