Redline Loan Consent Agreement with airSlate SignNow

Redline loan consent agreement

educational you know what we'll get this thing started and you know wanted to make sure everyone that's on the call we will make this PowerPoint available to you as well as a redline version of the third party lender agreement you know there is still some finalization of the document so that has not been released as of yet by the SBA which should be shortly our intent today is to give you a perspective of you know the document changes and hopefully address any questions that you might have you know you know I think the changes are not insurmountable but there are some changes that we felt it was important for the banks to bring in some major servicing folks just to make sure you understood the conditions of your certification on the line with me on this panel presentation I have da sea Colossus who is SP a general counsel for Santa Anna as well as operates out of a la district office and was a participant in the SBA closing task force for streamlining of the closing process and then also on the line is talk over Nick an SBA designated closing attorney and T DC's general counsel and myself like Owen CDC so the objectives for the third party lender agreement revisions you know clarify language within the document remove expen youit's language clarify lender obligation in a loan default and add language for loan swap type of scenarios so I leave what we're going to go through you know basically some of the changes that took place so nine primary sections of change maximum loan amount dispersion protocol 18 USC 1001 and reference added on efforts balloon payment protocol additional collateral treatment in liquidation notice on uncommon collateral notice on collection activity people charges and swap agreements again for those of you on the line you have the option of you know typing in a question or waiting until after the presentation after the presentation we will open up the line and you're eligible to address any questions you have so I'm going to turn this over now to Todd Cobra dick and him you know address his first change god terrific thank you Mike good morning everybody the first change to the third party lender group lender agreement changes paragraph number one and it simply clarifies that the amount of the third party loan does not and will not exceed the amount set forth in the authorization plus reasonable costs for collection and maintenance and protection of the collateral and and that if the amount does exceed the these amounts then any additional amount will be made subordinate to the 504 loan there's not a real big change here it's always been the philosophy of the program that these amounts will be subordinate that but we have the SBA has tightened up on the language to make sure it's clear and that there's no question as to what will be subordinate to the SBA deed of trust next slide paragraph 2 of the TPL agreement clarifies that the third party lender loan must be dispersed in accordance with the terms and representations made to SBA by the third party vendor it's not again not a major change that the SBA is ensuring that the third party lender is representing to SBA that the loan that their loan is was dispersed in accordance with what was anticipated if there's any change that needs to be confirmed with CDC and SBA prior to funding of the SBA loan next slide paragraph 3 has a reference to a federal statute 18 USC united states code section 10 1001 and this change simply states that all information submitted to SBA cannot knowingly and willfully be false and if it is then there can be some problems again not a major change but it brings into it makes clear that this code section would be will be applicable if there's any knowingly knowing or willful wrong information next slide and for those of you who want to see the text of this code section we provided it to you next slide paragraph 5 e deals with balloon payments on the third party lender loan and basically SBA is simply saying that the balloon payments must be clearly identified and disclosed and these are to be disclosed to SBA and approved a time of application so that you know as part of the process that CDC undertakes CDC has always disclosed the TPL terms and conditions to SBA and has obtained sba's consent to the same at the time of the application if for those of you who do business with any other CDC you just want to make sure that that is occurring and I'm sure that they will be able to advise you of their practice I'm sure that that practice is probably undertaken by the other CDC's as well next slide this next slide deals with paragraph six and it deals with preferences and this one I actually saw as being quite helpful to the third-party lenders basically if the third party lender took additional lateral and the additional collateral no longer exists at the time of liquidation or has insufficient value to justify the cost of collection then the third party lender is not required to liquidate the additional collateral prior notice is to be given to and obtained from CDC SBA prior to simply walking away or not moving against the additional collateral but this was and this was an issue for some of the third-party lenders and this should prove to be a benefit if there's ever a default in the future which we hope there are very few next slide paragraph 7 requires that the third party lender must give notice to SBA of any legal proceeding or collection activity against the common collateral 60 days prior to the initiation of such action and this and this there were some places were only 30 days notice or perhaps less was given to SBA and i would actually at this point ask da SE to comment on this section in and to perhaps just chat a little bit about the issues that SBA had in regard to not receiving adequate notice prior to an a third party lender undertaking collection activity against common collateral yeah I don't think it's so much of a problem here in California because if the third party lender initiates foreclosure then we will you know receive adequate time to