There’s no “forbearance fairy” to fix Covid-broken loans: Verrone

Workout whiz says borrowers must bring something to the table to get a deal done

National /
Apr.April 27, 2020 08:00 AM

Robert Verrone, arguably the most experienced hand when it comes to working out bad loans, said borrowers hit hard by Covid-19 shouldn’t feel a sense of entitlement when asking for forbearance on their loans.

“A lot of borrowers … feel like there’s some forbearance fairy flying around that’s just sprinkling dust on loans that are Covid-affected,” the founder of Ironhound Management told The Real Deal. “I know that’s not the case.”

Verrone was one of the leading figures of CMBS 1.0 as head of Wachovia Bank’s large loan group, only to leave in 2009 and start his own business working out busted securitized loans.

The industry veteran says that over the past few days, his team has been working on loans that were most likely teetering on the edge of trouble before the coronavirus pushed them over. His main advice for his borrower clients is that their lenders are under no obligation to share the pain.

“The problem is when borrowers think that the lender is their partner and they don’t expect the debt-and-equity relationship,” he said. “There’s a lot of borrowers that think when a property drops the lender should share 50-50 or even 100 percent in the diminution of value.”

Verrone explained that in a workout situation lenders are looking for concessions from borrowers that makes a deal more financially attractive than foreclosing on the property and taking their chances selling it at auction.

“You have to overpay a little bit to get a workout done,” he said. “I will tell you that it’s probably less than you would have to do pre-Covid.”

Contact Rich Bockmann at [email protected] or 908-415-5229


Related Articles

arrow_forward_ios
What will proptech look like in 2019 and beyond?
What will proptech look like in 2019 and beyond?
What will proptech look like in 2019 and beyond?
The Observation Deck at Hudson Yards (Credit: Adam Pogoff)
Views from 1,100 feet: A tour of Related’s “the edge,” the tallest outdoor observation deck in the Western Hemisphere
Views from 1,100 feet: A tour of Related’s “the edge,” the tallest outdoor observation deck in the Western Hemisphere
(iStock)
Delta force: Surging Covid variant spoils return-to-office plans
Delta force: Surging Covid variant spoils return-to-office plans
Disquiet at a dynasty: Inside the succession drama at Hertz Investment Group
Disquiet at a dynasty: Inside the succession drama at Hertz Investment Group
Disquiet at a dynasty: Inside the succession drama at Hertz Investment Group
The parking lot at 250 Water Street (New York Public Library)
What’s next for a 50-year-old parking lot in NYC’s oldest neighborhood?
What’s next for a 50-year-old parking lot in NYC’s oldest neighborhood?
Subscribe to The Real Deal's YouTube channel for unparalleled, comprehensive multimedia coverage on all things real estate
TRD’s YouTube channel: The place to watch all things real estate
TRD’s YouTube channel: The place to watch all things real estate
Douglas Elliman CEO Dottie Herman on FOX
Elliman CEO: ‘People are afraid to walk in NYC’
Elliman CEO: ‘People are afraid to walk in NYC’
Camber Creek Partners founder Casey Berman and The Real Deal's Hiten Samtani
Watch: Can venture capital solve real estate’s wicked problems?
Watch: Can venture capital solve real estate’s wicked problems?
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...