Liquidating loan self
Therefore, carefully adhering to the applicable SOPs during the liquidation and collection process can significantly decrease the chance of a denial or repair.
Accordingly, lenders should keep these initial steps in mind when liquidating and collecting on a defaulted SBA 7(a) loan.
The SBA requires that lenders liquidate and exhaust all possible avenues of collection until a loan may be charged off and application made for payment on an SBA guaranty.
However, if the liquidation and collection efforts of a lender do not comply with the applicable SOPs and SBA Authorization, and a loss results, the SBA can either deny a request for purchase of its guaranteed portion, or reduce the amount of its purchase by the amount of the loss (commonly known as a repair).
Once a loan is accelerated, it is in “liquidation” status, and the SBA will need to be notified.
At this time, if the SBA guaranteed portion of the loan was sold in the secondary market, it must be repurchased.
Post-default site visits may provide insight on whether an obligor can revitalize the business and possibly resolve the problems that caused the default.
The standard rate index shall be the Maspeth Federal Savings commercial interest rate for similar type property or the Prime Rate plus 1%, whichever is higher. Closing costs MUST be paid at closing with newly issued Commercial Line of Credit check.Generally, post-default site visits are required within sixty (60) calendar days of an uncured payment default.For non-payment defaults (such as bankruptcy filing, business shutdown, or foreclosure by a prior lienholder), the site visit must occur within fifteen (15) calendar days of the occurrence of the adverse event.If the aggregate recoverable value of the personal property collateral is less than ,000 or the recoverable value of each parcel of real property collateral is less than ,000, a site visit is not required.Whether or not a loan is exempt from a post-default site visit or the site visit was conducted, all lenders must prepare a post-default Site Visit Report, explaining why the site visit was not necessary or detailing the lender’s findings from the inspection, including an inventory of the remaining collateral and an assessment of its condition and value.