Since the downturn in 2008, mortgage lenders and borrowers have attempted to resolve distressed loans in a number of ways, including through extensions, write-downs and other modifications of the underlying financing terms. Although the number of distressed properties has been decreasing in New York, it is estimated that there are still $15 billion worth of distressed assets in Manhattan alone.1 As lenders look for increasingly creative ways to work through their troubled loans, the failure to recognize certain legal pitfalls can jeopardize their right to foreclose or exercise other remedies bargained for in the initial loan documentation.
In this article we explore the potential problems caused by unintentional waiver and estoppel, each of which can cause significant problems for the unwary lender and, especially notable in the context of today’s large mortgage loan portfolio sales, its successors or assigns.
Waiver
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