Special Assets Lawyer Blog

JMBM's Special Assets Team welcomes Juan Galvan and Kevin Chen, two talented young attorneys, to our San Francisco office. Juan and Kevin will represent major institutional lenders and creditors in negotiating, documenting, and restructuring commercial and real estate loans and in enforcement actions in federal and state court and in bankruptcy court.

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No one pays much attention to preparing a Notice of Trustee's Sale or a Uniform Commercial Code ("UCC") Notice of Intended Disposition. Both are regulated by statute, and a Notice of Trustee's Sale is usually prepared by the foreclosure company here in California (and other states where non-judicial foreclosure of real estate is commonly used). A Notice of Trustee's Sale is also used in California to conduct a "unified" foreclosure sale of both real and personal property collateral.

The concern here is to double check exactly the description of the collateral that is being sold at foreclosure. Where the notice is prepared by an outside vendor, it is critical to make certain that the vendor has all of the necessary information to prepare the notice properly. Even then, costly mistakes can be made, so it is very important to check carefully.

Continue reading "Foreclosure Notices of Sale Must Be Carefully Drafted - Or Unintended Consequences May Follow" »

Workout professionals often ask us whether they should accept a deed in lieu of foreclosure offered by a borrower whose property is now worth less than the debt. What is a deed in lieu of foreclosure? A deed in lieu of foreclosure is where a borrower deeds the real property that is collateral for the loan to the secured creditor instead of going through the foreclosure process. When it works, a deed in lieu of foreclosure has advantages for both the secured creditor and the borrower. The borrower avoids a foreclosure on its record, and gives up responsibility for maintaining the property, paying property taxes and insurance, and providing security. Where there are tenants, the borrower no longer has to assume the responsibilities of being a landlord.

For the secured lender, a deed in lieu of foreclosure terminates a troubled debt more quickly than traditional judicial or non-judicial foreclosure. Instead of waiting at least four months for a traditional non-judicial foreclosure sale to take place, during which time the property can deteriorate, the lender takes title to the property immediately. The secured lender also avoids the cost of foreclosure, the potential cost of a receivership, and the possibility that the borrower will get cold feet at the last minute and file bankruptcy.

So why wouldn't a secured lender take a deed in lieu of foreclosure anytime a borrower offers one up?

Continue reading "Deed In Lieu of Foreclosure: When to Look A Gift Horse in the Mouth" »

After a loan goes into default or matures and payment in full has not been made, some borrowers try to show their good faith by continuing to make payments to the Bank. Occasionally, these payments continue, even after a Notice of Default has been recorded and foreclosure proceedings have started. A question that we often get at the JMBM Special Assets Team is whether the lender can accept these partial payments without waiving the default.

Continue reading "Accepting Partial Payments After Default Without Waiver" »

NOTE: This article does not address foreclosure of residential real property with one to four units. Although many of the concepts described in this article apply to the foreclosure of residential real property, laws have been enacted to provide additional protections to homeowners and owners of residential property with one to four units. This article does not attempt to summarize the law that applies to residential property with one to four units.

As we have discussed in another article, under California's foreclosure law, three months must pass after recording a Notice of Default before the creditor can instruct the Trustee to sell the property. While California law requires only 20 days notice before the foreclosure sale, lenders typically instruct the foreclosure company to give 25 days notice to cut off any junior lien rights that IRS might have.

Continue reading "Credit Bidding at California Foreclosure Sales: What Foreclosing Commercial Real Estate Lenders Need to Know" »

NOTE: This article does not address foreclosure of residential real property with one to four units. Although many of the concepts described in this article apply to the foreclosure of residential real property, laws have been enacted to provide additional protections to homeowners and owners of residential property with one to four units. This article does not attempt to summarize the law that applies to residential property with one to four units.

Many of our clients are experienced bankers who know commercial real estate, but who had not been the officer assigned to loans in default - until recently. Other clients are experienced real estate workout professionals who are based outside of California and who have only heard tales of California's dreaded "one form of action" and "anti-deficiency" rules. This article discusses the basic concepts underlying foreclosure of commercial real estate in California. In this article, and in others yet to come, we will discuss practical problems that must be handled by workout professionals assigned to collect troubled commercial real estate loans in California. We'll provide tips from experts in how to approach and collect a troubled commercial real estate loan, and we'll also explain what should not be done and why.

Continue reading "Commercial Foreclosures in California: Questions to Ask and Answer Before the Lender Forecloses" »

Welcome to SpecialAssetsLawyer.com, a place where problem loans and troubled debts are the topic of discussion. I am Dick Rogan, bank lawyer and chair of the JMBM Special Assets Team. Every day, problem loans of all types cross my desk and the desks of my colleagues here at JMBM. That's because we ask for them. Our clients are banks, special servicers, private lenders and others dealing with the fallout from the "Great Lending Bubble." Our clients challenge us to help them find value where all appears to have been lost. They rely on our collective years of experience to develop the right approach for each loan. Let's face it, our task is to work with our clients to make the most out of a bad situation.

Over the years, we've been asked by young people just joining a lender's workout team and by experienced lenders who have crossed over to the "dark side" of the bank to explain the tricks of the trade in dealing with special assets. In response, we created SpecialAssetsLawyer.com - a collection of some of our accumulated wisdom and a place for bank workout professionals to come find out what works when attempting to collect and deal with problem loans.

Continue reading "Special Assets Lawyer.com: A Place Where Problem Loans and Troubled Debts Are The Topic of Discussion" »