Section 004 ]If the borrower fails to perform any of the borrower's obligations under the terms and conditions of the loan agreement, the borrower is in default. A typical default arises if the borrower fails to pay the monthly mortgage payment. Upon default, and so long as the lender strictly complies with numerous federal and state laws, the lender can cause the property securing the loan agreement to be sold at a foreclosure sale public auction. Since "foreclosure is a harsh remedy to be resorted to only under the direst circumstances, failure to comply with even the most minute federal or state consumer protection, debt collection, property, title and business statutes related to the enforcement of security interest can result in a wrongful foreclosure or class action lawsuit with dramatic economic consequences for the lender.
Lenders are particularly skittish around class actions, preferring to have their companies write checks for hundreds of millions, rather than lose their own houses and boats. After all, if you have $500M set aside, and settle for only $297, that's not so bad is it? And the ankle bracelet is so...pedestrian.