When facing a stressful loan situation, especially one in which you may lose your asset completely, your initial reaction might be to contact your attorney. Most people seek the advice and assistance of their lawyers because they believe no other options exist – at least none which could help them save face. They end up exhausting their bank accounts by putting the fate of their properties in the hands of someone with a professional legal background. In reality, however, allowing their attorney to handle your financial affairs could be detrimental for numerous reasons.

Firstly, they don’t have the knowledge of the industries involved. While they may have a legal background, most will not understand the complexities of bank dealings, CRE forecasts, and financial leverages that affect your asset. Instead, lawyers will result to filing bankruptcy or a litigation claim, both of which become very expensive procedures. In fact, Jon D. Greenlee, Associate Director of the Division of Bank Supervision and Regulation for the Board of Governors of the Federal Reserve System, noted “Business bankruptcies, a leading indicator for retail CRE performance, have risen 35 percent from a year ago.” As the commercial real estate industry continues to suffer in this economic climate, attorneys have made it rich without much effort on their client’s behalf.

Secondly, while your attorney may have a substantial amount of experience in financial dealings with the bank, they may make decisions (or mistakes) that could compromise the status of your asset. For instance, in deciding to go through with the bankruptcy process, they may not realize a bank’s willingness to negotiate an alternative course of action. Bankruptcy and other legal claims are expensive for all parties involved, even the lender. Your attorney’s failure to recognize the bank’s vulnerability and to capitalize on a potential loan work out rather than follow their routine filing process could cost you the ownership of your asset. You have opportunities – whether it means being released from your personal guarantee, reducing your principal, or minimizing you tax exposure – and your lawyer may not realize them.

So what do you do? Find someone with knowledge and experience in the loan workout world. We at Breakwater Equity offer a multidisciplinary approach to the workout process, allowing our team of high qualified (in all fields relevant to your loan) and seasoned analysts to carry out a thorough analysis of your financial situation and uncover all possible options. Having been through countless loan workouts in the past, we can easily recognize your points of leverage with the bank while knowing how to communicate directly with your lender in a way that will generate a desired outcome. Breakwater Equity believes that loan workouts are the most effective way to retain your asset and Jon D. Greenlee agrees: “The Federal Reserve recognizes that prudent loan workouts are often in the best interest of both financial institutions and borrowers, particularly during difficult economic conditions.”