EstateGuru has implemented a more aggressive debt collection strategy, as it warns investors that certain recoveries may take more than 12 months.
The European peer-to-peer property lending platform said due to different jurisdiction regulations, substantial monthly loan updates were not possible.
EstateGuru operates in Germany, Finland, Estonia, Lithuania and Latvia, and has a security agent in each country.
“We are more rapidly defaulting and moving to enforcement in certain cases, when our traditional, cooperative approach to workouts does not lead to recoveries,” EstateGuru said.
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EstateGuru’s sales volumes fell by 10 per cent year-on-year to €183m (£161m) in 2022, and it has decided to pause German operations for now, default delinquent borrowers and move on with enforcement.
“We can assure investors that for every defaulted case our debt management, risk and legal teams are working diligently to ensure the fastest and highest recovery for the defaulted loans,” the firm added.
“We are representing your interests and our own, and we are as impatient as you are for results.”
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In all the markets in which EstateGuru currently operates, the enforcement procedures are somewhat similar. Since November 2022, the company said it has taken on a more robust approach, where it terminates the contract with the borrower, and then the case is handed over to the security agent who prepares all the documentation and forwards it to the bailiff or the court.
EstateGuru had a “turbulent” 2022 due to rising inflation, higher interest rates and increased geopolitical risk.