To Enforce or Forbear: A Lesson in Keeping Your Powder Dry

Introduction

Following and sometimes in anticipation of a default by a borrower, the mortgage lender must decide whether to proceed to enforce its rights under its security as soon as its right to do so has crystallized, or whether to work with the borrower to attempt to resolve the pending or actual crisis in their relationship. Unless the lender is prepared to waive the default entirely, some positive action is almost always recommended to the lender by its legal counsel. Such action may be simply to demand payment of the amount in default (together with interest and costs incurred by the lender) or, where contemplated by the loan or security documents, repayment of the entire loan (including interest and costs). However, it may also include putting the borrower on notice of the default and providing an opportunity to the borrower to cure such default within a strict time period, especially if the borrower had bargained for and obtained such time before the lender