Having the banker/creditor you are working with on your side makes a workout a much easier and less stressful situation.  This is not to say it will be an easy road as all workouts are stressful on the guarantors, but an overly aggressive and antagonistic creditor can make the guarantor’s life a much more miserable situation.

My current client is in a terrible situation.  Their original mortgager made a grievous error and put the SBA-backed bank in first position on their mother’s home.  This made a home which should have been worthless and irrelevant in a workout situation prime collateral and good security for the attacking creditors.  The SBA-backed bank quickly moved to foreclosure status and began the legal steps to take away the mother’s, who is an elderly retired woman, home.  The bank was doing what they are required to do by attacking collateral to try and satisfy the loan on a defaulted borrower, but what rules and regulations do not cover is the damage such actions will cause.  When this woman is homeless she cannot enter the working world to regain a home.  She has no income so a refinance or most other avenues of protecting her home are gone.  She is in a no win situation with little options.  These points do not even touch upon the emotional damage to the mother and family even her grandchildren watching the home with all of their nice memories being taken by the bank.

To make matters worse, the home in jeopardy owns most of the land on which my client’s house sits.  If the bank takes possession they are going to have simply a house and a driveway with no yard left for the two children to play on.  In all it is a terrible situation with no reasonable solution.

The silver lining in this situation is the banker’s relationship with Second Wind Consultants.  She loves us.  She likes everything we have done and is very happy to have us involved taking care of things that would cost her time and funds if she had to pursue the legal alternatives.  She is interested in the asset sale of the business and is very upset that she has to foreclose on the house, only because of this relationship.  Our good standing with the banker involved has humanized our clients in her eyes and she is emotionally invested in their success.

To give an example of how this is helpful to our situation, our contact at the bank is willing to ignore the arm’s length transaction rule of the SBA, which stipulates that any buyer that is produced for collateral on an SBA-backed note cannot be blood related to the guarantors.  This allows us to use our clients as a buyer to save their mother’s home through a short sale.  The bank will get a significant return on the home with little to no investment and we can save the home which in any other situation would be unrecoverable.

So although having a banker as an adversary happens in some cases and is not an impenetrable obstacle, having the banker on your side can pave roads which are otherwise unusable through the workout process and will really go to bat for our clients.