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What are the Lender’s Responsibilities after a Charged-Off Loan is Referred to Treasury?

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June 30, 2015

By Bob Coleman
Editor, SBA Hot Topic Tuesday

Coleman faculty instructor Lance Sexton was posed this question last week during his office hour session from his Coleman Certified Liquidation online Training.

We have issued the final wrap-up report on a liquidated loan and SBA has referred the loan to Treasury. We have also retained some junior liens that remain of record on residences. The liens have not been released.

What happens when the first lien forecloses and we get served with the foreclosure complaint? NOW there is equity in the property above the first real estate mortgage debt.

Since an Answer and claim to the equity has a very short time frame – 20-30 days – can we Answer and assert a claim to the equity and ask for Treasury to either take over the defense and claim in the foreclosure, or to ask Treasury to refer the loan back to us as lender so we can go after the equity in the home?

Also, since there will be legal fees to defend the foreclosure and recover the equity, can we seek this in supplemental CPC tab submissions to the SBA if Treasury refers the loan back to lender?

Who do we contact at Treasury when there is equity in a junior mortgage retained on property?

Response from Lance Sexton

Treasury would be in charge of all servicing and liquidation after the Treasury referral. Any recoveries would be made by Treasury and SBA would share those recoveries with the bank on a prorate basis.

The only responsibility that you would have is providing notification to treasury of any notice regarding litigation or bankruptcy. Treasury would handle all litigation; thus, litigation costs would be handled by Treasury.

The contact information for Treasury is as follows:
Supervisory Loan Specialist
Treasury Offset Division
BirminghamTOPS@sba.gov
800-736-6048 ext. 7705

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