The current market environment makes it an ideal time for borrowers to work toward a cure for their distressed real estate loans, according to a podcast from financial adviser and risk management firm Deloitte Financial Advisory Services. The challenges, however, remain numerous. Yet oftentimes it is the borrower's behavior that can jeopardize a happy ending, according to E.J. Huntley, leader of real estate consulting at the firm. "The big complaint that we hear from our banking clients that are dealing with distressed situations is that borrowers too often come to the table with antagonistic “us versus them” view toward the negotiations," he said in the podcast (download by clicking here). "What we would really recommend is that borrowers come to the table with a realistic expectation and a realistic restructuring proposal, which often serve as a starting point to accelerate the negotiations." This approach would work for both commercial and residential loans. Commercial loans in particular, are the big trouble area. There are $1.5 trillion in these debts maturing by 2014, and the means to finance are all but nonexistent. The commercial mortgage-backed securities market is improving, to be sure, but at issuance hitting $11 billion in 2010, down from a peak $230 billion in 2007. "The good news for a borrower is that banks don’t really want to own real estate, and they are working hard to not pursue foreclosure as their primary course of action," Huntley adds. "As a borrower, you know, we see it being very important that you make a realistic assessment about the situation at your end, including determining what the real value of the collateral is versus the face amount of the debt." Deloitte is not blind to the current dire financial situations. In most cases of distressed real estate loans, said CEO David Williams, the property is no longer producing income because the inhabitants can no longer pay. That is a difficult situation to be in, especially considering that banks simply don't have the staff or expertise to properly service distressed real estate. And that's not the only problem financial institutions face. "Banks, in addition to the distressed real estate problem, have problems of their own from a customer-base standpoint," Williams said. "I would also say that building the relationship works fast when you start early, when you make a realistic assessment of where you are and don’t wait until the very last minute to go into your financing source and try to do this re-negotiation." Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.