Louisiana Revised Statutes 40:488 – Recourse obligations and cross-collateralization
Terms Used In Louisiana Revised Statutes 40:488
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
No guaranty, other recourse obligation, mortgage, or security instrument, or other instrument (recourse instrument) given or entered into by a housing authority in connection with financing the acquisition, creation, modernization, rehabilitation, or replacement of a development, which exposes to foreclosure, loss, or levy any property of the housing authority other than the development being acquired, created, modernized, rehabilitated, or replaced with the proceeds of such financing shall be given or entered into, unless the authority’s board of commissioners shall have specifically approved such action by resolution which finds that such action:
(1) Is necessary and essential to acquiring the financing with respect to which such recourse instrument is given or entered into.
(2) Will not unreasonably expose to loss or foreclosure property of the authority other than the development for which financing will be used.
(3) Is prudent and sound as required under La. Rev. Stat. 40:489.
(4) Is commercially reasonable, taking into account the characteristics of the transaction in which such recourse instrument would be given and its relative benefits and potential costs to the authority.
Acts 1997, No. 1188, §1.