Loan workout analysis that values every way out on today’s numbers, ready for committee
Every option tested on today's numbers, documented for examiners.
See one case, screen by screen ↓Software that helps a special assets team decide what to do with a troubled loan — extend, restructure, sell the note, take a deed-in-lieu or foreclose — by valuing each option on current cash flow, value, rates and guarantor strength. Loan Workout Analysis does that on one set of assumptions for every option and drafts the committee memo and term sheet, every figure cited.
How to choose AI solutions for lending →
Updated
When a commercial real estate loan goes bad, the special assets officer has to choose a way out: extend it, restructure it, sell the note, take a deed-in-lieu or foreclose. Each option has to be tested on current cash flow, current value, today’s rates and what the guarantor can really bring — and the committee wants it on one page before it meets.
Today each option lives in its own spreadsheet. The extension runs on the borrower’s rent projection, the foreclosure on the old appraisal, the note sale on the bid — so the comparison is not like for like. The analyst rebuilds the model for every loan, the memo is written by hand, and the documentation examiners expect for a workout — borrower analysis, guarantor and sponsor support, realistic cash flows, approvals — is uneven from one officer to the next.
Estimated split for one troubled CRE loan, from a complete file to a committee memo — by hand and with the solution.
Six specialist agents value every workout option on one set of assumptions; the officer recommends and the committee decides.
Halvorsen Crossing owes $18.4 million. The anchor tenant left, the loan matured on 31 August, and the short-term accommodation ends on 30 October. The loan committee meets Thursday. Here is the week, screen by screen, in the working solution.
Dana opens her workouts: 12 troubled loans, every one compared on four options, one set of assumptions and the 9.0% policy rate. Each row shows what went wrong, the rating, when the accommodation ends, the best option today and how far ahead it is. Halvorsen Crossing is at the top — Substandard, accommodation to 30 Oct, committee Thursday 15 Oct.
“Re-valued when a new appraisal, rent roll, statement or bid arrives.”
Tellmark Insurance Services left 41,200 sq ft on 31 March. Occupancy fell from 91% to 62%, and net operating income for the twelve months to September is $1.18M — down from $2.31M in 2024. Debt service coverage is 0.71× as written; the panel beside it shows coverage under each option against the 1.20× policy minimum for a renewal.
Never adjusts a figure without the line it came from.
The Whitford appraisal of 9 September puts the property at $13.2M as-is at an 8.75% cap rate, against $26.5M at origination and a loan balance of $18.4M. Four nearby office sales closed at $88 to $112 a square foot. The value trend (−4% a year), the discount rate, the extension and A note rates all sit on one panel, each linked to its source.
Net worth of $11.60M, but $1.90M liquid against $42.30M of guarantees on six other loans — one, Cobalt Flats, already in special servicing. His $750,000 paydown for a two-year extension is credible; it leaves $1.15M, about seven months of carry. Global cash flow coverage across his properties is 0.94×.
Never treats contingent liabilities as zero.
Dana presses one button. Six agents work in a rail beside the comparison, step by step: the financials, the value and rates, the guarantor, the options, the classification and accounting effect, and the memo — reading the file’s 47 documents, each step with its source.
Extend, restructure, sell the note and foreclose line up in four columns with the same rows: net present recovery, collateral value used, borrower cash flow, time to recovery, chance it fails, charge-off now and classification after. Selling the note to Gravenstein Capital recovers $12.29M — 66.8% of the balance — with cash in 45 days. The A/B restructure recovers $11.70M with a 28% chance the A note re-defaults; the extension $11.38M with an 85% chance it fails.
“Sell the note recovers $12.29M — $0.58M more than restructure, on the same 9.0% rate and $13.20M value.”
Under the columns, the break-even for every rival is solved on the same model: foreclosure wins only if the value is above $14.73M, 12% over the appraisal; the restructure only if the discount rate falls below 7.6%; the extension only if the chance of a full refinance in 24 months is above 27%, against 15% today. Dana clicks “Try it” on foreclosure — the value moves up, all four columns re-value, and foreclosure takes the lead. “Back to the file” restores the appraisal and policy.
Three bids from the Tamsin Loan Advisors process sit side by side — Gravenstein Capital at $12,650,000 closing in 45 days, Ashbury Credit Partners at $12,180,000, Pell Street Opportunity Fund at $11,720,000. The non-binding loan sale term sheet sets out price, deposit, diligence, closing, recourse and the accounting: a $5,936,500 charge-off and a $1,036,500 provision over the $4.9M allowance.
Drafted for Dana to edit — nothing goes to a buyer or the borrower from here.
The memo is drafted in the bank’s six sections — what happened, collateral and guarantor, options on one set of assumptions, recommendation, what would change the answer, accounting and classification — with seven margin notes back to the T-12, the appraisal, the guarantor’s statement, credit policy §14.3 and the bid summary. A checklist beside it shows what the examiners will look for, from the 2023 interagency policy statement.
Ruth chairs the loan committee. The note sale is approved 4–0. She signs the $5,936,500 charge-off and the rating to Loss on the charged-off part; next, the purchase agreement goes to counsel, with closing by 30 November. The case history keeps every step — who changed an assumption, which agent valued what, the memo sent with the assumptions locked as version 3.
The same workout, seen by the people who build it, question it, decide it and review it — what their week looked like, and what it looks like now.
Six specialist agents value every workout option on one set of assumptions; the officer recommends and the committee decides.
Reads the operating statement, rent roll, leases and borrower statements and sets current NOI, occupancy and coverage — at the current terms and at each option’s terms.
Reads the new appraisal, comparable sales and the rate sheet and sets value, value trend, cap rate and rates.
