To state the obvious: in order to resolve a problem, it is necessary to first identify what the problem is. In the circumstances of a distressed borrower, the lender often is best served by re-visiting the underwriting analysis employed at the time of loan approval. From a legal standpoint, this is achieved by means of a loan audit -- an analysis of the debt and security attributes of the subject loan. 

    Pete Zemanian has recently authored an outline for professionals on the requisites for performing loan audits, and is a regular speaker on the topic. Particularly for secured lenders who have received signals of financial distress from a borrower, the best (and maybe only) opportunity to shore up possible credit or security concerns is before a bankruptcy petition is filed. The loan audit serves the function of diagnosing needed, or helpful, corrections. 

    As directed by the client, the loan audit process can be as limited as a simple review of filed financing statements and recorded mortgage instruments or as thorough as a complete review and evaluation of the entire debt and security structure supporting the subject loan.