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Collection Problems: Your Underwriting Tools are the Answer


We often write about topics surrounding due diligence and strong underwriting procedure to mitigate bad deals going on the books. But what happens when deals start going bad? What steps can you take to protect your interests? The more you know, the better off you’ll be when it comes to enforcing on your security.

Things change and the asset you may have loaned money on 5-10 years ago may have changed in condition and value. Other mortgages may have been taken out and even other people added to title. Before enforcing on a defaulted mortgage, you are best served to locate as much current information about the property in question as possible.

Exterior condition – in lieu of performing a drive-by, you can review aerial and street-view images of the subject property to see if the property, from the outside, is being maintained and how it looks from the front. You can also leverage search engines like Google to see if the owner has promoted the property for sale or rent which could lead to further photos and information about both the exterior and interior of the property.

Value – you can generate an automated valuation model (AVM) online, from your office, to see what the property is worth. An AVM will review public records and other information to generate an estimated value based on comparable sales and other information. This is a fast and easy way to estimate what the asset is worth.

Registered mortgages and liens – checking registered mortgages and liens is important. You don’t know if, after your mortgage, the consumer took out other mortgages or even has liens from not paying things like condo fees and taxes. This is highly relevant because, while new mortgages may fall behind your mortgage, issues such as unpaid property taxes can jump the line and supersede your registration, meaning that you will have to pay them if you want to sell the property (which you likely already know). This is why checking registered mortgages and liens on default is critical.

Who is on title – another person added to title after your mortgage could seriously complicate things, especially if they live in the home. Re-validating who is on title often helps you avoid surprises and leads to a smoother power of sale or foreclosure.

When you have collection problems, your tools are often the answer and leveraging them to be in the know will improve your results. Purview For Lenders has the tools you need.

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