A recently released study has concluded that as secured transactions have grown more complex in recent years, the allocation of rights of first and second lien lenders has evolved, often with the rights of the junior lenders growing at the expense of senior lien holders. The study maintains that in the past first-lien lenders largely prohibited second-lien lenders from having material collateral management rights prior to or during insolvency, but that in recent years second-lien lenders have gained such rights back.
The trial court erred in sustaining objections to a confirmation entry. Although the second lien-holder actually held the first lien on the property, lien priority was established in a prior foreclosure order that was not appealed. In addition, the holder of the actual first lien failed to file a Civ. R. 60(B) motion for relief from judgment. Judgment reversed.
Answers to some of the less frequently asked questions in second-lien term loan financings are presented. As the second-lien term loan market has developed, there is growing agreement among first- and second-lien lenders on the answers to some of the more frequently asked questions in the intercreditor discussions. In a second-lien term loan deal, first-lien debt is generally broadly defined to cover all obligations under the first-lien debt documents, including principal, interest, premium and hedging obligations, subject to a cap on the amount of the first-lien debt. First-lien debt is often defined as debt incurred under the first-lien debt documents, subject to a cap on the principal amount of the debt that qualifies as first-lien debt. Second-lien loans are far from being a commodi...
The Small Business Administration continues to offer the 504 loan as a tremendous program to aid small- and medium-sized businesses in long-term, owner-occupied real estate and capital equipment financing. The partners in an SBA 504 loan transaction include the borrower, a commercial bank and a capital development company (CDC). Typically, the borrower contributes 10 percent of the cost of the project, with 50 percent being funded by the bank and 40 percent being funded via the CDC (called a debenture). The bank maintains a first lien on the project while the CDC secures a second lien position. The main benefits of
... estate mortgage loans must be secured by a first lien interest in real estate, except that the loanns may be secured by a second lien interest if the institution also holds the fi...
Save your house by not paying your mortgage. Sounds crazy, doesn't it? But for more than a million homeowners, this might be the right answer. Those homeowners, for whatever reason, have defaulted on their first mortgage but continue to pay their second mortgage on time. This has created a crazy situation in which the lender holding the second lien is reporting a performing loan while the lender holding the first lien is reporting a delinquent loan. The majority of these second liens are held in the loan portfolios of just four banks - Bank of America, Citibank, J.P. Morgan Chase and Wells Fargo. These same four banks service most of the first mortgages owned by bondholders or other banks. When Joe Homeowner defaults on his first mortgage but continues to pay his second mortgage and the...
... an Order today granting the motions of the First and Second Lien Lenders (the Lien Lenders) to inte...
Second-lien lenders and borrowers are generally familiar with the economic advantages and disadvantages of second-lien loans. It is not clear that they also fully appreciate the array of complexities and issues surrounding the intercreditor agreements which bind second-lien lenders and first-lien lenders. These complexities will most likely hinder workouts with second-lien loans and cost vital time. lntercreditor agreements lack uniformity and standardization, making comparisons and analysis that much more difficult. Notwithstanding the existence of an intercreditor agreement, if there is an increase in the number of workouts with second-lien borrowers, there are a combination of market and legal factors that are likely to make workouts with second-lien loans more difficult, time-consum...
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