Business foreclosure can be a tedious and complicated process for lenders to navigate, but commercial foreclosures have their own unique challenges. Because of the nature of a business foreclosure—in which there is far more money at stake than a residential loan—it can be difficult for lenders to reach a solution that protects the profitability of the loan while keeping the legal proceedings as brief as possible.
The Total Lender Solutions (TLS) team has decades of experience handling commercial property foreclosures. We see 3 aspects of a business foreclosure that are highly challenging for lenders and attorneys:
- Starting the Conversation
- Navigating Local Laws
- Finding the Right Solution
1. Starting the Conversation
When a business property enters foreclosure, there’s a good chance that communication has already broken down between the lender and borrower. In order to resolve a business foreclosure as quickly as possible, it is important to start negotiations between the two parties immediately. This can be difficult because:
- The borrower may have decided to pursue a risky option, like strategic default
- The borrower may feel that circumstances outside of their control caused the foreclosure and feel inclined to choosing one particular solution
- The borrower may feel distressed or ashamed about the foreclosure process and uncertain about negotiating
- Lenders may not fully understand the legal rights afforded to themselves or the borrowers
- There is a dispute between the borrower and the owner / operator of the business
Using a foreclosure partner, like Total Lender Solutions, is the best way to bring the borrower back into the process. TLS can help lenders and borrowers understand their rights and risks and establish a common ground that encourages all parties to come together to reach an agreement.
2. Navigating Local Laws
Lenders may have investments in a variety of different states, which each have their own rules and regulations that govern the foreclosure process.
Foreclosure firms can guide lenders to the best possible resolution, taking into account the local regulations, and the Total Lender Solutions team has the legal expertise to understand these nuances.
“A firm that specializes in commercial foreclosures can be invaluable to lenders,” says Randy Newman, founder and CEO of Total Lender Solutions. “They often have a team of attorneys with expertise in a variety of different areas, so they can provide state-specific guidance while giving you the totality of resources that law firms have to offer. TLS, for example, can assist lenders in 7 different states.”
3. Finding the Right Solution
There are many solutions to a business foreclosure, and choosing the path that is right for you depends largely on the circumstances of the foreclosure, the relationship between the lender and borrower, and the local laws where the property is located.
Common solutions to a business foreclosure include:
- Repayment plan
- Loan modification
- Short sale
- Deed in lieu of foreclosure
- UCC sale
- Convincing the borrower to continue with the original loan
Each of these options have both advantages and risks, and their feasibility depends entirely on the circumstances of the business foreclosure. If you’re not sure how to proceed, it’s best to seek the guidance of a commercial foreclosure firm like TLS, which can help you build the path that will best protect your investment.
When to Contact a Foreclosure Firm
Attorneys should contact a foreclosure firm as soon as their clients start to see turbulence in their commercial loans. Foreclosure firms can help lenders negotiate solutions that either prevent the business from foreclosing altogether or minimize damage if the borrower defaults.
Total Lender Solutions is a trusted foreclosure partner serving the states of Washington Oregon, California, Nevada, Arizona, Texas, and Missouri. Our expert team is prepared to assist real estate attorneys with all aspects of foreclosure processing, loan modification, and other financial resolutions. Contact us today to learn more about how we can help.
