It is clear that things are different now. A year after the collapse of some of the most revered financial institutions, it is now time to explore how best to maximize the value of what was left in the wake of that fall: distressed assets. The failure of Bear Sterns and Lehman Brothers and the federal takeover of Freddie Mac and Fannie Mae resulted in a widespread market meltdown and a systemic economic crisis. From both the buyer and seller's perspective, certain factors are necessary to restore liquidity to the credit markets. Recently, there has been a lot of emphasis placed on the value of assets in conventional loans based solely on cash flow and the credit score of the borrower. The insecurity regarding the overall health of the economy and the relentless barrage of negative press has spurred a somewhat irrational rush toward liquidation. Perhaps it would be important to remember key lessons from the past, as well as the tried and true valuation determinants prior to the money-lending frenzy. A renewed focus on core principles and fundamentals, such as accurate valuation, efficient process management and rapid execution, is key to the market's recovery.

Much of the underlying collateral in a variety of the loans being traded today still has value, despite the media spin to the contrary. Also, borrower behavior is not just a function of FICO score and income, but rather a complex set of variables requiring dynamic modeling. Realizing this and determining the appropriate value is critical to establishing a successful strategy to maximize asset value.

We are seeing a few glimmers of market stabilization as exemplified by the increased trading of distressed loans and a few moves in the securitization market thanks to the Term Asset-Backed Lending Facility. As commercial loans and properties continue to teeter, lenders are faced with multiple challenges: the need to sell, loan rate adjustments, declines in cash flow, tenant loss, and the continuing uncertainty of the markets. The remaining critical problems for banks include credit quality and insufficient capitalization. For banks looking to increase liquidity and manage risk, loan sales are a powerful tool in navigating the current economic recession. Proactive institutions have adapted their business models to contend with current times and are developing custom strategies based on asset risk. This assessment needs to occur early in the decline process of troubled assets-pre-watch and at maturity. Today, customized systems are able to gather and organize comprehensive information on loans that is necessary to create the most attractive packages within each portfolio marketed to investors. As a result, banks and other lenders can maximize the assets' overall value. By providing potential buyers with the most vital information during their due diligence period, banks and their loan sale advisors are able to market to the widest qualified audience, execute the sales and perform closing and post-closing services that bring out the most value. Some people compare the marketing of assets in this climate to putting lipstick on a pig and sending it down Main Street to find a buyer. We believe it's all about identifying the right buyers, providing them the best and most comprehensive facts and giving them a platform to compete for the asset. No makeup required.

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