Fitzgerald Advisors: Whole Loan Advisors, Debt & Note Brokers

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Empower Your CRE Business with the Strategic Use of Sales

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Community banks and similar institutions often run into problem assets they are unprepared to manage. Often, long-time loan officers and bank managers consider CRE and other asset sales as an admission of defeat and failure rather than a normative part of the process for nonperforming and charged-off loans.

Below are questions that may be useful for any asset manager to ask themselves about selling CRE loans or other assets:


  • Are you a loan officer or a collector? What is better for you and your book of business – to try and manage the collections on a loan that takes too much time and energy and results in little to no profit for you and your institution or to go out and make and manage more good loans?
  • Are assets worth more than what the market states? If you are sitting on an overvalued piece of commercial real estate when the loan was made and cannot be sold for what is owed, why not cut the loss and move on? Does it cost your institution legal fees, taxes, and thousands of dollars monthly with no return? Why let the “asset” keep costing you and your institution?
  • Is it genuinely admitting defeat to cut out a relationship that is not working? If an asset costs your institution money with no real return and no near-term potential for recovery, why let it continue to be a problem?
  • Is it truly a “customer service” problem to allow problem assets to be sold off, or is fear of backlash from a problem loan an excuse not to consider a sale an option?

Admittedly, there are some accounting gymnastics to be done by unhealthy institutions because of FDIC accounting practices. Some significant nonperforming assets cannot be sold for their actual value because of how off-balance they may throw specific ratios.

However, should FDIC considerations negate entirely using CRE or other asset sales? Would the sale of other nonperforming assets free up the proper capital or help balance ratios in other ways so that the worse loans could be sold?

Asset managers at banks and other institutions have to wear many hats and often take on roles they may not be entirely prepared for. For some, asset sales represent a challenging paradigm shift from the admission of failure or defeat on a loan rather than a part of the process of handling nonperforming or charged-off assets.

Though we want our bankers to typically think in specific ways so as not to extend undue risk, sometimes keeping specific business processes as secure options may prevent both future profits and sound, productive work.

In conclusion: CRE loans and other assets can burden banks that have traditionally managed them as part of their lending portfolio. They often run into problems with these asset sales – long-time loan officers and bank managers consider them an admission of defeat rather than just another normative process in the life cycle of nonperforming or charged-off loans.

The questions we’ve provided may help any asset manager make more informed decisions about how to proceed when it comes time to sell CRE, or other assets. Have you considered selling your charge-offs? If so, what are some things you must consider before making this decision?

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