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The Legal Remedies for Lender

The Legal Remedies for Lender

In any type of loan, the lender has to worry about their own protection in case the borrower does not pay them back. This can be due to the fact that they lack the funds to do so, become bankrupt, or simply choose not to. That is why there are certain laws and documents that help to protect a lender from the borrower by enforcing penalties, and using security as a preventive measure to loss of funds. These protective measures mainly deal with holding some kind of collateral over the debt owed, that would entitle the lender to use against the borrower in case they weren’t able to pay them back. 
In other cases, the measures can deal with penalties before this happens. For instance, when a bank is owed money on a mortgage over a property that goes unpaid, they have certain penalties. These penalties are known to the borrower prior to them acquiring the mortgage, and become enforced right after the debt goes unpaid. First, the late fees are imposed, and later, the account can be placed in default.
After it has been placed in default, the bank may have additional fees necessary in order to reinstate it into a current good standing. If the mortgage is in default for a certain period of time, the bank can take over control of that property as compensation for the debt. The property would be later sold, and the funds would go to the mortgage lender (the bank) as a form of payment for the debt. In other cases of loan, the lender can hold the title of a property directly, or indirectly through a trustee as as security interest over the loan. 
Specifically, the lender does not have the right to have use over the property under the title or preventing the owner from its use, simply just as a countermeasure against failure of payment. Similarly to mortgage defaults, in the event that the debt goes unpaid the lender has the opportunity to sell the title of the property to acquire their funds owed by the borrower. If the trustee is involved, than they sell the property and provide the funds to to the lender.
One way that a lender is protected from any existing, or future debt, is a clause known as the dragnet clause. This clause allows the lender the right to add any additional loans to the amount of an existing loan, within a mortgage loan. This means that the property securing the loan would secure any additional loans as well, regardless of their purpose. This protects the lender in the event that the borrower fails to make payments on any mortgage or loan, the property can be held against that debt as mentioned before, and sold if necessary to recuperate the money for the lender. 
When dealing with debt both parties are protected, but the importance of the lender’s protection is evident due to the high amount of money in a loan they may provide. These types of loan require not only a security interest, but an added sense of security to the lender themselves. Regulations, guidelines, and laws assist in proving that sense of security both on paper and as a given factor to the lender.

The Legal Aspects of Real Estate Finance

The Legal Aspects of Real Estate Finance

The Uniform Commercial Code is a uniform law, which exists in every state, set to help maintain control over all commercial transactions and sales, such as loans and mortgages. The UCC has been revised since its introduction to better suit the demands and needs of the borrowers and lenders involved in a deal such as a loan. 
A UCC allows for a loan to be secured with personal property through filing a statement and filling out a security agreement by the borrower. This includes, not only the personal property, but also its fixtures. Under the UCC, some examples of the transactions dealt with include the following: fund transfers, documents of title, investment securities, negotiable instruments, leases, secured transactions, sales, letters of credit, bank deposits, bulk sales, mortgages, loans, etc. 
Each area or article of the code deals with one of these specific transactions in stating what types of rules and regulations they must abide by. The code assists in unifying the transactions in states in order to prevent any confusion or interruption to them. For example, in dealing with sales of a product, it may be produced, packaged, and sold in many different states.
This may have presented a great deal of issues if there wasn’t a single code followed by all those states to ease the transaction altogether. However, due to the fact that all these processes would follow the UCC, such problems may be prevented. The way a UCC is made up is by being written into a draft document through groups of people with an expertise in commercial law. The draft then needs to be approved by the American Law Institute and the Uniform Law Commissioners. 
These organizations must review the drafts first, and decide whether any changes need to be made, or if the draft is ready to be endorsed for adoption by the states. This is when the code goes into effect, and the states must adopt it into their existing code. In real estate, the UCC requires a financing statement to be filed in relation to a debt. This statement contains vital information in regards to the debt and the debtor as well as any property involved.
The information included would be the names of both parties ( the debtor and lender) as well as their domiciles as well as a full and clear description of both the personal and real property (as well as the location). These details can help to clearly identify all the persons and items involved in the securing of a loan with personal property. 
The UCC is seen by many as one of the greatest universal laws accepted as it is a model code extensively adopted by states. With the UCC being applied into the commercial dealings by the states, the transactions have and will continue to progress with great ease. These include any transitional issues with commercial transactions that cross state borders and regulations.