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Los Alamos National Bank president Steve Wells explained the bank’s foreclosure process in an email response to an inquiry from the Los Alamos Monitor.
“It is important for anyone examining the foreclosure process to understand that banks are regulated by a state or federal regulator whose prime responsibility it is to ensure depositors funds are protected.
“LANB like all other banks and financial institutions make loans with depositor’s funds and manage the risks in lending to protect its depositors as well as those of its shareholders or members.
“I cannot speak for other banks but know how we work at LANB. Foreclosing on a real estate mortgage we hold as collateral for a loan is always a last resort and a decision arrived at when no other viable option exists.”
Wells said that foreclosure is never a desirable option because it entails damaging a valued customer relationship, significant legal costs, time delays and public disclosure, which is not good for the borrower or LANB.
“At times it is the only option available to recover our investment,” Wells said.
He pointed out that the foreclosure on residential real estate is different than commercial real estate. Residential foreclosures typically have more borrower protections, federal programs for restructuring loan terms and even forgiveness of debt, primarily because the foreclosure represents the potential loss of someone’s home.
“Commercial real estate foreclosure procedures are less protected as owners and investors in this type of property are more astute and the property does not represent the loss of one’s home but rather an entrepreneurial endeavor where the risks are understood,” Wells said.
“LANB provides numerous financial services to generate a return to its shareholders. Lending is one of these services. If we do our job well most loans will pay back as agreed returning the borrowed funds with interest on the terms agreed.”
Wells pointed out that borrowers sometimes experience difficulty in making payments on time.
“When a loan falls past due it gets our attention and we want to determine if it was a mistake or oversight or if the borrower is experiencing financial difficulty that can be corrected or mitigated if dealt with quickly,” he said.
“Working with the borrower at this time is critical to ensuring the problem doesn’t get larger or becomes insurmountable. Most of the time this is all that is needed to get things back on the right track. If the problem continually persists, we continue to work with the borrower as many times as necessary to examine the causes, change their business models and possibly even rework loan terms to find a way for the customer to repay their loan. In those cases where the borrower stops making payments or there is no viable way for them to make their payments, foreclosing is a consideration we must make,” Wells said.
Wells said in his 28 years at LANB he has never seen a foreclosure occur before the bank has worked every conceivable angle for resolution with the borrower.
“We work to exhaust all reasonable and logical options before reluctantly arriving at the decision that foreclosure was in the best interests of our depositors, shareholders and bank,” he said. “We take any decision to foreclose as a very serious matter and will always do so with reluctance and careful thought.”