You cannot even imagine the reasons banks are calling notes
It is not just payment default. While that is the reason for a vast majority of notes being closed, there are a host of additional reasons banks can and do call notes. Technical default it is generally called, and this covers everything other than payment default.
What is technical default? Any aspect of default that is covered in your mortgage documents, such as unpaid taxes, lack of insurance, out of repair, and other financial issues the bank can call on such as inadequate cash reserves, lost income etc. In short there are many reasons the bank can utilize to call notes.
A large category for this nonsense is when real estate drops in value the bank can call the note for inadequate collateral value, not enough value to cover their note. While it is hardly something the borrower can do anything about, and is not real merely a paper concept, the bank feels justified in calling a note and foreclosing, liquidating the property because there was inadequate value, and thus realize their problem that caused the event....creating real losses instead of just conceptual losses....all this while the loan is current. Nasty but true.
I have recently heard an even more despicable practice. A bank called the notes of a business which had never been late, had profitable operations and significant value, adequate collateral, but was within a high risk business....office furniture. Thus the bank felt justified in calling the note because the industry was taking large losses across the country despite the fact this borrower was in good shape and fairing well.
No, not fair at all, but the banking industry is not about fairness, they believe it is all about 100% for them and nothing for the borrower. They apparently believe that the bank must be made whole and held harmless by the borrower no matter what and that all issues fall on the borrower for resolution including a full payoff of the note whenever and for whatever reason the bank conjures is in their own best interest, despite the lack of damage to the bank and the real damage to the borrower.
Beware, be prepared and call us when the note is called. We have the strategies that can protect your business assets and reduce your personal guaranties to pennies on the dollar. We need to fight fire with fire...unfortunately as we are not in it together; the banks still believe their needs are superior to the borrowers.
That is one reason we are and remain in the deepest recession in history.
Call us; we can help you win this battle.
You cannot even imagine the reasons banks are calling notes
By: Don Todrin
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