How does a qualified lender decide to restructure a loan?

CFR · 2024-01-01 · US · Title 12

(a) (1) Whether the cost to the lender of restructuring the loan is equal to or less than the cost of foreclosure, considering all relevant criteria. These criteria include: (i) The present value of interest and principal foregone by the lender in carrying out the application for restructuring; (ii) Reasonable and necessary administrative expenses involved in working with the borrower to finalize and implement the application for restructuring; (iii) Whether the borrower's application for restructuring included a preliminary restructuring plan and cash flow analysis, taking into account income from all sources to be applied to the debt and all assets to be pledged, that show a reasonable probability that orderly debt retirement will occur as a result of the proposed restructuring; and (iv) Whether the borrower has furnished, or is willing to furnish, complete and current financial statements in a form acceptable to the qualified lender. (2) Whether the borrower is applying all income over and above necessary and reasonable living and operating expenses to the payment of primary obligations; (3) Whether the borrower has the financial capacity and the management skills to protect the collateral from diversion, dissipation, or deterioration; (4) Whether the borrower is capable of working out existing financial difficulties, taking into consideration any prior restructuring of the loan, reestablishing a viable operation, and repaying the loan on a rescheduled basis; and (5) In th

official document · source cfr-2024 · id 12:§ 617.7415