Texas Commercial Law Firm
Foreclosure
C. Deciding Whether to Forebear, Workout or Foreclose
Whether to forebear, workout or foreclose is the lender's business decision. In evaluating how to proceed, the lender's most significant tasks will be to: 1) reach a reasonably accurate conclusion as to the value of the collateral securing the loan, (after deducting any liens which will not be cut-off by foreclosure from the property's value and after taking into account any potential reduction in value resulting from other contingent, unliquidated liabilities, such as environmental problems); 2) carefully evaluate the borrower's ability to meet the proposed financial requirements; 3) calculate the lender's total cost in entering into the proposed agreement (for the lost time-value of money, for example); and 4) conclude whether the proposed arrangement is likely to yield greater returns, or avoid greater losses than would be expected if straight liquidation through foreclosure were pursued.
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