Restructured a Small-Balance Loan for a Borrower Hurt by the Pandemic and Maximize the Lender’s Recovery

In 2007, an established printing company purchased two buildings, taking out commercial mortgages for $544,000 and $410,000. The 30-year, fixed-rate, fully amortizing loans performed as agreed until the beginning of the COVID-19 pandemic, when they started to become delinquent. In March 2021 the borrower defaulted, and in June the loans were transferred to SitusAMC’s special servicing group. 

The borrower was a family-run business confronted with declining revenue amid pandemic shutdown, and the borrowers had depleted their cash. The properties sat in a jurisdiction where SitusAMC could have quickly foreclosed. Instead, SitusAMC put the loan in forbearance, and worked with the borrower on a deep analysis of the business, to figure out how it could adjust to compete in a post-pandemic world.  

Together, SitusAMC and the borrowers devised a strategy to consolidate operations into one building and sell the other. The borrower used the sale proceeds to pay off one loan and cure the outstanding amounts on other, making the lender fully whole. The strategy minimized the borrower’s need to tap restructure in bankruptcy, and its business operations will support payments on the remaining loan on a go-forward basis.