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Foreclosure Nightmares: Private Lending Edition

What happens when the rent checks stop coming in? 

 

The COVID-19 pandemic was the impetus for a radical shift in the American property markets.  In the face of mask mandates, lockdown orders, widespread layoffs, and supply chain issues, millions of Americans were out of work through no fault of their own.  This economic storm caused an equally strong reaction by local, state, and federal authorities, who instituted widespread measures to keep Americans housed — including eviction and foreclosure bans. 

 

While these moratoria did help many Americans stay in their homes, they also had cascading effects on the housing markets, causing headaches for not only prospective renters and homeowners, but also for landlords and lenders. 

 

How the Other Half Lives 

 

From headlines in The New Yorker to political stump speeches from coast to coast, an ocean of proverbial ink has been spilled writing and pontificating on how COVID-19 affected renters and homeowners.  Decidedly less coverage has gone to the trials and tribulations faced by landlords and lenders.  Most of you have probably heard a story about a small landlord losing their livelihood- and maybe even their home– as a result of terrible tenants and eviction fiascos.  

 

Lenders, too, saw tremendous uncertainty introduced to the industry as a result of foreclosure moratoria.  This uncertainty was and is not limited to lenders- the entire industry is connected, and if foreclosures are impossible, home buyers and renters will feel it in due time, as those properties do not trickle onto the market, artificially reducing supply and helping to create the affordability issues we see in so many parts of the country.  

 

While things have changed, we’re not out of the woods yet, and lenders still face challenges on several fronts.  If you’re interested in learning more about what 2022 and 2023 might look like in lending markets, check out our take, Private Lending Market Growth in 2022 and Beyond. 

 

One pressing problem that’s probably kept a lot of lending professionals up late at night over the past few years, is the fact that without a functioning foreclosure process, they’re stuck with long-lingering loans on their books.  This can lead to several problems for lenders, including the loss of investor confidence, the requirement to service and litigate non-paying assets- at your cost, and the inability to effectively deploy capital because it is tied up within that non-performing no-foreclose asset. 


How Lenders Can Find Their Way Home 

 

If you can’t turn to the government, what do you do?  Accept diminished future earnings and sleepless nights?  No- you find a way to get back to where you want to be.  Lenders can utilize solutions like AXY Wrap™ to recoup portfolio-related losses and avoid foreclosure expenses and headaches altogether.  

 

With AXY Wrap™, the risk of loss is transferred upon default.  Bad loans move from your books to theirs in an elegantly simple process: 

 

Option 1: 


  • -Borrower stops paying. 
  • -Presentment of the option to AXY. 
  • -Lender gets paid! 

 

Compare Option 1 to the often arduous steps you need to take to get paid through the traditional and time-consuming foreclosure process, with its decidedly complicated, lengthy process: 

 

Option 2: 


  • -Borrower stops paying. 
  • -Lender serves notice of default. 
  • -Foreclosure complaint filed. 
  • -Litigation ensues. 
  • -Final judgment entered. 
  • -Foreclosure auction scheduled. 
  • -Borrower files bankruptcy and delays auction. 
  • -Lender must wait for court order to proceed with foreclosure auction. 
  • -Foreclosure auction finally takes place. 
  • -Lender seeks deficiency judgment for remaining loan balance. 
  • -You finally get paid- how long do you think that took? 

 

Every day you spend with a bad loan on your books is another day spent shoveling cash onto a fire.  But you don’t have to worry about that anymore.  Get in touch with the team at Axylyum to make sure you get to exercise Option 1 and get defaulted loans off your books.  

 

Get Foreclosure Protection Today. 

 

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