ICBC vice president on the problem of non-performing loans
If the debtor starts making payments again on a non-performing loan, it becomes a loan even if the new debtor execution has not taken on any missed payments.
Institutions holding non-performing loans in their portfolio can choose to sell them to other investors in order to get rid of risky assets and clean up their balance sheets Sales of non-performing loans should be examined carefully because they can have many implications financial, particularly affecting the company's profits and losses and tax situations.
A non-performing loan is any loan that can reasonably be expected to enter default Often, if the loan does already in default ISN, the borrower has not made a number of payments within a specified period usually no payment was made within 90 days, if a loan can still qualify, even if this time has not elapsed.
Once a loan is considered non-performing, lenders may have the opportunity to try to recover the principal This particularly applies to loans secured against specific assets, such as a mortgage or vehicle loan in these cases the lender can begin the foreclosure process on a home, or move to seize the property, such as a vehicle.
In cases where there is no specific asset, such as unsecured lines of credit, the lender can start using the internal collection services to recover shortfalls If extenuating circumstances are affecting the borrower, the lender can choose to put the loan in forbearance, suspending the need for payments until the situation changes Forbearance is more common with student loans, especially if the borrower still participates courses or was unable to get a job after graduation.
If a borrower is still unable to make payments on the debt, the debt can be sold, usually including a reduced price to an external collection agency Otherwise, the lender may be associated with a collection agency, the supply of perform the service for a percentage of the amount recovered was.
At this point, the lender can answer any losses based on the difference of the capital owed and the debt price was sold or the amount collected less the costs of collection agencies while trying to make a profit guaranteed payment in full, or as close as possible to the borrower.
Non-performing loans (NPL), unproductive loan.