For hard money lenders in commercial foreclosure who are faced with a delinquent borrower, foreclosure can seem overwhelming at the onset of the process. There are state and federal laws that must be followed precisely at the risk of legal action or government penalties. The best way to remain in compliance is to understand your legal obligations as a hard money lender in commercial foreclosure.
The best way to manage a large project like foreclosure while maximizing your assets is to take advantage of foreclosure services. The experienced and professional team at Total Lender Solutions works as an extension of your team to complete your foreclosure and keep your team educated about state and federal laws.
TLS has helped hundreds of lenders complete their foreclosures, and we’re confident we can help you too. Read more to learn about what a commercial foreclosure may look like for a hard money lender.
The Role of Hard Money Lenders in Commercial Foreclosure
Lenders are obligated to communicate with their borrowers and remain transparent throughout the foreclosure process. When you work with a foreclosure service like Total Lender Solutions, they act as a third-party trustee who handles their actions for your team. Outsourcing your foreclosure is a good option if you do not have the internal manpower needed to enact it yourself.
Disclose Rights to Borrowers
Hard money lenders are required to disclose the borrower’s rights and remedies in the event of default and foreclosure. This information is usually provided on the initial notices and includes clear information on the foreclosure process, the borrower’s options, and what the process to come will look like.
Follow Procedural Timeline
One of the most crucial parts of enacting a foreclosure is providing proper notice to the borrower when initiating foreclosure proceedings. Open communication channels between the lender and borrower are often expected throughout the foreclosure process. Some states have shorter or longer timelines, so it is crucial to review your state’s order of operations carefully before you begin the process.
Comply with State and Federal Laws
Hard money lenders must comply with all relevant laws and regulations governing foreclosure processes in their jurisdiction. These laws may dictate specific procedures, timelines, and requirements that must be followed during foreclosure. Failure to comply can lead the borrower or the government to halt the foreclosure process and impose fees, which can quickly bankrupt your business.
Accept Valuation and Disposition Scrutiny
Lenders may be obligated to obtain a fair market valuation of the property and take reasonable steps to sell it at a fair price. A sale is said to be “commercially reasonable” when the court approves the sale price.
The proceeds from the sale are typically used to repay the outstanding loan balance, with any remaining funds returned to the borrower or applied to other outstanding obligations.
How Total Lender Solutions Guides Lenders Through Commercial Foreclosures
If you are a lender who must foreclose on a commercial property due to delinquency or a breach of contract, seek out a trusted partner to help complete the process efficiently and under state and federal compliance.
The Team at Total Lender Solutions is intimately familiar with the nonjudicial process in Texas, California, Arizona, Nevada, Oregon, Missouri, and Washington. We work as an extension of lender teams looking to maximize recoveries on defaulted loans. We transform the complicated process of foreclosing commercial real estate into clear resolutions for institutional and private lenders.
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