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    1 Reply Latest reply on Feb 28, 2012 6:36 AM by LUCKIEST

    SBA loan defaults and liens on your home

    Ryan Adventurer

      After the SBA Offer in Compromise and SBA defaults, SBA lien releases are the most popular service that clients contact me for.  There is usually two types of lien release situations:


      1.)  The business owner has recently defaulted on their SBA loan, and they want to know if the SBA is going to foreclose on their home.

      2.)  The business owner has filed, and been dishcharged from chapter 7 bankruptcy, but the SBA lien still remains on their home and the client wants to know if the SBA will release their home.


      The answer to both questions is basically the same.  If the SBA feels that there is equity in the home, there is a chance that they will foreclose in order to convert that equity to cash.  The reason for this is the Personal Guarantee that the borrower signs when applying and getting approved for an SBA loan.

      There is certainly determining factors which play into foreclosure such as equity in the home.  Most homeowners look at their value in their home as Fair Market Value, however during a foreclosure it is looked at in liquidated value.  All that means is, the foreclosure process can be costly for the bank and knowing that it will not get top dollar in a foreclosed process is taken into consideration.

      So how do you get your lien released?

      If your home HAS EQUITY, you will need to make an offer for an amount close to the amount of equity in the home.  Of course, how much equity you have is debatable as explained above, and trust me, it will be debated!   When you make an offer, it's reasonable to look at it from their perspective.  In other words, take atleast 60% of the fair market value, then subract costs of foreclosure and existing liens.  Your offer should be somewhere in that neighborhood.


      Ryan Lineham

      Bridge Management Consulting