During economic expansion when real estate values are rising and the likelihood of default seems low, standard due diligence may be okay. However, during market turbulence and recession when it is necessary for lenders to fully understand risk and its consequences it is better to rely on business-minded scientists with some gray hair they earned during years of work in good and bad times.
Similarly, freshly baked bread and apples picked right-off-the-tree are good but they don’t offer the sophisticated tastes and textures of a 12-year-old Scotch or aged cheddar. Such differences are also true in the environmental consulting world.
At Bell Oldow, our experience tells us that we are entering the “clean-up phase” of this most recent economic disaster. This means that lenders with distressed debt will be considering ownership of collateral to secure recovery. As part of this decision making, wise lenders will consider collateral value, the real estate’s overall quality, and whether there are environmental liabilities that would require the lender to enter regulatory programs to investigate and remediate contamination. These lenders understand that such liabilities also have costs and time frames to complete that could adversely impact the deal. Having an experienced team that can define risk and outline expenses and timelines in such transactions is critical at this time.
We consider our gray hair to be the single malt of the industry. We have been through multiple economic cycles and have experience supporting lenders who are addressing a single site and loan buyers that are looking at large portfolios. Our backgrounds as consultants, bankers and environmental insurance underwriters allow us to provide a comprehensive review of collateral and the ability to help you think through foreclosure, REO, and debt purchases.
