Bruce Sturman Managing Director

FOR IMMEDIATE RELEASE
Brooklyn, New York, United States of America (Free-Press-Release.com) February 14, 2011 -- According to Bruce Sturman of The Maxal Group, when a distressed asset is subject to both mortgage debt and mezzanine debt, the mismatch in collateral types has the potential to create major disputes between the mezzanine lender and the mortgage lender. The mortgage lender is concerned that if a mezzanine foreclosure takes place, the new equity owners of the project company may be less creditworthy or have less industry experience than the original equity owners. That could lead to further woes for the project.

For its part, the mezzanine lender worries about any potential mortgage foreclosure. If the project owner loses title to the project due to a mortgage foreclosure, the project owner’s assets are drastically diminished, and any equity interests in the project owner will be worth far less as a result.