EstateGuru has taken possession of its first defaulted loan’s collateral and has started the sales process to regain investors’ funds.
In October, Toome avenue development loan in the amount €224,000 reached its maturity date, however the borrower had become insolvent and was therefore unable to repay the loan. EstateGuru’s COO Mihkel Stamm comments that the bailiff agent has declared an auction process that starts on 14th of November 2017 and has a starting price of €313,280. The collateral is a 544,7 m2 private house that is situated on a 1577 m2 property in Nõmme district Tallinn. The collateral has been valued by an accredited valuation company ERI Kinnisvara in the valuation of €440,000. The auction can be found on the following link.
“Toome avenue development loan is the first loan among all facilitated 220 loans during 3 years that has been declared defaulted, however a good thing is that our risk model is efficient and investors’ interests are covered. During the entire process, EstateGuru’s representatives have been in constant contact with the borrower who remains fully cooperative. The borrower has the chance to repay all debt and regain control over the property before the auction has ended,” Stamm adds.
As Stamm explains, the first default evidently illustrates the reason behind EstateGuru only facilitating property-backed loans. „In our current portfolio, the average loan to value ratio is 58%. This means that in case the borrower becomes insolvent EstateGuru has a strong chance to regain all investors’ funds through selling the collateral property. In this particular case we have informed the EstateGuru security agent and the selling process has been taken over by our partnering bailiff agent. EstateGuru team is confident that the proceedings from the sales process will be sufficient to cover the entire cumulative debt.“
Toome avenue development loan was funded on 28th of October 2015 and the loan was financed by 294 investors. The loan collaterals are a private house in Nõmme, a 6,26 hectare property in Keila parish and a 6,31 hectare property in Keila parish.
The sales process of the collateral – how does it work?
The public auction will be held by the bailiff on the www.oksjonikeskus.ee platform starting from 14th of November 2017. The interested parties have 20 days to register for the auction after which the bidding process lasts for 5 working days. Additional information about the collateral property can be obtained via e-mail firstname.lastname@example.org and the same contact can be used to arrange a personal inspection of the property.
The person who wishes to participate in the auction bidding process must register on the Oksjonikeskus portal and make a prepayment of €5000. The prepayment will be repaid to all participants who are not the winners of the bidding process the day after the auction has ended.
After the auction has successfully ended, a notice will be forwarded to the E-land Registry and a new ownership will be established. The collateral will be released of all transaction prohibitions. All funds will be transferred through the bailiff agent and after the end of the auction process the buyer has 15 days to make the payment. The process will be stopped should the borrower pay all cumulative debt before the auction process has ended.
More information about EstateGuru’s default plan can be found from the blog post.
The loan was repaid to investors on 21th of November 2017 along with all applicable interest, overdue charge and indemnity. The return for the loan was 13.72%.