We recently sent an email to our late and defaulted borrowers in Germany, which we have reproduced below.
The current German portfolio consists of €85,2M in outstanding loans, with 37.86% being late in payments and 38.42% in default. While we focus on resolving the problematic subsection of the portfolio, we are opting for a more conservative approach in Germany, and will not bring any new projects with new borrowers to the marketplace for the time being.
We have made significant changes to the management of our German operations, with Mr Kaspar Kaljuvee, one of Estateguru’s founders and the previous CRO of Estateguru Group, joining the management board and taking the lead there. The team was also strengthened by the addition of one of our longest serving Country Managers, to support operations and recoveries. Our goal is to reduce the default rate to below 15% by the end of the year, and we have mobilised all of the resources necessary to achieve this aim.
We are currently investigating the possibility of improper activities relating to our loan origination processes in Germany during the years 2020-2021. We are doing this to ensure that the money has been used in accordance with the purpose stated in the loan contract, and to protect the interests of the thousands of investors on our platform who have invested in German loans and find themselves increasingly unhappy with borrower companies who refuse to honour their agreements. We will however continue to work with cooperative borrowers and keep financing commitments as we have promised, while initiating asset recovery processes with those who are insolvent, late or uncooperative. We have successfully implemented a similar policy in other markets in the past.
We will be dealing with borrowers directly and without the use of intermediaries (loan brokers). As stated above, in cases where borrowers refuse to make interest payments, or otherwise prove to be uncooperative or unreliable, we will be enforcing our default procedures. Legal due diligences are already being finalised by private investors and our debt collection partners, and the first debt claim sales are closing in February, with others to follow month by month. This means that claims will be sold to new mortgage holders who will continue the enforcement process while Estateguru’s investors are exiting the projects.
We urge you to make payments in accordance with the agreed and binding loan payment schedules, and remind you that Estateguru has all the resources necessary to enforce our investor’s claims, should that be required. Our debt collection department can be reached at firstname.lastname@example.org if you have any questions.