Thursday, December 22, 2011

BMO Harris Tightens the Screws

The word that is missing from this article is "covenants."

Dozens of Reedsburg area business and property owners said Monday they are facing foreclosure even though many have never missed a mortgage payment.

The move will force many owners to downsize their operations, but BMO Harris Bank's decision is perfectly legal, mortgage experts said.

For most business loans, there are "covenants" which accompany the lending agreement.  Those covenants lay out conditions under which the bank will continue to lend money.  Those might include "loan-to-value" percentages, or receivables as a percent of assets, or a minimum of X dollars kept as cash-in-the-bank.

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