[WSBARP] Lender Dispute - Columbia Bank

[David R. Ambrose]

To the collective,

I can guarantee you that somewhere in the loan documents is a provision, dealing with default, which provides that it is a default if the lender deems itself insecure, or that there has been a adverse change in the financial condition of the borrower (here's text from language which we use in our loan documents relating to what constitute a default:  "6.10  A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired; or 6.1.11 Lender in good faith believes itself insecure.",  which would arguably be the case if a new valuation determined the property is worth substantially less than the amount of the debt.  Having said this, given the market, it would be highly unusual for a commercial property to be worth less today than it was four to five years ago, so perhaps do a deep dive into the new appraisal and compare it to the appraisal done when the loan was made.

Regards,

David Ambrose
drambrose at ambroselaw.com<mailto:drambrose at ambroselaw.com>


From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Douglas Owens
Sent: Thursday, March 3, 2022 1:27 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Lender Dispute - Columbia Bank

Dear Inge, it seems to me that the wording of the note and deed of trust will control whether the bank has any legitimate claim.  On the face of it I cannot see why even if the collateral has lost value without fault of the borrower, that means the borrower is somehow in default.  Were there insurance proceeds as a result of the fire?  That should come into any calculation of lost value.  Yours truly, Doug Owens


On Mar 3, 2022, at 12:41 PM, Inge Fordham <inge at fordhamlegal.com<mailto:inge at fordhamlegal.com>> wrote:

Colleagues,

A former client contacted me regarding a dispute with his mortgage lender.  This is not my area of expertise so I am looking for referrals.  The former client owns and operates a restaurant business.  The business owns and operates a restaurant in a building encumbered by a mortgage issued by Columbia Bank.  Approximately 4-5 years ago, the building was appraised.  Within the last year, Columbia Bank ordered another appraisal, which came in approx. $700k less than the appraisal from 4-5 years ago.  The building suffered a fire and was renovated but we would not expect the appraisal to come in at $700k less than the prior appraisal.  If anything, we would expect the building to appraise for more than it did 4-5 years ago (especially considering the recent renovation and improvements).  Columbia Bank is demanding that the former client either pay down the note (by $700k) or pay the note in full.  Columbia Bank is being quite aggressive and is demanding an answer no later than March 15th.  Please let me know if you (or someone you know) deals with these types of disputes.  All referrals will be forwarded.

Best regards,

<image001.png>
Inge A. Fordham | Attorney
Fordham Law, PLLC
3218 Sixth Avenue | Tacoma, WA 98406
Office: (253) 348-2657 | Mobile: (206) 778-3131
www.fordhamlegal.com<http://www.fordhamlegal.com/>

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