Realization Upon Charged-Off Loans Clause Samples
The "Realization Upon Charged-Off Loans" clause defines the process and rights related to recovering value from loans that have been officially written off as uncollectible. Typically, this clause outlines how any proceeds or recoveries from such charged-off loans are to be handled, including who is entitled to receive them and how they are distributed among stakeholders. For example, if a borrower makes a payment after their loan has been charged off, the clause will specify whether the lender, servicer, or another party receives those funds. The core function of this clause is to provide clarity and structure for handling unexpected recoveries, thereby preventing disputes and ensuring fair allocation of any realized amounts from previously written-off assets.
Realization Upon Charged-Off Loans. The Servicer will use reasonable efforts to repossess or otherwise comparably convert the ownership of any Related Property relating to a Charged-Off Loan and will act as sales and processing agent for Related Property that it repossesses. The Servicer will follow such other practices and procedures as it deems necessary or advisable and as are customary and usual in its servicing of contracts and other actions by the Servicer in order to realize upon such Related Property, which practices and procedures may include reasonable efforts to enforce all obligations of Obligors and repossessing and selling such Related Property at public or private sale in circumstances other than those described in the preceding sentence. Without limiting the generality of the foregoing, unless the Administrative Agent has specifically given instruction to the contrary, the Servicer may sell any such Related Property to the Servicer or its Affiliates for a purchase price equal to the then fair market value thereof, any such sale to be evidenced by a certificate of a Responsible Officer of the Servicer delivered to the Administrative Agent setting forth the Loan, the Related Property, the sale price of the Related Property and certifying that such sale price is the fair market value of such Related Property. In any case in which any such Related Property has suffered damage, the Servicer will not expend funds in connection with any repair or toward the repossession of such Related Property unless it reasonably determines that such repair and/or repossession will increase the Recoveries by an amount greater than the amount of such expenses. The Servicer will remit to the Collection Account the Recoveries received in connection with the sale or disposition of Related Property relating to a Charged-Off Loan.