Georgia bank failures lead the nation and this trend will continue into 2010. These bank failures can present an opportunity for commercial real estate owners to refinance their debt at a discount. This will likely occur with the3rd party who purchased the loan pool from the FDIC. I thought I would share some insights from my research on this matter:
1) It is very difficult to negotiate a payoff on your note with the FDIC. It is challenging to find the appropriate FDIC official who can process the paperwork and authorize the payoff.
2) The FDIC does not want to be portrayed as allowing borrowers to benefit from buying the note at a discount. As a result, the FDIC would rather sell the note as part of a pool in a public auction and receive less than they might from a borrower who wished to renegotiate the note directly.
3) Purchasing from the third party who acquires the loan pool is likely the better route to paying the note off at a discount. In this instance the third party has already purchased the note at a discount and typically wishes to get as much as they can as quickly as they can.
Bank closures will remain a fixture in the Georgia market in 2010. This also provides a potential
opportunity for borrowers to payoff these notes at a discount. For deeper pockets I have seen financing available to accomplish the payoff although this may occur in conjunction with additional personal guarantee’s and/or using additional collateral as security. If you have further questions on this matter, please let me know.
As always your trusted resource for practical legal advice.
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