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#6531 - 11/09/01 10:09 PM Collection on Past Due Loans
CFreasier Offline
Junior Member
Joined: Mar 2001
Posts: 25
Corpus Christi, TX, USA
I am looking for someone to share their procedures on collecting on past due loans? I am trying to determine when we should be sending demand letters and if it is necessary to send any other notices prior to accelerating the loan.

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#6532 - 11/09/01 10:50 PM Re: Collection on Past Due Loans
jon m Offline
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jon m
Joined: Jun 2002
Posts: 6
Southeastern US
Knowing when to send a demand letter can be tricky because the form and content for them generally vary from one state to the next. Some states even have requirements that the customer must be notified that they have the right to seek credit counseling. You should consult with you an attorney for specific state requirements.

That point aside, my company generally issues a Notice of Intent and Right to Accelerate letter when the customer's loan becomes 45-60 days past due. Each account should be looked at individually prior to a notice going out. You may have one customer who you might extend their account to a much later delinqeuency level based on their circumstances. On the other hand, you may have a chronically delinquent customer, who does not pay until they receive a Notice of Intent. In that case, you will want to issue the letter once the account is 30 days past due (2 payments).

Once our Notice of Intent letter expires without the loan being reinstated, the account is referred to outside counsel to initiate foreclosure/legal activity.

Collection strategies should be well thought out and should be tailored to the type of loan portfolio you are servicing.

jon m


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#6533 - 11/11/01 08:41 AM Re: Collection on Past Due Loans
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,546
On the Net
Make sure you also check your loan docs for any cure provisions and notice requirements.

This is one area that certainly has to be done correctly on the front end. Potential reversal of a foreclosure would be a bad, bad thing.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

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