What does a lender typically do during the collection process?

During the collection process, a lender typically focuses on the administrative and procedural aspects of managing a loan that is in default. This includes mailing and recording necessary documents. This documentation may cover a range of activities, such as sending notifications to the borrower regarding delinquency, formal notices of default, or initiating foreclosure proceedings if necessary. The accurate completion and recording of these documents are critical for the lender to maintain a clear legal standing and to proceed with any potential recovery efforts.

The other actions provided in the choices do not represent typical steps that a lender would take as part of the collection process. Filing for bankruptcy is generally not an action a lender would undertake since they are the entity seeking repayment. Offering loan modifications is a possible strategy, but it isn't a standard step in the initial collection process itself and would typically be considered after initial collection efforts. Selling the loan to another company may occur but is more related to secondary market practices rather than the direct collection process.