In September we completed the first recovery process from a loan with real estate collateral. I would like to share our experience and the results of last month’s recovery.
Our recovery results
Recovery from private borrowers
In September, we recovered over 10% more from individuals to investors compared to August – 73.798 Eur (2.87% of all non-performing loans).
Solid recoveries from business loans
In September we collected 32.664 Eur (5.18% of all non-performing loans) from business loans with a personal guarantee and 58.137 Eur from a loan with real estate pledge.
We completed the first ever recovery process from a loan with real estate collateral in a month!
How is recovery from a real estate secured loan handled?
The recovery procedure from a mortgage loan is slightly different from the usual one – we terminate the contract after a delay of 56 days and then we have the right to apply to a notary for the issuance of a an executive order without a court decision.
After the notary has issued executive order, it is submitted to the bailiffs who conduct real estate collateral auctions and the funds received from the sale are used to cover obligations. Auctions may not take place if there are no buyers. We manage this risk by conservatively choosing collateral, usually apartments and houses in three biggest cities of Lithuania where the housing market is most liquid.
If after realizing the pledged real estate, there are not enough funds to cover all obligations, then we would demand to collect the remaining debt from the other debtor’s assets according to the general procedure provided by law. We manage this risk by financing loans up to 75% of the value of the pledged property.
How was the recovery processed from the mortgage loan on our platform?
Until now, we have had a dozen loans with mortgaged real estate. We are quite conservative in evaluating the property offered as collateral, and as a result, we encountered foreclosure on a mortgage loan for the first time in our sixth year of operation.
We terminated the loan agreement on August 29th and kept in constant contact with the client and agreed on partial payments. The client made a payment of 20.000 Eur on September 8th, on September 23rd and 26th we received partial payments amounting to several thousand, and on September 29th we received the remaining amount of the loan – more than 32.000 Eur with all the interest and late charges due to the investors.
We are pleased with the successful recovery results from this project. We go to great lengths to keep our investors’ money safe and earn solid returns.