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Commercial Real Estate Workouts.

As Stuart Saft states in his opening remarks in his book, "It is unfortunate that this book had to be written, because it is indicative of the current difficulties faced by real estate." In fact, I believe the opposite is true. This book could not have been written at a more opportune time; granted, we are in probably the worst recession that any of us have ever experienced in the real estaqte market. Many borrowers, developers and lenders are faced with some very tough choices as we maneuver through this recessionary period. At this point in time, this book serves as an important reference, one that is well overdue and that should be read by every real estate professional.

Commercial Real Estate Workouts will not tell you how to solve your problems, and it is not intended to tell us when we will come out of this recession and begin a growth period for new prosperity. This book focuses on using every bit of your innate ability to remedy the dilemma that many people are facing.

Saft has written a book that is a major reference source for the real estate professional. The book provides an opportunity in two major areas. This first is a basic guide for those just entering the business, especially in the workout area. Saft has gone to great lengths to provide, in detail, a basic understanding of real estate financing. He has written this in such a manner that is easily understood, and he covers this ground in such a way that the reader will have a good command of real estate finance.

The second major contribution Commercial Real Estate Workouts makes to the real estate industry is that it benefits individuals that have many years of experience in the area of workouts, foreclosures and bankruptcies. This book serves as a youthful remainder of where we have come from. It gives a clear review of issues that we may have taken for granted and/or overlooked. We all get very comfortable relying on our experiences, but Saft has reopened my eyes on several points.

As I mentioned earlier, this book serves a useful purpose in today's environment. Many lenders have never experienced the type of downturn that is currently occurring. Over the years, many lenders' portfolios have been rather pristine; they have not had any major problems. Today they may be faced with numerous workouts, foreclosures and bankruptcies. How lenders react to each of these situations and how they develop the strategies for each type of property, at times, can be an overwhelming nightmare. Saft has provided a rather comprehensive analysis and insight on how to prepare for these types of situations. For example, in the chapter on commercial loan workouts, Saft states, "One of the prime ingredients in the pre-workout, is for the lender to determine the cause of the property's problems and whether or not these problems can be turned into a viable project." An analysis of what the lender must do in this situation will lead to some unique strategies from which various alternatives can be developed. Wading through this analysis is an arduous task for the lender, drawing him to conclude, "Can this problem property be solved through a workout or am I really facing the inevitable bankruptcy and/or REO?"

The borrower, on the other hand, is faced with similar situations on how to extricate himself from a bad situation and possibly one that, given this market, may not be his fault. The borrower must know how best to work with the lender to be in a position to cooperate, compromise and make the concessions that may be necessary.

In reviewing Saft's book, I found some beneficial chapters, especially the ones on commercial loan workouts, existing permanent financing, foreclosures and lender liability. His overview of the bankruptcy laws and federal tax implications are well worth reading. These chapters I just mentioned provide a refreshing new resource and an opportunity to revisit areas many of us have taken for granted. The area of lender liability in of itself poses a multitude of problems for lenders. As Saft points out, "Lender liability is an involving legal theory that has been utilized, or attempted to be utilized, in many different scenarios..." I read this chapter three times, and each time I came away with a new sense of enlightenment.

Based on my years of experience as a lender and mortgage banker, I look upon this book as a means to provide the guidance that is necessary to work through these tough times. The real estate industry is faced with some very difficult choices in the months ahead and Saft provides the foundation from which various strategies can be developed.

Would I recommend Commercial Real Estate Workouts as reading material to other real estate professionals? My answer to that question is an emphatic "yes." In fact, it's required reading for my staff. Saft has provided the real estate community with reference material that, based on his years of experience, puts into a perspective all of those disciplines into a format that is readily understood. The time and energy Saft put into this book is a refreshing testament to an individual who is willing to put his experience in "book" form. I highly recommend Commercial Real Estate Workouts to be read by all of us in the industry, especially those on the lending side of the aisle, as it fills a niche in the market that has been missing for so many years.

Reviewer Paul A. Edberg is vice president of commercial mortgage loan servicing for Draper & Kramer, Inc., Chicago.
COPYRIGHT 1991 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Author:Edberg, Paul A.
Publication:Mortgage Banking
Article Type:Book Review
Date:Jul 1, 1991
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