Profile the Obligation
Initial File Review and Due Diligence are critical components of the overall recovery process. These initial steps allow CRA to understand the “story behind the loan” and to identify any critical issues that require immediate action.
Identify “Critical Issues”
- Upcoming legal dates, court hearings, settlement conferences
- Legal actions commenced by prior holders of debt
- Bankruptcy deadlines for hearings and proofs of claim
- Identify and claim any undistributed bankruptcy proceeds
- Files placed with law firms for various purposes
- Incomplete settlement negotiations
- Open guarantees from SBA, HUD, etc.
- Unclaimed pledged collateral, UCC filings
- Insurance policies or lines of credit
- Debtors in probate
- Any other critical or time-sensitive issues related to potential collectability.
Full File Scrub
- Identify all guarantors
- Identify any remaining collateral
- Extract all “settlement relevant” data
- Verify loan balance
- Roll up any unaccounted expenses, fees and interest that should be added to loan balance
- Establish points of contact with any in-place law firms or other third-party service providers retained by prior bank on a file by file basis
- Identify all file related correspondence and bank internal memos
- Identify and attempt to secure any missing documents
Deal (Loan) Brief
Relate the general “story” of the loan, giving the asset manager, at a glance, a summary of information surrounding the loan origination, default and potential collectability, including:
- Loan purpose, e.g. construction loan, bridge loan, business loan, line of credit, real estate, mobile home, etc.
- Key events leading to default
- Lien position in collateral
- Disposition of collateral
- Settlement discussions or other collection attempts
- Information regarding the obligor’s financial dealings, assets or line of business before and after origination and default
- Determine and document any obligor BK filings including current status
Stratify Loans for Optimal Recovery according to internal strafication guidelines