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1 504 LIQUIDATION Build Northeast Conference September 8, 2014 504 Liquidation Overview Hollis Carter, Supervisory Loan Officer Manager, 504 Liquidation.

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Presentation on theme: "1 504 LIQUIDATION Build Northeast Conference September 8, 2014 504 Liquidation Overview Hollis Carter, Supervisory Loan Officer Manager, 504 Liquidation."— Presentation transcript:

1 1 504 LIQUIDATION Build Northeast Conference September 8, 2014 504 Liquidation Overview Hollis Carter, Supervisory Loan Officer Manager, 504 Liquidation Division Commercial Loan Servicing Center Little Rock, Arkansas

2 2 504 LIQUIDATION LRSC – Debenture Purchase Trends FY 2006 -- 126 (11/mo.) FY 2007 -- 179 (15/mo.) FY 2008 -- 323 (27/mo.) FY 2009 -- 712 (59/mo.) FY 2010 -- 1,081 (90/mo.) FY 2011 -- 920 (77/mo.) FY 2012 -- 680 (57/mo.) FY 2013 -- 495 (41/mo.) FY 2014 -- 344 (29/mo.)

3 3 504 LIQUIDATION

4 4 Delinquent Loans/Debenture Purchases -Quarterly reports required on all loans over 60 days past due. -SBA will follow up on severely past due loans monthly. -No response by CDC – debenture purchase. -> 3 months past due with no plan - debenture purchase. -Debenture purchase and cancellation deadline is the 10 th business day of each month.

5 5 504 LIQUIDATION TPL 60-Day Foreclosure Notices -CDC to contact SBA/forward notice immediately. -CDC to make recommendation on debenture purchase. -Generally SBA will purchase debenture immediately. -CDC must order BPO or appraisal. New SOP 50 55 requires independent appraisal. CDC may request a copy of TPL’s appraisal, but can’t rely on it without exception to policy approval from LRSC. -Must be prepared for foreclosure sale (bid/no bid).

6 6 504 LIQUIDATION Liquidation Process -CDC assistance is critical to effective liquidation. -SBA will authorize debenture purchase, transfer of loan into liquidation status & authorize new appraisal or BPO. -CDC must order BPO or appraisal - SBA will pay or reimburse cost. If delay is justified, contact SBA ASAP. -CDC must prepare and submit liquidation plan and site visit report to SBA within 30 days of debenture purchase. -Immediately following debenture purchase SBA will send an e- mail to CDC requesting updated obligor info (TIN/SSN) within five days and the liquidation plan, site visit report, appraisal and protective bid analysis within 30 days.

7 7 504 LIQUIDATION Liquidation Process -- continued -Immediately following debenture purchase SBA will send a demand letter to the borrower. -Thirty days after debenture purchase SBA will send a second e- mail to the CDC requesting any liquidation information not received. -Thirty to forty days after debenture purchase SBA will send a demand/acceleration letter to all obligors. -Quarterly liquidation reports are required by CDCs conducting the liquidation. The format is available on the servicing centers’ website and the URL is included in the 30-day e-mail sent to the CDC.

8 8 504 LIQUIDATION Liquidation Process -- continued -All borrowers that are over 120 days past due after debenture purchase will automatically receive a (Treasury Offset Program) TOP Due Process Notice. -If default isn’t cured during the 60-day due process period TOP referral will proceed and receivables from the Federal government will be offset. -If borrower is cooperative and engaged in serious workout or short sale negotiations TOP referral may be “outlawed.” -To “outlaw” a TOP referral the CDC must contact SBA ASAP so codes can be entered to stop TOP referral.

9 9 504 LIQUIDATION Liquidation Process – continued -To ensure effective TOP referral it is imperative that current and accurate obligor info (names, addresses, SSN/TIN, etc.), be submitted to SBA within five days of debenture purchase. -Recently reorganized SBA Office of General Counsel will pursue obligors through DOJ if: Net collectability of $50,000 or more per individual guarantor is anticipated through enforced collection. -Work with LRSC to determine net collectability IF high net worth is apparent. -Recovery through Treasury Cross Servicing for guarantors with less than $50,000 net collectability.

10 10 504 LIQUIDATION Liquidation Process -- continued -Current liquidation plan format is available on SBA’s website: http://www.sba.gov/for-lendershttp://www.sba.gov/for-lenders (Under “Lender Quick Links” at bottom of page go to “Steps in SBA Lending,” click “CDC/504 Loans,” click “Liquidation”) -If litigation/bankruptcy CDC should notify SBA field counsel and LRSC immediately and submit litigation plan to field counsel for approval. -Debenture purchase is usually, but not always, required in the event of bankruptcy. -CDC should determine status of the TPL loan and their intentions regarding workout, foreclosure, etc.

