A.12.5.6 Foreclosure

A. Decision to foreclose. Make a decision to foreclose where the contractor becomes bankrupt, abandons the job, or the contractor is terminated due to inadequate contractor performance. Encourage the MAP Lender to consider foreclosure and tender of the unfinished property to HUD, where the Regional or Satellite Office Director agrees in writing that it would be advantageous to the insurance fund, e.g., instances where interruption of construction occurs at an early stage and market and/or economic conditions have worsened to preclude attaining project viability. Consider surety's position in reaching this determination.

B. MAP Lender tenders unfinished property. Where the Regional or Satellite Office Director agrees in writing that accepting conveyance of such unfinished property would be more advantage to the insurance fund than pursuing project completion:

1. Promptly convey the decision to all interested parties.

2. Request field counsel to maintain close communication with the Lender’s and Borrower’s counsel and seek advice from the Office of General Counsel as necessary.

C. Estimate completion cost. Estimate completion cost for the unfinished project to support a subsequent damage claim against the surety for damages due to contractor's failure to perform.

D. Document distribution. Compile original documents, including the Regional or Satellite Office Director's authorization to accept the unfinished project, in the Washington Docket with one copy to the Field Office Docket, Field Counsel, and Mortgage Credit Control File.