Commercial Mortgage Lenders: FDIC Agreements – Loss Share or Lost Hair?
While Financial Compound has completed loan modifications and note sales with many types of commercial mortgage lenders, we have been involved in only a precious few with banks holding recourse commercial real estate loans subject to a loss share agreement with the FDIC. Since 2009 the successor bank purchases all of the failed bank’s assets, and enters into a loss share agreement with FDIC, typically intended to cover 80% of the successor commercial mortgage lenders’ losses from those assets. While this could be an efficient way to move distressed loans through the balance sheets of strong financial institutions, the FDIC has been hesitant to approve for loss share, modifications or discounted note sales for recourse loans encouraging instead the banks to look to the loan guarantor and the foreclosure process to stave off losses.
Unfortunately this has often results in the mortgage getting stuck as an impaired loan on the successor bank’s balance sheet. Without a government change in banking policy, Financial Compound barely sees the light at the end of the tunnel over the near term for the majority of these type of mortgage assets.
Financial Compound can be a strong asset for borrowers seeking to perform loan modifications, workouts, and distressed refinances with commercial mortgage lenders. Financial Compound has the skill and track record to assist borrowers and lenders in these efforts, and receives compensation only upon the closing of a restructure. It’s this commercial mortgage broker’s stimulus plan. When we work out your loan, we make a beneficial impact on the economy and capital markets of greater magnitude than the transaction itself.