Loan Workout Advisor Vol. 1 – “Default and Demand Letters”, By Thomas M. Lombardo
A demand/default letter is adverse and uncompromising and, if your loan is recourse, makes the business relationship personal in an often uncomfortable way. Still, most of your portfolio consists of defaulting loans, or loans that will not be paid on or before maturity. You need to protect the Bank and initiate the next phase in your loan — whether it be a restructure, extension or foreclosure — in the manner most likely to result in payoff and least likely to provide ammunition for Borrower’s counsel. Fortunately, simple is best when it comes to demand/default letters, although some important items should be included in each letter.