I have seen this twice this week. It seems a terrific move by the bank as it certainly gets the borrowers attention and causes maximum damages to the borrower while supporting the banks recovery process.
Here is the deal:
The banks are now utilizing powers buried deeply within the documents you have already signed authorizing them to pull such maneuvers. They, then, send a letter to each tenant requesting (demanding) that rents be paid directly to the bank.
That’s a disaster for most borrowers who are depending upon the rents for many reasons. It’s also, presumably, a bonanza for the bank as it allows them to recapture cash to stellenangebote to their account, the unpaid mortgage; so goes the theory.
Worse yet, what actually happens is the tenants pay no one as they interpret this to be an open opportunity for confusion, “I did not know who to pay”, they exclaim so they pay no one. So no one really wins in this strategy. Much worse, everyone lose.
What to do about it? Well, in both instances, I was able to get the bank to write a letter releasing the tenants from paying the bank and redirect payments to the borrower. However, the deal required the borrower making monthly payments going forward. In both instances the borrower felt his relationship with his tenants would result in their ignoring the bank’s letter and they would pay the borrower directly anyways; so the net result was, it was a bust for the bank.
The evaluation was, if there would be any net left over after the payment was made on the mortgage and in both instances, there would be nothing left over as vacancies were high and rents were low; thus, it was a total wash. So we did not enter into the agreement and the borrower collected the rents anyways while we worked out the conclusion with the bank based on our winning strategies
But it is a dangerous strategy and borrowers who own rental property should be aware of these strategies. Pay attention, workouts are a tricky business. Contact us if you need help. We will arrange a no obligation conference call.