11 11 504 LIQUIDATION Liquidation Process – continued -If there’s workout potential, CDC should work with borrower to submit proposal to LRSC (address in liq plan). -If TPL foreclosure is eminent CDC must order appraisal or BPO immediately. -CDC should timely prepare & submit a protective bid analysis to SBA including bid recommendation. -If “no bid” determination push for short sale, private auction sale or monitor TPL foreclosure action (provide results to SBA). -If “bid” is approved SBA will order Treasury check and request that CDC represent us at the foreclosure sale (district office support may be available if needed).

12 12 504 LIQUIDATION Liquidation Process – continued -If SBA is winning bidder, REO account is established and CDC assistance is requested to secure, maintain and market the property. CDC assistance is critical to a positive outcome on the sale of REO. -CDC should send Wrap Up Report recommending charge off and pursuit of judgment/Treasury referral of obligors at conclusion of liquidation. -Administrative wage garnishment (AWG) is possible and a very effective collection tool for obligors with outside employment. -AWG should be pursued at the outset of liquidation if obligors with outside employment are uncooperative. -SBA will notify CDC when loan charge off is complete.

13 13 504 LIQUIDATION Liquidation Concerns & Issues -Please use the 504 Liquidation e-mailbox! lrsc.504liquidation@sba.gov -Submit liquidation plans within 30 days of purchase. -If possible, send liquidation plans and attachments in separate files. -Include accurate TIN/SSN on all obligors in liquidation plans. -Site visit reports must be provided timely (due within 60 days of payment default/15 days of technical default/30 days of debenture purchase)

14 14 504 LIQUIDATION Liquidation Concerns & Issues -FF&E must be addressed in appraisal/BPO and PBA. -Keep SBA informed as the property is liquidated, e.g., reporting TPL foreclosure results to SBA. -CDC must enforce the TPL agreement which requires 30 days notice of default and 60 days of foreclosure. -Short sale submissions must contain complete supporting information required by SOP 50 55. -Detail any secondary collateral and obtain valuations including residences.

15 15 504 LIQUIDATION Liquidation Concerns & Issues -Original PFS on guarantors must be included in liquidation package if loan was processed under ASM. -CDC must record the bid results and buyers at all foreclosures sales and ensure surplus proceeds for SBA are recovered. SBA notification required. -Quarterly Reports (60-day past due and liquidation). -Must submit wrap up report at the conclusion of collateral liquidation or abandonment. -CDC assistance is critical to effective liquidation.

16 16 504 LIQUIDATION Communicating with 504 Liquidation Division -CDC’s are encouraged to communicate with SBA continually throughout the liquidation process. -We ask that you use the 504 liquidation e-mailbox for submission of ALL case specific and general questions. -The 504 liquidation e-mailbox should always be used for: -Quarterly Delinquency Reports -Debenture Purchase Requests -Liquidation & Litigation Plans -Quarterly Liquidation Reports -Protective Bid Analyses -Wrap Up Reports -Our website has a link for secure transmission of large files such as appraisals, environmental surveys, etc. (Send This File)

17 17 504 LIQUIDATION 504 Liquidation Division Contact Info E-mail: lrsc.504Liquidation@sba.govlrsc.504Liquidation@sba.gov Main Phone Number: (501) 324-5871 Fax: (202) 741-6930 Website: http://www.sba.gov/LittleRockCLSChttp://www.sba.gov/LittleRockCLSC Hollis Carter, Supervisory Loan Officer & Manager (x264; hollis.carter@sba.gov)hollis.carter@sba.gov Steve Clark, Loan Officer (x298; steven.clark@sba.gov)steven.clark@sba.gov John Hiegel, Loan Officer (x247; john.hiegel@sba.gov)john.hiegel@sba.gov Kenneth McKay, Loan Officer (x291; kenneth.mckay@sba.gov)kenneth.mckay@sba.gov Karen Musick, Loan Officer (x313; karen.musick@sba.gov)karen.musick@sba.gov Steve Park, Loan Officer (x314; steve.park@sba.gov)steve.park@sba.gov Gail Schulte, Loan Officer (x228; gail.schulte@sba.gov)gail.schulte@sba.gov Beverly Smith, Loan Officer (x292; beverly.smith@sba.gov)beverly.smith@sba.gov Vickie Welch, Loan Officer (x284; vickie.welch@sba.gov)vickie.welch@sba.gov Veronica Kirtley, Loan Servicing Assistant (x232; veronica.kirtley@sba.gov)veronica.kirtley@sba.gov Sharreka Reed, Loan Servicing Assistant (x236, sharreka.reed@sba.gov)sharreka.reed@sba.gov Anna Sadler, Loan Servicing Assistant (x224; anna.sadler@sba.gov)anna.sadler@sba.gov

18 18 504 LIQUIDATION Thank You!


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