streamline any future litigation necessary to enforce the loan if the forbearance agreement is breached. Indiana law is settled that forbearance releases are effective to protect against future lender liability claims. If an obligor is not willing to grant a release, then the lender might as well get on with the fight. Deal Terms Here is a list of some key contract terms to be considered: ▶ Obligors’ admission of: » existing loan documents and the ratification of same; » lien perfection; » default(s); and » debt amounts. ▶ Payment terms: » payment of principal and/or interest during the forbearance period versus deferral; » rate of interest; » payment of escrow items versus deferral; » treatment of any past-due interest; » treatment of any past-due principal payments; » payment of attorney’s fees; » payment of a forbearance fee; and » payment of other out-of-pocket expenses, such as appraisal fees. ▶ Extension of maturity date. ▶ Stipulated payoff amount upon maturity (end of the forbearance period). ▶ Agreed judgment, either filed or escrowed (aka “pocket” judgment). ▶ Addition of collateral. ▶ Addition of guarantors. ▶ Cure of prior loan document defects. ▶ Requirement to resolve other liens or junior lien foreclosure suits. ▶ Waiver of jury trial and covenant not to sue. ▶ Consent to jurisdiction and venue. ▶ Release of claims and defenses (see previous). Depending on your situation, the benefits of granting obligors more time through a thoughtful and well-written forbearance agreement can exceed the costs of deferring the enforcement of the loan. This article has been prepared for parties involved in the field of commercial foreclosure law and is for informational purposes only. The article is not intended as advertising but may contain attorney advertising. Prior results do not guarantee similar outcomes. This article does not represent the views of Dinsmore & Shohl LLP. John D. Waller Partner Dinsmore & Shohl LLP John.Waller@Dinsmore.com John represents secured lenders in commercial loan enforcement actions. He publishes the Indiana Commercial Foreclosure Law blog at CommercialForeclosureBlog.typepad.com, which is dedicated to Indiana mortgage foreclosure, lien enforcement, title and servicing issues. Dinsmore & Shohl LLP is an associate member of the Indiana Bankers Association. BancMac provides correspondent and wholesale lending and is your Community Bank Mortgage Partner to help your financial institution originate fixed-rate secondary market loans including: PROGRAMS • Conventional Loans • USDA Rural Development Loans • Rural Living (Hobby Farm) Loans • VA Loans • Jumbo Loans • FHA Loans OUR PARTNERS RECEIVE: • Superior Service & Competitive Pricing • No Minimum Volumes • Significant, Non-Interest Fee Income • Non-Solicit Protections & More BANCMAC COMMUNITY BANC MORTGAGE CORP. YOUR COMMUNITY BANK MORTGAGE PARTNER bancmac.com mortgages@bancmac.com 888.821.7729 | NMLS# 571147 MARCH/APRIL 2024 41
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