IF A BORROWER has no meaningful equity in a property, does not foresee a turnaround in the near future and is not motivated to retain the property and insist on a restructuring, the borrower may be willing to transfer the property to the lender. This decision may be particularly appropriate with a single asset, single purpose borrower. The consensual transfer can be completed in three basic ways: (i) by deed-in-lieu of foreclosure; (ii) by uncontested friendly foreclosure; or (iii) by pre-packaged or friendly bankruptcy.
Whichever path is chosen, the lender must be sure to treat the transfer as an acquisition of property. As in any real estate acquisition, the lender/transferee should do two things.
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