Although freshly baked bread and apples picked right-off-the-tree are good, 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. 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.
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 repayment. As part of this decision-making process, wise lenders will consider five key factors:
- Collateral value
- Borrower’s credit
- Legal, foreclosure timing
- Building condition
- Environmental
The fifth factor, known and potential environmental liabilities requiring regulatory notification and remediation, can cost lenders more than their investment and can take years to resolve given that regulators require remediation regardless of property value or investment amount. Having an experienced consulting team to define risk and offer guidance when navigating hairy transactions is critical during the process.
We consider our gray hair experience to be the single malt of the industry. We have been through multiple cycles and have experience supporting lenders working on single sites as well as loan buyers that are looking at large nationwide 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 sale and debt purchases.
