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Jan 17, 2011 5:04 PM

Are banks, borrowers racing to the bottom?

We missed this over the holiday rush, but it's still appropriate to pass this on as the nation's banks prepare to report their fourth-quarter results: Bob Mendes says it appears many lenders were applying extra pressure on tenuous credits in late 2010 to help them clean up their books. That, he said, has led to "some cannibalism among owners of businesses" — people bailing on projects where there is little hope or they have little power to focus on the loans where they can be the main man. That, Mendes says, means we may have begun a race to the bottom.
"If some owners and banks start to conclude that many of the commercial deals out there probably won’t make it through the tough times, and some of those owners start to bail out, it will likely put enormous pressure on the remaining owners to face the probability that their particular project won’t make it through this downturn without failing or restructuring."
Jan 13, 2011 7:21 AM

Still extending, still pretending

Bob Mendes read our piece last week on the state of community banking in Middle Tennessee and got to thinking about the nimbleness of small lenders versus "still too shell-shocked" larger institutions. He also sees issues with the number and quality of loans that will mature in the coming years.
But, in reality, the bank and borrower are just making the bet that the economy will be better in 2011 and 2012; that values will have rebounded enough for the borrower to refinance or sell at that point in the future. I am not criticizing this approach by banks and borrowers; just raising the point that looking at the total amount of “noncurrent” debt might not reflect how much “troubled” or “questionable” debt they might have on their books.
Sep 7, 2010 7:28 AM

As of next month, the foreclosure price is officially the market price

Noted local attorney Bob Mendes draws attention to a new state statute that makes it a little harder for foreclosed homeowners to fight banks when the latter come looking to recover money lost from foreclosure sales.
At first blush, this statute seems to limit the arguments available to borrowers. However, in reality, our experience has been that, unless a borrower could show fraud or irregularities in the sale process, most courts have assumed that the foreclosure sale price was a fair market value. Given this, while the statute might streamline some individual lawsuits, it might not change the result in many cases. We will have to see how the statute is used by parties and applied by the courts.
Aug 18, 2010 10:43 AM

Lending requires stability

Local attorney Bob Mendes says commercial property owners looking to refinance or take out new money will continue to run into a banking wall until the bigger economic picture shows clear improvement.
This should make credit more readily available. The question is whether the economy can hit that sweet spot without experiencing another round of significant “corrections” to the banking industry and values.
SEE ALSO: Elizabeth Warren tells Mario Bartiromo it will take three years to sort through the CRE muck.
Mar 30, 2010 7:45 AM