ASSIGNMENT:

A past client, thinking that he was not doing any harm had mistakenly added a 2nd trust deed on an apartment building that we had financed for him in the past.  However, this was a breach of the covenants in the loan agreement and the lender reached out to inform us that this must be corrected, or the loan would be called due in full. So, we suggested we refinance and pay off the 2nd trust deed.

CHALLENGE:

The biggest challenge was the global DSCR of the borrower and the insurance. On his current loan the lender had allowed him to have a separate insurance policy for each building.  At the time it was less expensive to insure the asset in this manner.  The loan also had been structured with impounds for taxes & Insurance and somehow the servicer errored and didn't pay one of the policies when it came time to renew the insurance, and the insurance company tried to reach out to the servicer but they didn't respond within the grace period and as a result the insurance was cancelled and the insurance company then was no longer insuring properties in California.  UUUUGH!

SOLUTION:

Sometimes during a refinance, you end up fixing a lot of loose ends and this is exactly what happened here. We paid off the 2nd trust deed, we worked with the lender to make good on their mistake with regards to the insurance, and we obtained new insurance, and we also were able to get some cash-out for the borrower to add to his reserves. Another example of a successful closed transaction where everyone walked away happy. Thats how we try to do it here at ALB Commercial Capital.