A major premise of a workout is that institutional lenders would rather receive loan repayments than engage in foreclosure and/or litigation proceedings.
A workout is just that — the lender and the borrower work out an agreeable alternative to foreclosure. Upon request of the defaulting debtor, the lender may be willing to reasonably accommodate the debtor. This accommodation can take many forms including, but not limited to, temporarily suspending mortgage payments, waiving accrued costs, fees, or penalties, or extending the loan’s repayment period.
In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.