It's Happening Again. Deja Vu. Banks Are Calling Performing Notes!

It happened in the 1980s. The FDIC examined banks and when they determined that the collateral for a loan was worth less the value of the loan (in other words, the loan was under-collateralized) and therefore the bank was technically unsecured, they would require the bank to call the note and liquidate the collateral, even though the note payments were current!

This decimated thousands of borrowers all over the Northeast and Texas, where most of this occurred. Thousands of performing notes were called and the underlying collateral---mostly real estate, which had dropped in value---was liquidated for the benefit of the bank and at the destruction of the borrower. There was no way to refinance as the real estate was in fact worth less than the loan. Thus, a huge loss was recognized at the borrowers' expense.

This is beginning to occur again.

Be aware, learn from experience. It was not that long ago and history is beginning to repeat itself again. Here is what you must do to prevent this train wreck: Implement workout strategies before the bank calls your note. The debt must be reduced at least 50%, or possibly more, so it can be refinanced and the assets preserved. The only answer is debt forgiveness.

This applies to everyone, but the focused attack is on real estate developers who have inventory of unsold lots or homes that will take a longer time than projected to sell. The banks will want to write these loans off and liquidate the collateral at pennies on the dollar, then hold the borrower liable for the shortfall because of personal guaranties.

It is happening again. It is becoming more and more visible that banks, because of FDIC compliance requirements, are calling notes and demanding the collateral be turned over to the bank for liquidation or refinanced out, which is impossible at the current debt level.

Enter into a loan workout scenario on your terms and within your control, one that is designed to reduce the debt to a low enough level to support the refinancing. This works. Any other strategy will fail.

Call us for help, we can help you implement this strategy. Call Norm at 413-584-2581 and he will arrange a no-obligation teleconference for us to explore your options.