The review and evaluation of financial covenants imposed upon a borrower by its mortgage lender can be (but does not have to be) a challenging task, even between a sophisticated lender and a sophisticated borrower. The key to simplifying the process is understanding the elements used in applying the financial covenants, understanding how and when such financial covenants are tested, and understanding how to manage their application. This article will explore these concepts and offer some simple practice tips that can be used by borrowers.
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