Traditional foreclosure presents a challenge in some depressed real estate markets. The lack of job growth and unemployment exacerbates the problem by decreasing any demand for the abundance of hotels, multifamily and even more recently, office properties. All types of retail outlets are similarly impacted by a lack of sales.

So, where do we go from here?

Implementing a proven resolution methodology is in order and will not only assist lenders but will also serve to stimulate the economy generally. As an alternative to foreclosure, loan sales, more than ever, serve as an effective risk management and disposition tool that allow banks to decrease NPLs and clean up their balance sheets. Loan sales, which are used in good times as well as bad to prune, focus and balance banks' portfolios, are especially valuable now as banks face the daunting task of managing vast portfolios of distressed loans secured by depressed properties.

Over the past two years, some lenders had been cautious in implementing an aggressive disposition strategy due to an inability to take losses. However, it has become all too apparent that extend and pretend isn't working and, instead, savvy banks are using loans sales as a means to manage risk and raise funds. And the velocity ofloan sales is rising dramatically.

Fundamental to a sound exit strategy is accurate loan valuation, which is complex and requires a diligent review of a myriad of characteristics.

Based on these valuations, we are able to recommend a customized strategy that meets the bank's objectives, be it a series of one-off trades, a limited offering, a larger portfolio sale or a combination of all of the above. By marrying accurate valuations with the client's goals, banks can execute strategies that make sense, are measureable and are based in reality.

One ideal and measurable example of a financial institution gaining solvency via loan sales is a bank headquartered in the Midwest that we represented in selling a portfolio of commercial real estate loans with an unpaid principal balance of approximately $190 million. The loans were secured by collateral properties located in Florida at risk for further devaluation. The bank opted to utilize loan sales as an alternative to extending terms or foreclosure due to the length of the process and uncertainty of a timely property sale. Moreover, the portfolio had to be sold for maximum value over 60 days for the bank to meet its objectives of reducing non-performing loan ratios and redeploying capital. It has become painfully obvious that extend and pretend is not viable or prudent given the severity of to day's financial crisis. However, by employing established approaches for the resolution of problem loans, banks can take the steps necessary for a healthy balance sheet with their eyes wide open.

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