Page:United States Statutes at Large Volume 101 Part 3.djvu/276

 101 STAT. 1574

PUBLIC LAW 100-233—JAN. 6, 1988

SEC. 102. RESTRUCTURING DISTRESSED LOANS.

(a) IN GENERAL.—Part C of title IV is amended by inserting after section 4.14 (12 U.S.C. 2202) the following new sections: 12 USC 2202a.

"SEC. 4.14A. RESTRUCTURING DISTRESSED LOANS.

"(a) DEFINITIONS.—As used in this part (other than in sections 4,17 and 4.18): "(1) APPLICATION FOR RESTRUCTURING.—The term 'application for restructuring' means a written request— "(A) from a borrower for the restructuring of a distressed loan in accordance with a preliminary restructuring plan proposed by the borrower as a part of the application; "(B) submitted on the appropriate forms prescribed by the qualified lender; and "(C) accompanied by sufficient financial information and repayment projections, where appropriate, as required by the qualified lender to support a sound credit decision. "(2) COST OF FORECLOSURE.—The term 'cost of foreclosure' includes— "(A) the difference between the outstanding balance due on a loan made by a qualified lender and the liquidation value of the loan, taking into consideration the borrower's repa3mient capacity and the liquidation value of the coUat.^ eral used to secure the loan; a "(B) the estimated cost of maintaining a loan as a nonperforming asset; "(C) the estimated cost of administrative and legal actions necessary to foreclose a loan and dispose of property acquired as the result of the foreclosure, including attorneys' fees and court costs; "(D) the estimated cost of changes in the value of collateral used to secure a loan during the period beginning on the date of the initiation of an action to foreclose or liq'uidate the loan and ending on the date of the disposition of the collateral; and "(E) all other costs incurred as the result of the foreclosure or liquidation of a loan. "(3) DISTRESSED LOAN.—The term 'distressed loan' means a loan that the borrower does not have the financial capacity to pay according to its terms and that exhibits one or more of the following characteristics: i, "(A) The borrower is demonstrating adverse financial and repayment trends. '(B) The loan is delinquent or past due under the terms of the loan contract. "(C) One or both of the factors listed in subparagraphs (A) and (B), together with inadequate collateralization, present a high probability of loss to the lender. "(4) FORECLOSURE PROCEEDING.—The term 'foreclosure proceeding' means— "(A) a foreclosure or similar legal proceeding to enforce a lien on property, whether real or personal, that secures a nonaccrual or distressed loan; or "(B) the seizing of and realizing on nonreal property collateral, other than collateral subject to a statutory lien arising under title I or II, to effect collection of a nonaccrual or distressed loan.

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