prepare and determine the value of the collateral however there are other states where under state law a lender could foreclose and only only had to give 30 days notice to junior lien holders and so for instance in those states that may not have been enough time for the CDC or SBA to obtain updated opinions of value on the collateral and make a decision about whether to protect it the foreclosure sale or take action thanks da sake um next slide excuse me now the next three paragraphs of the third party vendor agreement are new provisions paragraph assuming assuming the third party lender agreement that we've reviewed is adopted ultimately paragraphs 9 d e and F our new paragraph 9 d excuse me requires the third party lender provide the CDC and SBA notice 60 days prior to the sale of its note stating the amount being offered further the CDC and SBA will have the option to purchase the note at the same price less na default charges occur and the odds of purchase price is net of any default charges such as prepayment penalties late fees or other default charges and this is the result of as I understand it of defaults in during the last couple of years in third party lender selling their notes and it would have been beneficial to the SBA and CDC's had they had had the option to purchase the note is my my dossier my understanding of the reason for the adoption of that it is correct isn't it or maybe you can add something on there yeah well we've had situations where sometimes our loan is being paid current but there has been a dispute between the third party lender and the borrower and so the third party lender for example in one case was was had obtained a buyer for its note notified us on a Friday afternoon that they were selling the note but because the fact that our loan was current and this was a viable operating business and we wanted to to help the business because we are the Small Business Administration we thought it would be helpful to purchase the third-party lenders note and then had to negotiate you know kind of at the last minute to buy the note rather than have the third-party lenders sell that note to an investor who was very likely to proceed to foreclosure thanks Mike next slide paragraph 90 again is a new one and essentially any third party lender default charges are subordinate to the amounts outstanding on the 504 loan and and this has always been the case but it's this new paragraph makes clear that this also applies when the third party lender loan is sold or transferred to a third party we just want the purchaser assignee of the TPL to know that those charges are subordinate to the sba loan it isn't that they can't be collected but they can only be collected after SBA has been made whole under their note and deed of trust and the next slide Mike this last addition to the third party lender agreement paragraph 9 f provides it all costs associated with the swap agreement or hedging contract will be subordinate to the 504 loan and the CDC lean and this has been the result of quite a few discussions and quite a bit of work and essentially treating those the negative impact of swap arrangement similar to the way SBA treats the so-called default charges and that's an overview of the changes to the third party vendor agreement I would ask Tasi if you would like to add anything to the the comments I made well just going back to the discussion about the balloon pain month being identified wanted to note that in the next modification to the loan authorization boilerplate there will be a modification that specifically will identify the amount of a balloon payment if any it's going to do that by stating that the terms of that note so we'll be able to tell if there is a balloon payment or not in the past we sometimes had to ask bring up these issues in our complete file regions and the regulation requires that if there is a balloon payment that SBA have approved that and so we had to raise those issues at complete file review time but now we'll be able to take care of it up front okay so when you say the SBA will have to approve it or something along the lines of a 25-year amortization with with a balloon in 10 years uh-huh yeah okay and and that decisions supposed to be coming out this month in February okay so instead of just leaving it to the approval process in the the credit information that's shared with the center it'll be a part of the authorization now right yes okay we have another one other change it is still under discussion maybe you can address it it and I think what we're also looking for well we don't see this change the prevalent you know in the west coast we're looking for any feedback you know from the lenders on this call if this would have an impact to the types of transactions your closing under five of course so if you want to give some background yeah yeah in in many places the CDC designated attorney also closes the third party loan and there was a change proposed that prohibited the closing council has CDC closing counsel from also representing third party lender at time of closing and this created a headache for many CDC's and banks because of the economies of scale that they perceived and and SBA was concerned about the conflict of interest in the in this duel representation after announcing this proposed change that I believe would be it was part of the SOP the SOPs also would be in the attorney's opinion letter that there was no dual representation SBA is reviewing the provision and had because it has received comments and in solicited is now soliciting comments from Matco CDC's and from third-party lenders and my guest somebody who another group of people that might be added to that list are the impacted attorneys may not be so happy with the proposed change as well how da say do you want to add anything else to that no it is under review I don't think that this is so much of a problem out here in California as it is on the east coast where the there isn't an escrow involved but rather the closings are handled by closing council so but you know if anyone has a comment there they should feel free to