Florida Hospital Credit Union Foreclosure Policy
I.PURPOSE: The Board of Directors recognizes that from time to time the credit union
may have to
foreclose on a real estate loan (1st and/or 2nd Deed of Trust). In light of this, the
following policy is
established to ensure:
• An appropriate Risk Assessment for foreclosing and holding of a CUF (Credit Union
Foreclosure) is properly performed.
• Levels of risks are established in relationship to holding a CUF.
• Proper accounting of the CUF is done.
• A strategy for either the liquidation or holding of the CUF is done.
FHCU Policy- 2007, 2008, 2009
II. RESPONSIBILITY: The Chief Operations Officer (COO) is responsible to establish
procedures to fulfill this CUF policy. The Chief Financial Officer (CFO) is responsible to
accounting procedures to fulfill this CUF policy.
III. WORKING WITH REAL ESTATE LOAN BORROWERS: The COO is responsible to
procedures to determine if a workout loan or foreclosure is in the best interests of the
credit union and
the member. Prudent workout arrangements, in the long term, can be in the best interest
of both the
credit union and the member. However, when foreclosure is unavoidable, the credit
union will seek
legal counsel to consider all the risks associated with the foreclosure and the liquidation
of the CUF.
IV. FORECLOSURE OF REAL ESTATE LOANS: It is the responsibility of the COO to
procedures for initial evaluation of the projected financial impact to the credit union
completing a foreclosure. The initial evaluation must include a reasonable market
evaluation of the
property, maintenance costs, holding costs and selling costs with supporting
documentation. It is
understood and recognized by the Board of Directors that due to adverse market
conditions a real
estate loan that is in a junior lien position (i.e., closed end 2nd or Home Equity Line of
Credit) has a
higher loss potential then a real estate loan that is in a first lien position. It is further
due to adverse market conditions that in considering a foreclosure of a junior lien it might
necessary to make the decision not to foreclose on the junior lien and write-off the entire
loan. In such
cases, however, the COO will be responsible to seek other collection means in
relationship to the
unforeclosed note. It is the responsibility of the COO to monitor the foreclosure process
and to update
the Board concerning the status of the foreclosures.
V. REAL ESTATE OWNED (REO): It is the responsibility of the COO to establish
foreclosed properties that have become Real Estate Owned by the credit union.
VI. EVALUATION OF POTENTIAL GAIN OR LOSS AND REPORTING OF CUF’s TO
The COO will be responsible to report to the President/CEO of the credit union and the
Directors on a regular basis, the status of all CUF’s. This report is to include at least the
• Potential loss of pending and actual CUF’s.
• Status of all CUF properties.
• Legal counsel recommendations.
VII. The President/ CEO will make the final decision on whether or not to proceed
foreclosure or work out a modification of their loan.