Appraisals for a Defaulted Loan

Loans go bad, borrowers go into default, and Lenders seek Appraisers to provide Appraisals for a defaulted loan. Whether is a covenant default that can be worked through re-writing or conversations or a complete missed payment default. Lenders need to protect their collateral.

In a defaulted loan situation, an equipment appraiser can assist a bank by providing an accurate appraisal of the property that was pledged as collateral for the loan. The Equipment Appraisal is essential as it will determine the value of the collateral and how much the bank can potentially recover.

Truman Mox, Inc can assist the Lender in a default scenario by providing an appraisal report that discusses:

  1. The current market value of the property. We would provide either an Orderly Liquidation Value (OLV) or a Forced Liquidation Value (FLV) . The OLV will tell the lender what they can recover if the repossessed property is marketed properly. The FLV will tell the lender what they can expect to recover if they just want to move the asset in a quick fashion.
  2. Our Appraisal report would identify any factors that may affect the asset’s value. Hours or Mileage on the Asset. Special Attachments, or missing parts.

The Appraisal Report will help the Lender identify whether to offer a workout or repossess the asset. If the appraiser determines the value of the asset has declined significantly, it may be better for the to offer a workout and modify the borrower’s loan terms.

In some cases, the Appraiser may need to provide expert testimony. In some cases, the appraiser is called upon to provide expert testimony in court. This could be critical if there is a dispute over the value of the property.

The Lender and Appraiser relationship is critical in a default loan situation. The Lender relies on the Appraiser for accurate information to make a decision on the banking relationship they have with a borrower. Truman Mox completes Appraisals for a defaulted loan on a regular basis.

Contact Us Today to learn more.

April 10, 2023 4:17 pm

Comments are closed here.