1. COLLECTION ISSUES Jeff Novel M. Edward Burdzinski
TABC Webinar Series—Banking 101
COLLECTION ISSUES
Jeff Novel
M. Edward Burdzinski
Blog: LawofBanking.com

2. Initial Considerations—5 key questions
What is the lender’s goal?
What type of default?
What is the borrower’s situation?
How many loans and what amounts?
Does the borrower have a feasible plan?

3. The Pre-negotiation Letter
Fix issues that you have identified in the loan documents.
Confirm the defaults under the loan documents.
Set out all conditions of the potential workout.
Confirm all amounts due under the borrower’s loan(s).
Consider getting borrower to acknowledge fair market value of collateral.
Obtain a waiver and release.

4. Assignment of Rents & Leases, Forbearance Agreements, Modifications
Chapter 64 Tex. Prop. Code
Collection Letters Directly To Tenant or Landlord
Forbearance Agreements
When To Use
Common Terms & Conditions
Modifications

5. Notices Common Law Notices -
Demand For Payment
Intent to Accelerate
Acceleration
Common Law Notices Can Be Waived by Clear & Unequivocal Language – Shumway v. Horizon Credit Corp., 801 S.W. 2d 890, (Tex.1991)

6. Servicemembers Civil Relief Act – 50 USC §§501-597b.
Notices
Servicemembers Civil Relief Act – 50 USC §§ b.
Protects Active Duty Servicemembers and Their Dependents From Foreclosure While On Active Duty
These Rights Can Be Waived in a Separate Instrument Signed by Servicemember §517
Tex. Prop Code § (i) –
Required Statutory Language In Notice of Default & Notice of Sale Warning Active Duty Servicemembers To Notify Sender of Their Status Immediately

7. Non-Waivable Notices -
Notice of Default (personal residence) 20 Days Prior To Notice of Sale (Tex.Prop. Code §51.002(d); BUT
Fair Debt Collections Practices Act – (15 USC§§ p) Must Give Consumer Debtors 30 Days to Dispute Validity of All or Part of the Debt
Notice of Sale To IRS (Federal Tax Liens) 25 Days Prior To Sale (26 CFR § )
Notice of Sale 21 Days Prior To Sale (Tex. Prop. Code §51.002(b) – Mail, Post & File

8. Read DoT, Appoint Substitute Trustee
Foreclosure
Read DoT, Appoint Substitute Trustee
Determine the Appropriate Bid Value and Deficiency Amount
Check Active Duty Military Status at
Conducting the Sale
Record Foreclosure Deed ASAP

9. Special Rules for Home Equity Loans
Foreclosure
Statutory Rescission Provisions (Residential Real Property) (Tex. Prop. Code §51.016)
Special Rules for Home Equity Loans
Tex. Rules of Civil Procedure§§735 and 736
Promulgated Forms at

10. The Deficiency Lawsuit
If the preliminary steps are done correctly, the deficiency lawsuit should be fairly simple.
Where a counterclaim arises, determine whether there is an arbitration clause or jury waiver.
Principal issues in litigation.
Misrepresentation and fraud claims
Texas Property Code Section
The calculation of the deficiency amount.
Bankruptcy

11. Post Judgment Collection
What happens after you get a judgment?
Locate the debtors’ assets
Abstract of Judgment
Execution
Discovery
Garnishment
Charging Orders

12. Bankruptcy of Debtor, Guarantor or Pledgor
Other Issues
Bankruptcy of Debtor, Guarantor or Pledgor
Death of an Obligor (Hire/Consult with, Probate Counsel)
Death an Event of Default?
Estate Solvent? Collateral Valuable?
Creditor Has a Right To Apply For Administration
Complex Claims Process and Priority of Claims

13. THANKS! Jeff Novel 1601 Elm Street Suite 3700 Dallas, Texas 75201
(214)
Blog: lawofbanking.com

14. Thank you M. Edward Burdzinski Ed.Burdzinski@Leclairryan.com
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