The Lender is responsible for monitoring the Guaranteed Loan in the manner that it would service its portfolio of conventional loans. This includes, but is not limited to, sending out timely past due, Right to Cure and demand notices to bring the Guaranteed Loan current.
The Lender must also take all steps necessary to protect the collateral, rights or other interest of WHEDA's portion of the Guaranteed Loan. These actions may include declaring defaults, commencing foreclosure or pursuing other legal action on the collateral and otherwise taking prompt action to ensure maximum recovery from the disposition of the collateral.
In the event that the Lender's actions or inactions, including Lender's negligence, are responsible for or contribute to an impairment of the collateral, or in the event that the Lender had actual knowledge of such impairment of collateral and failed to take reasonable steps to prevent or correct it, then WHEDA may reduce or deny the payment of the Guarantee. It is the Lender's responsibility to keep WHEDA informed of any action, pending or future, necessary to protect the interest of the Lender and WHEDA.
A loan delinquency/default may be either monetary or non-monetary as defined below.
WHEDA defines a monetary delinquency/default to be the failure to receive a complete principal and interest payment on a loan within thirty (30) days of its due date.
In the event of a monetary delinquency/default, the Lender is responsible for notifying WHEDA, using the Monthly Default Loan Status Report (Form 8), within thirty (30) days after payment is due. Monthly reports must be provided as long as the delinquency continues. Failure to provide monthly notices may result in the termination or reduction of the Guarantee.
Once the Monthly Default Loan Status Report is received by WHEDA, a Commercial Underwriting Officer will be assigned to the delinquent or non-performing loan. Contact should be maintained with this Commercial Underwriting Officer.
If the principal on the Guaranteed Loan is ninety (90) days or more past due, the loan must be placed on non-accrual, with all future payments applied to the principal balance. The Lender must notify WHEDA if there are reasons why the loan should not be placed on non-accrual or if it should be removed from non-accrual status.
A non-monetary delinquency/default occurs when a Borrower or Lender has violated any of the terms and conditions of the Loan Authorization, other loan documents and agreements, or if a Guaranteed Loan becomes ineligible based on program guidelines.
Some examples of a non-monetary delinquency/default include:
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| Releasing or substituting collateral without WHEDA's consent; |
| Failing to maintain required insurance policies; |
| Incurring additional borrowings without WHEDA's consent; |
| Modifying terms of the Note; and |
| Discontinuing operations of an in-Home business. |
In the event of a non-monetary delinquency/default, the Lender must immediately notify WHEDA in writing. A Commercial Underwriting Officer will be assigned to the delinquent or non-performing loan. Contact should be maintained with this Commercial Underwriting Officer. Courses of action may include, but are not limited to:
| Modifying the terms of the Loan Authorization(s); |
| Maintaining the existing commercial loan without the Guarantee; |
| Refinancing the Guaranteed Loan, at which time the Guarantee would end; or, |
| Beginning to liquidate the collateral and applying the proceeds against the outstanding Guaranteed Loan balance. |
