Distressed Circumstances Call for Common Steps: Review Your Loan Covenants to Avoid Springing Recourse Liability

Distressed Circumstances Call for Common Steps: Review Your Loan Covenants to Avoid Springing Recourse Liability

When paid down income leads to mortgage defaults, and negotiations with loan providers dont seem to be leading toward amicable restructuring, borrowers must see how to come up with influence as well as perhaps reduce the chances of foreclosures and other remedial behavior by lenders. In so doing, individuals have to be cognizant that lots of non-recourse financial loans, specially those where borrower was needed to end up being a single factor entity (“SPE”), have split guaranties from creditworthy mothers or affiliates that create obligation in a few situation, like when the debtor files case of bankruptcy. These “springing guaranties” are actually one of the more effective deterrents to filing bankruptcy also to more delay strategies used by holders to prevent foreclosures. Borrowers and guarantors need to be some the restructuring that is considered when you look at the proposed personal bankruptcy legal proceeding produces more value versus recourse accountability that comes from the springing guaranty. (more…)

Continue reading

© 2021 The Iron Gate Group of Fred Holland Realty. All Rights Reserved