Can’t we all just get along?

A trip to the trainers’ facilities is not so grueling or demanding on the psyche and blood pressure as sitting across a desk from a disappointed lender. High-tech weight machines are far less complicated in figuring out what buttons to push than a “workout” between debtors and creditors ….

Regular gym workouts enhance physical and mental conditioning. But financial “workouts” can improve fiscal condition and achieve “peace of mind” with far less effort or sweat. Both require commitment to results and, ideally, the supportive guidance of experts. Workout loans can seem to be as deceptively simple and straightforward as hopping on a treadmill. Ridding one’s self of an extra few pounds or a couple of inches is much easier than satisfying a debt on life-support.

Restructure of a mortgage is neither easy, nor an approach to be taken lightly. The primary criterion is that both parties find it mutually beneficial to explore the proposition. Absent a meeting of the minds, establishing common ground, the prospects for a mutually agreeable resolution are even bleaker than the potential for imminent default.

We, here at Capella Mortgage, have the experience and expertise to objectively advise clients from the perspective of both mortgagees and mortgagors. If a workout is optimal for both, we’ll go to work. If not, we’ll be equally prepared to save everyone a lot time and acknowledge the futility.

Moving forward, factors that creditors should consider are many and varied. Examples of fundamental questions are:

  • What is the equity in the project or property?
  • What are the circumstances or causes responsible for potential default?
  • What is the loan balance?
  • What are the prospects for debtor’s fiscal improvement?
  • Does a workout make “dollars and sense” to investors or owners?

Borrowers should, as well ask them a few honest questions:

  • Have all other resources and solutions been exhausted?
  • Is there a feasible plan and strategy to meet future obligations?
  • OR is the workout simply a final act of frustration and desperation?

Ultimately, if negotiations develop into the substantive discussion, both parties will routinely address the issues below (as well as many more):

  • Extension of the term (years) of the original loan agreement
  • Include, “roll over”, any delinquencies, penalties and interest
  • Renegotiate the original interest rate or index, e.g., fixed vs. ARM

The key to unlocking the common door of opportunity that may ultimately serve the best interests of both debtor and creditor is simply that: the realization that there is a common door of opportunity. The highly-experienced financial and legal experts at Capella Mortgage can provide effective and efficient passage over the threshold.