Are You Protecting Your Collateral Properties?

Hi Prospects & Friends!

Collateral properties play a key role with lenders and investors since its their portfolios that determine if we will witness more than normal foreclosures and bankruptcies, which happen to drag down the property prices if these portfolios aren't managed correctly with collateral monitoring. If you're a lender and you have a bunch of defaults the worst thing to ignore is the property itself, if you're just getting contact from the borrower on when they will make payments. So lets first acknowledge if you have a mortgage then you are the borrower, and if you have the collateral then you're the lender. Majority of lenders have collection departments that monitor their collateral portfolios, by contacting the borrower in any form of communication they can, but on the other hand borrowers aren't really contacting the lender about their collateral property and if its ok. So point is if you are responsible for collateral property portfolios, then it would be wise to monitor your collateral too. No lender or investor wants to hear the news that their collateral property was acknowledge as having the shingles falling off while windows and doors are broken, all while the borrower informed the collection department they're doing ok, and property is fine and that they will handle the defaulted payments soon. This is a one sided call and can be avoided by having properly done property inspections to protect these collateral portfolios. Commercial collateral portfolios aren't exempt from these issues either. I recently did an inspection on a big chain restaurant privately owned, and behold what happened, in my property inspection report I informed the lender the property will always make money because of having excellent street frontage and highway access, but because the borrower of the franchise entered into default this was putting the property and the restaurant in jeopardy if the lender didn't get the loan cured from the borrower within 180 days, and this would cause further riskier collateral issues. So the lender did an assignment and allowed another investor to take over the loan, since the new investor could handle the bigger risks developing. In conclusion key is to know when to stay or remove yourself from the collateral by staying on the collateral monitoring.