If they stop paying or otherwise default on the property, you foreclose.

Somehow defaulting has become a non-issue.

Make friends with the loan officers, slow pays and defaults go against their pay checks.

Don't borrow OR lend too much if you don't want to loose your ***(ets).That being said - as you stated, the borrower will borrow up to the nose and more if allowed, regarding the general public.Nobody looks at their own credit score and says to themselves, "I dont want to borrow that money because my FICO is too low which means my risk of defaulting is high."

And, in some cases, force the sale of a living unit but the owner is still the seller if the burden of management is too big, that may also lead to a strategic default or a note being called due.

It's almost like you're making the loan and hoping the borrower will default??

As an investor, you have no due diligence period...once you submit your earnest money, you either have to close or lose the money (with the exception of a seller default).

That allows the lender to collect rents in the event of default.

Has anyone here ever defaulted on an SBA 504 loan.

LTV and income from the property is so favorable that one would be crazy to default on such l loan .. and the lender (my solo401k)would be happy to repossess the property.What I am concerned with is to do it properly to make IRS happy :-)Any word of wisdom or referrals in CA would be appreciated