Stakeholders with assets and property in Ohio have rights to equity when an outside third-party that services loans files for bankruptcy protection. At Delev & Associates, LLC, we understand your concerns as a lender or creditor in complex situations involving third-party service providers.
If an outside provider is unable to continue its business operations, it should not affect your ability to recover all monies owed from borrowers. Regardless of the financial troubles a service provider may be facing, your legal rights in receiving full payments may be upheld. You may exercise your rights by filing a claim through the service provider’s bankruptcy proceeding.
When a major mortgage loan originator and service provider recently filed for bankruptcy protection, the presiding federal judge blocked its original reorganization plan. The company initially requested a plan that involved selling or transferring its business of forward and reverse mortgages to other service providers, but the judge did not approve it, as reported by Reverse Mortgage Daily.
In this case, it was the borrowers who owed $1.8 billion worth of mortgages along with consumer rights’ organizations that objected to the service provider’s plans for reorganization. By claiming that the transfer of their mortgages to another company would strip borrowers of their property rights and force them into wrongful foreclosures, they were successful in blocking the service provider’s first attempt at reorganization. After making adjustments to the provisions in its plans to include how borrowers may correct any mistakes related to their mortgages, the judge approved the reorganization.
Without the intervention of stakeholders such as lenders, other creditors or borrowers, a company’s reorganization plan may get approved, which might result in your inability to collect on a debt. Our page on extending credit provides more information on the ways you may protect your business before offering a loan.