Negotiating on Behalf of Distressed Borrowers
Lenders have traditionally been reluctant to accept any but the simplest proposals for repayment agreements to avoid foreclosure. While borrowers with huge loans were often able to obtain significant concessions, individual homeowners or small investors were told that their only option would be payment in full with the associated fees and costs. The dramatic increase in the number of projected foreclosures has caused a dramatic change in the type of concessions lenders are willing to make in today’s market. The lending industry realizes that a large increase in the number of foreclosures simply does not make business sense. The avalanche of foreclosures in the late 1980s and early 1990s resulted in lenders being forced to manage large portfolios of deteriorating properties. Some foreclosures were profitable because the lender was able to resell property purchased for less than market value. In today’s depressed real estate environment, however, the current market value of most distressed property is below the amount owed by the borrower.
The desire to avoid the management headaches associated with ownership of foreclosed properties has resulted in a fundamental reevaluation of lender’s foreclosure practices. It is still, unfortunately, the case that an unrepresented and unsophisticated borrower has little chance of obtaining a reasonable workout agreement. The inequality of power and information is significant. It is often the case that a lender sensing desperation or lack of understanding will fail to offer the most favorable workout options. The result will be the imposition of a solution that maximizes the return to the lender and does not offer a long term solution to the problem.
As with any negotiation, extensive preparation is required. Our attorneys will meet with you and obtain detailed information that will help us determine realistic income and expense projections. This will allow us to determine how much money is available for a possible workout agreement. It is also important to document sympathetic aspects of the borrower’s situation. Detailed information about the subject properties, especially its condition and fair market value, is another essential tool in our push to obtain the best workout agreement.
In conclusion, the aggressive advocacy provided by a lawyer on behalf of the borrower is essential in most cases to place the parties on an equal footing and to protect the interest of the homeowner/borrower. A borrower represented by an attorney may obtain negotiated relief that goes far beyond that which would be offered voluntarily to an unrepresented homeowner.
By: J. Ulises Herran
Ph: (305) 444-7662
Email: Ulises@AristaLaw.com |
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