Humberto and Tiara, Who Are Married, Borrow $110,000 from Sterling

Essay

Humberto and Tiara, who are married, borrow $110,000 from Sterling Credit Union to buy a home. The loan is a fixed-rate mortgage at 3.38 percent with a thirty-year term, subject to an acceleration clause, and secured by the home. When Humberto and Tiara have paid off $10,000 of the mortgage-still owing $100,000-they stop making payments. Meanwhile, the home's market value declines to $85,000.  Sterling Credit attempts to contact Humberto and Tiara but cannot get in touch with them and the couple will not return phone calls or e-mails to the bank. After six months, Sterling Credit decides to take steps to recover the unpaid amount of the loan. What are the lender's options? Which option seems most likely? Why? What steps are involved?