For a variety of reasons a borrower may seek a renewal, extension or modification of an existing real estate loan. When a default exists the Bank may agree to a renewal, extension or other modification to the loan as the solution to “working out” the problem. Alternatively, it may choose to proceed to foreclose its lien on the real estate. This Chapter discusses defaults that lead to workout, guidelines for the Bank in a workout situation and the necessary documentation if the Bank’s ultimate decision is a modification of the loan. Foreclosure is covered in the following Chapter.
Special rules, including disclosures, apply to Texas home-equity loans. See Chapter 16, “Home Equity Lending” for a detailed discussion. Additionally, certain renewals, extensions and modifications of residential real estate loans require new disclosures.