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 Attorney Spotlight | |
Katie G. O'Brien, Esquire |
Katie's practice areas include finance, real estate, contracts and corporate law. Katie assists commercial lenders with loan documentation and closing issues and with the drafting of corporate and finance documents. Katie also advises small businesses on regulatory and licensing matters at both the state and federal levels, as well as corporate governance and transactional matters.
Katie is admitted to practice before the Supreme Courts of Pennsylvania and New Jersey. She is a member of the American Bar Association, the Pennsylvania Bar Association, and the Philadelphia Bar Association.
Katie is a graduate of the Pennsylvania State University, where she graduated with Distinction and earned a Bachelor of Science degree, and Temple University Beasley School of Law, where she earned a Juris Doctor degree and was a member of the Temple University Political and Civil Rights Law Review.
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...that Starfield and Smith provides loan documentation and closing services for SBA 7(a) loans to its lender clients nationwide? Call 215-542-7070 for more information, or visit our website at www.starfieldsmith.com.
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| The Value of a Payoff Letter
By Kimberly A. Rayer |
 According to the SBA National Guaranty Purchase Center, one of the top reasons why the SBA repairs or denies SBA guaranty purchase requests is due to the Lender's failure to obtain correct lien priority in the collateral securing the SBA loan. In practice, we often see that Lenders trust that the Borrower's existing secured parties will eventually terminate their recorded financing statements a few weeks after being paid off by the Lender. In reality, often those paid off secured creditors never get around to terminating their financing statements against the Borrower. Too often this fact is discovered after the Borrower is in default, when it is too late to get the Borrower or the paid off secured party to assist in cleaning up the lien priority record.
Under 9-513 of the Uniform Commercial Code, a secured party must send a debtor a termination statement for a filed financing statement or file the termination statement in the filing office within 20 days after a secured party receives authenticated demand from a debtor, if there is no obligation secured by the collateral covered by the financing statement, and no commitment to make an advance, incur an obligation or otherwise give value. Nowhere does the UCC give a Lender who has paid off the debt of a Borrower the authority to terminate the prior secured party's financing statement once it has made payment on the Borrower's behalf.
Therefore, Lenders must rely on the Borrower to make demand of the secured party to release its lien and wait 20 days to see if the secured party files the termination statement. Further, only the Borrower has the authority to make the demand and file the termination statement. An easier process is for the Lender to require its Borrower to obtain the authority to release the lien in its payoff letter from the existing secured party in connection with closing.
Lenders should require the following items in payoff letters from existing secured parties:
- A defined Payoff Amount, including all fees, costs and expenses owing to the secured party;
- A date and time by which the Payoff Amount must be received (so that no further interest or fees will accrue);
- A per diem amount in case the Payoff Amount is not sent on the specified payoff date and time;
- A statement by the existing secured party that upon receipt of the Payoff Amount, Secured Party's lien on and security interest in all of Borrower's assets and personal property shall be released and terminated; and
- A statement by the existing secured party authorizing the Borrower or its agent, assigns or designee to terminate the existing financing statements and take all actions necessary to effectuate the release of the existing secured party's lien on the Borrower's assets and personal property.
For more Iinformation on best practice in obtaining payoff letters or for other information on commercial lending, contact the author at krayer@starfieldsmith.com or at (215) 542-7070.
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| Upcoming Seminars and Events
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Closing and Funding the SBA Loan
Presented by: NAGGL
On April 19 and 20, 2010, at the NAGGL SBA Lender Trainer Series in Decatur, GA, David Starfield will be presenting the two-day course, Closing and Funding the SBA Loan. This seminar is for those who prepare loan closing documentation and coordinate key people and events in the loan closing meeting.
The following topics are on the agenda:
· SBA Standardized Loan Authorization
· SBA Closing Forms
· SBA Closing Requirements
· Due Diligence and Checklist
· Lender Documentation: Securing the Loan
· Tracking the Loan Proceeds
To register online, click here. Advanced SBA Loan Documentation and Closing
On May 4, 2010, at the NAGGL SBA Lending Technical Conference in Fort Worth, Texas, David Starfield will present the "Advanced SBA Loan Documentation and Closing" course. This session is designed to help lenders ensure that the documents they assemble comply with the SOPs, the loan authorization and sound lending practices. Topics will include key loan closing issues; tax, lien and judgment searches; third parties; loan modification issues; and more.
To register online, click here.
Closing and Funding the SBA Loan
Presented by: NAGGL
Date: May 17, 2010
Location: Rockport, ME
On May 17 and 18, 2010, at the NAGGL SBA Lender Training Series in Rockport, Maine, Ethan Smith will be presenting the session entitled Closing and Funding the SBA Loan. This seminar is for those who prepare loan closing documentation and coordinate key people and events in the loan closing meeting. The following topics are on the agenda: · SBA Standardized Loan Authorization · SBA Closing Forms · SBA Closing Requirements · Due Diligence and Checklist · Lender Documentation: Securing the Loan · Tracking the Loan Proceeds
To register online, click here. |
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Starfield & Smith, P.C.
Pennsylvania Office
501 Office Center Drive, Suite 350 | Ft. Washington, PA 19034
phone: (215) 542-7070 | fax: (215) 542-0723
Minnesota Office
1516 West Lake Street, Suite 303 | Minneapolis, MN 55408
Loan Documentation | Closing | SBA Guaranty Repurchase
Regulatory Compliance | Franchise Eligibility
Business Consulting
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