Gregory borrows $200,000 from Mountain Bank to purchase a plot of land, and Mountain Bank perfects its security interest. Gregory defaults on the loan, and owes an outstanding balance of $80,000. His house has gone down in value to $160,000 at the time of default, but he has other personal assets to satisfy the debt. Which of the following is a course of action for Mountain Bank to recover the debt after foreclosing on the loan?

Question

Quizplus · Accepted Answer

Proceeding to judgment against Gregory would allow Mountain Bank to obtain a court order requiring him to pay the outstanding balance of the loan. This would be the best course of action as Gregory has personal assets that could be used to satisfy the debt, and the value of his house has decreased below the outstanding balance of the loan. Filing a financing statement and releasing a termination statement are actions taken in relation to a security interest, but they do not directly address the issue of recovering the debt. Proceeding to repossess the collateral would only be possible if the property were still worth more than the outstanding balance of the loan, which is not the case in this scenario.

Gregory Borrows $200,000 from Mountain Bank to Purchase a Plot