TopS&S Horizontal Logo
 
In This Issue:  
Quick Links:  

Spotlight

In the Spotlight!

 

 

Kim Web Photo
Kimberly A. Rayer, Esq.
Kim concentrates her practice in the areas of financial services, commercial contracts, real estate and corporate law.  Kim has extensive experience representing banks, financial institutions, as well as companies in connection with commercial financing transactions, including acquisition financing, asset-based financing, healthcare receivable financing and other secured transactions. She has experience with intercreditor relationships, as well as creditor's rights in bankruptcy.  Kim also advises small businesses on corporate governance and transactional matters.

Kim is admitted to practice before the Supreme Courts of Pennsylvania and New Jersey and the Federal District Court for the Eastern District of Pennsylvania. She is a member of the Philadelphia Bar Association and the National Association of Government Guaranteed Lenders (NAGGL).

Kim is a graduate of Drexel University where she received a Bachelor of Science Degree, cum laude, and the James E. Beasley School of Law, Temple University, where she earned a Juris Doctor degree.

 

DYK

Starfield & Smith, PC

is on LinkedIn!

 

View my profile on LinkedIn

 

Link yourself to Starfield & Smith, PC

today to get the most recent news and articles.

 

Back to Top

 

Facebook  

Starfield & Smith, PC is on Twitter!

 

Follow me on Twitter

 

Follow us for links to our most recent news and articles. 

 

 

SOP 50 57: 7(a) Loan Servicing and Liquidation

  

 By: Ethan W. Smith, Esq.  

 

 

Ethan Smith
Ethan W. Smith, Esquire

 

On January 22, 2013, SBA released SOP 50 57 which covers Servicing and Liquidation requirements for SBA 7(a) loans. This new SOP, which takes effect on March 1, 2013, combines the servicing requirements previously set forth in SOP 50 50, and the liquidation requirements previously set forth in SOP 50 51 3, and constitutes the first update to the servicing SOP since 1999. A cursory review of this new SOP reveals the following key changes:  

 

 

Servicing:  

  • The definition of a "seasoned loan" has been modified to mean a loan that is not considered to be an early default loan; 
  •  

  • The SBA Environmental Risk mitigation guidelines have been expanded to include processes for loans in regular servicing status as well as loans in liquidation status; 
  •  

  • The standards for documenting servicing actions have been standardized in the definition of a "Loan Action Record", which requires all servicing actions to be documented by the lender or other "independent" party with justifications and written supporting documentation; 
  •  

  • When there is a change of ownership that includes new financing to accomplish the acquisition and assumption of an SBA loan, the SBA loan may only be subordinated to the new loan to the extent that the new loan finances improvements to the collateral that will increase its value.  

 

Liquidation:  

  • "Financial Hardship" has been defined as the inability to pay for: (i) food and clothing; (ii) out of pocket health care expenses; (iii) housing and utilities; and (iv) transportation; 
  •  

  • The guidelines regarding Protective Bids have been modified to include a "prudent lender" exception for circumstances not reflected in the appraisal, but otherwise documented in the loan file; 
  •  

  • Federal redemption rights may only be released for 50% of the Recoverable Value after the senior lienholder's foreclosure sale has been confirmed; 
  •  

  • Thresholds for mandatory liquidation of real and personal property collateral have been raised to $10,000 and $5,000, respectively; 
  •  

  • Guidelines regarding Offer in Compromise have been expanded to include OIC's for going concerns; 
  •  

  • A "Feasibility Test" has been articulated for use in connection with proposed loan workouts; 
  •  

  • CPC expense reimbursements may only be submitted: (i) with the guaranty purchase package; (ii) when the outstanding expenses exceed $5,000 per loan; or (iii) with the wrap-up report; 
  •  

  • Lenders are encouraged to explain missing documents and provide estimates of repairs for deficiencies leading to material losses in the guaranty purchase package; 
  •  

  • The definition of "Material Loss" has been increased to $5,000 for personal property, and $10,000 for real property collateral; and 
  •  

  • Full denial of a guaranty is generally appropriate if a lender uses a suspended or debarred loan agent to prepare its loan application package.  

 

This summary of changes is a quick sampling of some of the more significant changes to the servicing and liquidation guidelines set forth in the new SOP 50 57. Many other changes have been made to the servicing and liquidation guidelines which will be addressed in future articles. In the meantime, prudent lenders will familiarize themselves with the new servicing and liquidation guidelines so they are ready to implement these new requirements by March 1, 2013.

   

 

For more information on the new SOP 50 57, or general SBA 7(a) servicing and liquidation issues, contact Ethan at 215-542-7070, or [email protected]

 

 

 

Back to Top

 

Seminars                Seminars and Events 

  

 

SBA Lending Update 2013:  Trends, Regulations & a look at SOP 50 10

 

Presented By: Community Bankers Webinar Network

Instructors: Kimberly A. Rayer & Janet M. Dery

Date:  February 28, 2013

Time:  3:00 pm ET

Location:  Webinar

  

For more information about this event and/or to register, click here.

 

Back to Top

 

DYK                 

 

   Did You Know...  

  

  Banner Stand  

...that Starfield & Smith, PC provides loan documentation and closing services for SBA 7(a) loans to its lender clients nationwide? 

 

For more information about this and other services Starfield & Smith, P.C. provides its clients from loan origination through liquidation, please contact Ethan Smith at (215) 542-7070 or at [email protected].

 

 

 

   Starfield & Smith

is on FACEBOOK!

 

  Like us on Facebook

    

Become our fan on Facebook to

receive updates, articles and news pertaining to

SBA and lending related topics. 

 

Man Hiding
                             


 

ContactInfo Starfield & Smith, P.C.
Pennsylvania Offices:
1300 Virginia Drive | Suite 325
Ft. Washington, PA 19034
phone: (215) 542-7070 | fax: (215) 542-0723

2000 Market Street | Suite 500
Philadelphia, PA 19103
phone: (215) 542-7070 | fax: (215) 542-0723

 

* * * * *
   
Florida Office
1101  North Lake Destiny Road| Suite 105
Maitland, FL 32751
phone: (407) 667-8811 | fax: (407) 667-0020

* * * * *

 

California Office
2955 Main Street, Second Floor
Irvine, CA 92614
phone: (949) 333-4108| fax: (949) 679-1709

   

 
 Loan Documentation | Closing | SBA Guaranty Purchase
Franchise Consultation | Regulatory Compliance 
Business Consulting | Commercial Litigation
Creditors' Rights 

This email is an advertisement from Starfield & Smith, P.C. and is subject to this disclaimer.
 � 2009-2013 Starfield & Smith, P.C. All Rights Reserved