Delaware Administrative Code
Title 5 - Banking
2100 - Mortgage Loan Brokers
2108/2209 - Statement on Subprime Mortgage Lending
Section 2108/2209-5.0 - Workout Arrangements
Current through Register Vol. 28, No. 3, September 1, 2024
5.1 The Commissioner encourages providers to work constructively with residential borrowers who are in default or whose default is reasonably foreseeable.
5.2 Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the provider and the borrower.
5.3 Providers should follow prudent underwriting practices in determining whether to consider a loan modification or a workout arrangement.11 Such arrangements can vary widely based on the borrower's financial capacity. For example, a provider might consider modifying loan terms, including converting loans with variable rates into fixed-rate products to provide financially stressed borrowers with predictable payment requirements.
5.4 The Commissioner will not criticize providers that pursue reasonable workout arrangements with borrowers. Further, existing supervisory guidance and applicable accounting standards do not require providers to immediately foreclose on the collateral underlying a loan when the borrower exhibits repayment difficulties. For those providers that portfolio loans, they should identify and report credit risk, maintain an adequate allowance for loan losses, and recognize credit losses in a timely manner.
