Real estate across Californian and around the country have been affected by the recent failure of three banks, including the Silicon Valley Bank closure. Bank failures tend to precede lower interest rates across banks in the vicinity, meaning that new buyers are likely to enter the market. At the same time, banks must continue to deal with commercial real estate foreclosures and properties at the end of a borrower’s term.
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As third party real estate trustees, with a specialization in commercial foreclosures, we have had fifteen years of experience helping lenders and banks manage their loans secured by commercial real estate. “We’ve found that, although the law is strict in every state, no two loan agreements are the same,” says Total Lender Solutions CEO Randy Newman. “In the event of a bank closure, lenders use trustees to move their assets.”
What Happens to Commercial Foreclosures in the Event of a Bank Closure?
Different nonjudicial states have different commercial real estate foreclosure processes. The bank’s decision to delay or terminate the foreclosure process may depend on the current stage of the foreclosure process for the property.
If the bank closes suddenly, before the foreclosure can be completed, it may cause delays. Often, real estate properties must be moved to a new bank or financial institution. In nonjudicial states like California, the third-party trustee, who holds the Deed of Trust, is responsible for transferring the ownership of the loan over.
There are cases where the closure of a bank results in real estate foreclosures being postponed, giving the borrower extra time to cure the default, or canceled altogether. Once the loan is transferred, however, the direction for the property is now left in the hands of the new owner.
If the foreclosure was completed at the time of the closure, it is less likely that the foreclosure will be reversed. The new institution is now responsible for additional maintenance of the loan. However, if the lender failed to follow state compliance guidelines at any point, the borrowers still have cause to file for damages from the lender.
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Trusted Partner for Your Commercial Real Estate Foreclosures
Lenders should have a trustee by their side that can continue to manage their real estate, even in the event of a closure. Our team of highly experienced real estate professionals and legal experts has transformed complicated processes into clear resolutions for institutional and private lenders.
Our top priority is to safeguard your assets. We consider each lender’s circumstances before implementing an intentional strategy. Our dedication and persistence when it comes to navigating the foreclosure process ensure that our clients are confident in reaching successful outcomes. Contact us today.
