Recent Successes Negotiating with Lenders

Some of our more recent and more sophisticated clients have had success negotiating effectively with their lenders.  This scenario is more likely to happen where there is not a personal guarantee or where the borrower is not financially collectible to the lender for deficiencies.  These clients have been able to convince the lender that it is in everyone's best interest to agree on a discounted payoff "DPO".  This allows the lender to remove the note off their books and make the necessary regulatory adjustments. 


Once this number is agreed to, the borrower then must perform within a limited time period to either refinance or pay off the lender to consummate the deal.  It also allows the borrower to reset the basis on a new loan that will cash flow.  We are assisting these new clients, performing on the negotiated DPO's.


The process of obtaining new financing, especially where the commercial lending market is already very limited, and where most borrowers are not able to come up with the normal 30 - 40% down payment can be extremely challenging.  We have been able to attract lenders and investors that understand this difficult situation and are willing to lend or invest in this environment.  It is important that any commercial borrower that is working through this situation understands the importance of seeking professional assistance in this process.  The DPO may create a taxable event and consultation with a qualified CPA is not a bad idea.  Failing to take advantage on the negotiated DPO can be very expensive to both the lender and the borrower.


We also have clients that have already lost their property to foreclosure and would like to make an offer to the lender to purchase the property back from the lender REO department.  These clients also require financing or an investor partner to accomplish this purchase.  Seeking the assistance of a professional that understands the challenges associated with this process can save time and money.



We find that working through these ever changing markets conditions is a challenge to all of us.  Particularly in commercial real estate, no two properties are the same, and each transaction must stand up to the merits of the deal.  Understanding the moving parts and the motivation of each affected party is key to achieving success for each workout.



For additional information or comment please contact the author:

Chuck Matheny  602.697.7904

chuck@commercialequitysolutions.com