Press Release: Jacobs P.C. Successfully Defends Borrower in Dispute Over Loan Extensions
New York, NY (November 18, 2024) – Jacobs P.C. announced today that it has successfully filed a comprehensive response on behalf of SIG CRE 2023 Venture LLC, Rialto Capital Advisors, LLC, and Quantum Servicing Corporation in a declaratory judgment action brought by multiple borrowers over loan extensions originally issued by Signature Bank.
The plaintiffs, who entered into five-year loan agreements with Signature Bank prior to its closure in 2023, allege that the defendants engaged in improper practices to hinder their ability to extend their loans under the agreements' automatic renewal terms. Signature Bank's loan documents provided borrowers the unilateral right to extend loans for an additional five years by giving written notice 60 to 90 days before the original maturity date, subject to narrowly defined conditions under which the lender could decline the extension.
Following the FDIC’s takeover of Signature Bank, these loans were transferred to the defendants for servicing. The plaintiffs claim the defendants improperly imposed additional conditions not stipulated in the original agreements to block extensions. These conditions allegedly included legal fees, pre-negotiation agreements, and appraisals, among others.
Jacobs P.C.’s response highlights the defendants' adherence to legal and procedural obligations during the transition of Signature Bank’s loan portfolio to its new administrators. The firm contends that the alleged actions were lawful and within the scope of the defendants' rights under the loan agreements. Jacobs P.C. further asserts that the defendants acted in good faith and maintained consistent communication with the plaintiffs regarding their obligations.
“The case raises important questions about how loan servicing transitions are handled following the failure of a financial institution,” said Leo Jacobs, Founder of Jacobs P.C. “Our clients acted in compliance with the terms of the agreements they inherited and in the best interest of ensuring sound financial practices.”
Jacobs P.C. is committed to achieving a fair resolution of this matter and looks forward to presenting its clients' case in court.
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Amy Rossetti
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