send me an email and i'll forward that information on to the to the folks who are reviewing this change in policy you want to you know allegro in your email so that they have the opportunity to share okay sure my email address is da cdac e and then a dot and then pop laughs give PAB lv f k is at sba.gov okay thanks yo kid so everyone's where we will be emailing all those that attended to call and if you weren't on my original distribution should send me an email my email as mo on at EDT loans com will send you a clean copy of the new third-party web premium what fits really we will send you this red line version of the draft that we've been working from as well as 18 USC 1001 in addition will also send this PowerPoint presentation and also notes that this PowerPoint presentation will be on our website or can also heat download it I believe it will is reported Larry on the stage yes it is recorded so it'll take a couple days but yeah we can get that dr. Brady okay and then as I mentioned we will open it up as well as address any questions maybe Larry you could start with the least a written questions at this point yeah there is there is one written question actually it's from Georgia line's they've got about four or five questions within the same frame but I don't you can see that my business it's ppl lender must now provide notice before engaging in any collection activity that's one question maybe less why don't we just tackle these things one at a time so the question is maybe go ahead done good so maybe a the question is that the TPL must now provide notice before engaging in any collection activity I suppose the question in California might be da say does the third party lender need to do something before it files an n OD against the against the borrower or does the n OD satisfy that 60-day notice timeframe we know an n OD is of course 90 days yeah that would satisfy the notice requirement you know the concern that SBA I was in those states where a third party lender could initiate foreclosure and in 30 days go to foreclosure sale and that its times was not sufficient time for the CDC and SBA to to order the you know opinion of value and make a decision on what to do so that's why they instituted the 60-day notice but as you mentioned in California that's not really a problem and really in the past the third party vendors have notified the agency of when they are about to take foreclosure action what so we're usually copied prior to even your filing the notice of defaults with the letters it's you know for the collection letters so it's usually not a problem let me let me ask a question on non real property where we might have a business personal property and we're concerned that it may disappear does the third what would the third party lender do in that circumstance where perhaps they want to get it go in for some type of restraining order or they simply want to take possession to maintain the status quo can they how will they go about taking those actions because of no circumstances you can't give the 60 days notice yeah well they would need to notify the agency and if it is an emergency type situation then you know obviously we're going to have to react quicker and I don't think that we plan to like wait 60 days or it helps before resisted but but but I think that we will need to to take that into account and sometimes lenders think of collection activity I suppose we all do as including phone calls where a borrower you know is a little late on his payment and they may call that isn't the type of collection activity you're talking about it do you think that the agency will provide some type of clarification because right now it does say that there must be prior notice 60 days prior but any type of that collection activity yeah that that's a little bit too broad I agreed then we should provide clarification okay the concept is to allow SBA to protect its its security interest and not have to make a hasty decision whether to purchase or walk away from the senior lane right okay a microphone if it's okay I let me just open up the lines just unmute everybody so they can we can just have a free conversation but before as I do that to everybody out there just be aware of the ambient noise around you or background noise if you got other people in the office or ringers going off just be aware that's just a courtesy riverdale so here we go everybody I think you have to do yeah i think we address most of Jordans questions through that at discussion there is one other question that was closed are the changes in the third party lender agreement only for new loans moving forward for this retroactive tall outstanding third-party loan no this this is going forward so these provisions that while these changes will be taking place for this agreement they don't apply to any pre-existing loans no we're going to initiate you know we're going to require that this new form be used I believe that it's going to be by no later than the than may we're going to we're going to be putting out a notice regarding the effective dates but we're not going to make you know the CDC's go back to their third party lenders and execute a new third party lender agreement with these terms so if you've already closed alone and have a third party vendor agreement in place we would abide by that agreement it's only going forward that will use this new warm agreement now that you're all unmuted are there other questions that we have an address in this presentation alright looks like you guys have done a great job of explaining some of the changes as I mentioned we will be distributing this deck as well as a redline version of the draft third party lender agreement that we have and then unreleased we will also send out a claim copy for your records and then the you know the 18 USC 1001 for vision this will also be on the CDC small business finance website along with recorded version of this presentation so that you're able to upload that as well I want to thank everyone for taking time out of your busy morning to attend and look forward to doing business with you thank you