Contemporary Real Estate Law – C Kerry Fields (1)

In a workout, the parties renegotiate the terms and conditions of the loan as an alternative to the lender filing for foreclosure, the borrower filing for bankruptcy, or the parties engaging in litigation. In practice, many loan workouts are negotiated in the context of the borrower’s desperate financial condition, often when the borrower is considering filing bankruptcy.

Workout A non-foreclosure response to a loan in default. Gather Loan Documents One of the first steps in the workout process is for the lender and borrower to gather all the documents related to the original loan transaction. For residential loan transactions, the following documents should be obtained: ■ The promissory note ■ The mortgage or deed of trust ■ Any modifications or amendments to the note and deed of trust, including partial releases of property securing the repayment ■ All notices, real estate title documents, and correspondence Commercial loans require more documentation than residential transactions.

While the list below is not complete, to consider a loan modification, many lenders require full and complete copies of the following documents: ■ All subordination agreements. A subordination agreement is an agreement in which a lien holder agrees that another lender will have priority over its existing loan or claim on title.

■ All personal guaranties made by the borrower. ■ Current income and expense statements for income- producing properties. This information would include a rent roll and accounting of tenant security deposits. ■ The lender’s title abstract with opinion or insurance policy and any subsequent title guaranties, endorsements, or reports.

■ All communications relating to the loan, including those indicating whether the lender and borrower agree on the outstanding loan balance. ■ Appraisal, environmental, engineering, zoning, or other third- party reports obtained by the lender. ■ Insurance policies required by the loan documents. Review of Loan Documents Workouts involve the review of every document related to the loan.

If a violation of the Truth in Lending Act (TILA)1 has occurred, the borrower may be eligible for a loan rescission within three years of loan consummation, which may include crediting back to the borrower all interest collected by the lender on the loan, loan origination fees, broker fees, lender fees, statutory penalties, and attorney fees. As an alternative, when a borrower makes a TILA claim, lenders are often willing to compromise with a loan modification that meets the needs of the borrower.

Review TILA at https://www.usgs.gov/mission-areas/natural- hazards/. Determine If Borrower Has Any Common Law Remedies The workout investigation will also determine whether the borrower has any legal remedies. The following causes of action are the most relevant legal remedies available in residential loan claims. 1. Fraud. A fraud claim may exist if the loan broker or lender failed to disclose any material facts relating to the terms of the loan. A fraud claim may also arise if the lender or loan broker made any representations or promises to the borrower that contradicted the terms of the loan documents.

2. Negligence or duress.

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Under no circumstances may any part of this publication be used in content generation software, systems, or tools such as those that utilize artificial intelligence processes or algorithms. For information about permissions or to request permissions online, visit us at www.AspenPublishing.com. Cover image: iStock.com/Cristian Lourenço To contact Customer Service, e-mail [email protected], call 1-800-950-5259, or mail correspondence to: Aspen Publishing Attn: Order Department 1 Wall Street Burlington, MA 01803 eISBN 979-8-8941-0295-5 Library of Congress Cataloging-in-Publication Data Names: Fields, C.

Kerry author | Fields, Kevin C. author Title: Contemporary real estate law / C. Kerry Fields, Professor of Clinical Finance and Business Economics Marshall School of Business University of Southern California; Kevin C. Fields, Professor of Clinical Finance and Business Economics Marshall School of Business University of Southern California.

Description: Fourth edition. | Burlington, MA : Aspen Publishing, 2026. | Includes bibliographical references and index. | Summary: “Introductory book on real estate law for business students”— Provided by publisher. Identifiers: LCCN 2025051625 | ISBN 9798894102931 Paperback | ISBN 9798894102955 ebook Subjects: LCSH: Real property—United States | Vendors and purchasers—United States | Real estate business—Law and legislation—United States | LCGFT: Textbooks Classification: LCC KF570 .F54 2023 LC record available at https://lccn.loc.gov/2025051625 OceanofPDF.com ABOUT ASPEN PUBLISHING Aspen Publishing is a leading provider of legal education content and digital learning solutions in the United States and globally.

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