Work-Out Agreements

Work-Out Agreements

When an existing loan needs restructuring to avoid default or foreclosure, lenders and borrowers often seek the benefit of a work out agreement to restructure the loans terms and covenants.  In some cases it serves the interests of both the borrower and lender to engage in such an agreement.  For the lender, the work out avoids non-performing loans and may serve to limit their losses and maximize their ultimate recovery without commencing foreclosure and other recovery efforts.  For the borrower, a work out agreement may provide extra cash flow and avoid defaulting on their loan to maintain good credit for future transactions. 

Negotiation and drafting of a detailed Work-Out Agreement as provides the road map for the parties concerning loan management to maintain the relationship and fulfillment of the obligation.