Reads the personal financial statement, tax returns and K-1s, builds global cash flow, lists every contingent liability and says what the guarantor can credibly contribute.
Values every workout option on one shared set of assumptions at the policy discount rate, weights each path by its chance, and solves what would change the answer.
Sets out rating, accrual, modification disclosure, allowance and charge-off effect for each option.
Drafts the committee memo in the bank’s six sections and the term sheet for the chosen path, every figure cited.
Recommends; the chief credit officer and loan committee decide. The agents propose; a named person decides.
Ask why an option wins, what would change the answer, or about the guarantor — or tell it to add an option. Every answer cites the file.
Why does selling the note beat the restructure?
On the same assumptions the note sale recovers $12.29M and the A/B restructure $11.70M. The restructure pays more cash over five years, but it waits for it, and 28% of the time the A note defaults at 1.17× coverage and the loan ends in foreclosure anyway. Gravenstein Capital’s $12.65M arrives in 45 days with no recourse. The restructure only wins if your discount rate falls below about 7.6%.
What value would make foreclosure the best option?
Foreclosure overtakes the note sale only if the property is worth about $14.73M — 12% above the appraisal’s $13.2M. The four recent sales nearby closed at $88 to $112 a square foot; that value would be about $103 a foot for a building 62% occupied.
Can Erik Halvorsen fund a bigger paydown?
Not credibly. He reports $1.9M of cash and securities against $42.3M of guarantees on six other loans; one of them, Cobalt Flats, is in special servicing. His $750,000 offer leaves him $1.15M — about seven months of carry on his other properties. A larger paydown would come from selling real estate he values at $9.45M, which he has not offered.
Add the deed-in-lieu option
Added on the same assumptions. A deed-in-lieu recovers $11.37M: transfer in about three months, a sale in twelve, and the bank releases Mr. Halvorsen above $400,000. It is ahead of foreclosing ($11.11M) because it saves eight months, but behind selling the note ($12.29M) — and it needs the borrower to agree.
13 screens from the working solution, on its sample data. Pick one to see it large.
The valuation rules every workout follows, the options always compared and who approves what are settings — versioned, and shown to credit risk review.
| Setting | Default | Choose from |
|---|---|---|
| Discount rate for every option | 9.0% | Required return on troubled assets · credit policy §14.3 · set up or down |
| Sale costs | 4.5% | Broker, transfer tax and closing on a property sale · set up or down |
| Receiver fee | $9,000 a month | Per month during foreclosure · set up or down |
| Foreclose and sell — Ohio | 20 months | Judicial · Indiana 16 months · Michigan 10 · Kentucky 18 |
| Options compared on every workout | Extension · Restructure (A/B) · Note sale · Foreclosure | Add Deed-in-lieu · Discounted payoff · Forbearance — policy minimum: the first four |
| Special assets officer | Charge-off up to $1,000,000 | Recommends |
| Chief credit officer | Charge-off up to $5,000,000 | Ratings and charge-offs |
| Loan committee | 4 members | Any path with a charge-off above $5,000,000 · any note sale |
Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.
“demo” = seen in the working solution, on its sample loan data · “target” = the design goal, measured in the live solution · “estimated” = our estimate · “typical” = published figures (MBA via PCBB — $875B of commercial mortgages maturing in 2026; CRED iQ — CMBS special servicing 11.13%, February 2026). The 2023 Interagency Policy Statement on Prudent CRE Loan Accommodations and Workouts (88 FR, 6 Jul 2023) and ASU 2022-02 are named as context. People, companies, banks and properties named on this page are fictional — characters and sample data in the working solution.
Software that helps a special assets team decide what to do with a troubled loan — extend, restructure, sell the note, take a deed-in-lieu or foreclose — by valuing each option on current cash flow, value, rates and guarantor strength. Loan Workout Analysis does that on one set of assumptions for every option and drafts the committee memo and term sheet, every figure cited.
The option modeler builds the cash flows for each option, weights each path by its chance of failing and discounts it at your policy rate, so every option ends in one comparable number: net present recovery. The columns also show collateral value used, borrower cash flow, time to recovery, charge-off now and classification after.
Yes. For each rival option it solves the break-even on the same model — for example the value at which foreclosure would win, or the discount rate at which the restructure would. “Try it” moves the assumption so you can watch every option re-value.
No. The agents value and draft. The special assets officer recommends, the chief credit officer signs ratings and charge-offs within the limit you set, and the loan committee approves larger charge-offs and any note sale, with the votes recorded.
A checklist beside the memo follows the points in the 2023 interagency policy statement on CRE loan accommodations and workouts: a review of the borrower, realistic forward-looking cash flow, guarantor and sponsor capacity, current collateral value, options compared on one basis and management approval recorded. Every figure in the memo cites its document, and the assumptions are versioned.
The classification and accounting checker sets out, for each option, the rating, accrual, modification disclosure under ASU 2022-02, and the allowance and charge-off effect. It never sets the final rating — the chief credit officer does.
No. Agents never contact the borrower, a buyer or counsel. The term sheet and memo are drafts; the officer edits and sends them.
The Agentic Solution Engine builds and deploys it from your requirements — your credit policy, memo template, approval limits and a sample of past workout files — and it goes live once every quality gate has passed. We will walk you through it on your own troubled loans first.
Every contact inside the 7-in-7 rule, spent where it pays.
1-min demoBorrower Hardship ManagementSame request, same decision, every time, with the reason written down.
1-min demoCollections Agent AssistThe one call the rules allow this week, handled right first time.
1-min demoWe’ll run Loan Workout Analysis on a sample of your own workout files.