Ways to reduce risk when preparing to sell your NPLs
Here’s what you need to know to mitigate risk when selling your nonperforming loans:
- Strategy: Assume all your loans will default and implement processes and systems that will enable you to liquidate uncollected receivables quickly and compliantly. Important data to track includes origination date, charge-off date, interest rate, and last successful
- Segment: Determine what subset of your loans to sell (bankruptcies, higher balances) and when (after internal collections? At charge-off?). Place accounts with buyers who know that market to optimize your ROI.
- Security: Create sample files for buyers rather than share unmasked PII prior to sale. This protects the customer and you, ensuring a fully compliant, seamless sale.
- Selling: Give yourself enough time to complete the bidding process across multiple buyers. Take advantage of certified buyer networks that offer triple-blind bidding to ensure you get the best price for your portfolio, and are selling to a qualified, compliant buyer.
- Post-Sale: Must have a process in place to track the chain of custody during the debt sale and collection process. As the originating lender, you are responsible for the account until it is Paid in Full (PIF) or Settled in Full (SIF).