What does banks do with property collateral when a loan can't be paid

[Niyi Briggs]

To get loans, a person must leave a collateral. And most times, these collaterals are in the form of landed properties.

Most times also, the collaterals dropped are always more than the entire loan. If the loan is not repaid, what does the bank do with the property?

Do they sell and give the owner the balance or they sell and make a profit?

 

[eldavis]

Yes when the loan cannot be paid they usually sell the property, which why they always take or accept properties of equal value with the loan.

 

[Niyi Briggs]

Yes when the loan cannot be paid they usually sell the property, which why they always take or accept properties of equal value with the loan.

But most properties they want is always like twice the value of the loan. So, what do they do with the balance?

 

[eldavis]

But most properties they want is always like twice the value of the loan. So, what do they do with the balance?

Normally the property they take should be of equal value but everyone wants to reduce their level of risks, hence they usually take does of higer value.

 

[hastral45]

Banks is at liberty to dispose such collateral in order to reclaim their outstanding loans from the debtors. They could only do this after granted injunction from the competent court.

 

[Springtime]

Banks here usually takes over the ownership of the property and sell it by auction.

 

[hastral45]

A bank has right to take possession of such property through the court order called fifa and disposed such asset in order to reclaim their debt.

 

[Shavkat]

In my country, it is also the same thing. They need to have collaterals before you can have the loans from the banks.

 

[nomad]

Banks will auction the collateral if the borrower cannot pay the loan. If the collateral fetches more money than the loan, it will be returned to the owner.

 

[Reedex]

Once the owner of the property default the loan, then it will becomes the property of the bank and they can sell it to recover the money back.