Expert: Terrence Cullen - 3/18/2011

Question
My mortgage company ( a regional bank) called one of our investment property loans due last year and we had to use our savings to pay it off since no one was lending. We have another loan with them that gives them the right to call it due in May 2011. They acquired this loan from two banks that folded. We are afraid they will call this one but don't want to approach them to give them any ideas. Last year they just called us and gave us 60 days notice. What is the normal practice when calling a loan due? Could they not call and just send a statement April 15th stating the balance is due on May 1st? We are trying to refinance but it is still a tough environment. It would be a 60% ltv on our office building (single tenant) but the loan amount is under $140k and lenders have a minimum of $250k. Our business is managing our own properties and our tax records will show a loss last year with all our deductions. Please give any advice and experience that you have. We just aren't sure which way to go but we want to prepare and have a plan A, B and C. Thank you.

Answer
Possibly your credit standing has changed since you paid off the last loan. I would attempt to refi it once again with another lender whom you have a RELATIONSHIP. I hope it is fallen through the cracks right but keep in mind. any correspondence would lead them to make the next move.  Just in case I would look to find a possible buyer, who could be interested in a sales leaseback.
 1. Take a second with an area bank. If you are on time with your payments, use an are bank to do a collaterized second which would then deter the bank from calling the first. A lot of times the first will prohibit a second.
 2. sell the property to the single tenant and have them lease it back from themselves
 3. Sell the property outright
 4. Do not sign any registered letters and hold on as long as possible.
 5. Buy back your own loan using a collaterized CD.  

You might be spared by an overtaxed bank, but you are exploring options which is half the battle.  

Good Luck, TC