The first action that the buyer does when evaluating your debt portfolio is the masked file analysis. Therefore, for the successful sale of a debt portfolio, it is crucial to take a serious approach and spend the time and resources of your IT department on this.
A detailed masked file will result in a more significant transaction amount. A file with less information would force the portfolio buyer to discount its price because debt buyers always proceed from the worst-case scenario if the information is not provided.
A masked file is an excel table in which information about debts being sold is recorded. Each line is one debtor. And for each of the debtors, important information is provided - the state, the amount of debt, the availability of guarantors, the delay period, and so on.
IMPORTANT! the information in the masked file does not contain PII (personal identifiable information); such information must be masked. That's why this file is called Masked File
If you are asked to provide a file with open information, you should not do this in any case because this may lead to data leakage and their use by intruders.
Table 1. The example of a masked file
The question arises: if the fields are masked, how will the buyer determine the value of the debt portfolio? It's straightforward: buyers use mathematical models for evaluation, which are based on their experience of collecting similar files. They superimpose their previous work experience on a new portfolio and estimate how much these debts may be worth.
Experienced sellers of debt portfolios know what information needs to be provided for evaluation by buyers, but what if you are making a sale for the first time?
Unfortunately, there is no universal answer that would fit all cases. Why? The fact is that each type of debt requires certain information, and the same type of debt sometimes requires different details depending on the state and the seller. Therefore, we recommend contacting experienced market participants - brokers for help in compiling the file.
Last Payment Date is crucial for assessing whether the debt is in statute, as well as determining how much it will be possible to recover from this portfolio. The more recent the last payment, the higher the probability of collecting the debt.
Auto loans are similar in data structure with unsecured debts, but information about the car is added there (model and brand, year of manufacture, availability of GPS tracker, availability of insurance, information about repossession).
Mortgage notes require less information than the two types of debt discussed above. But they must be accompanied by information about the subject of the pledge - address, BPO, Line Position.
As a rule, the assessment of this type of debt primarily comes from the assessment of real estate objects that provide it.
Unfortunately, there are often cases that the methodology of evaluating a particular buyer has its own specifics. And then the debt seller will have to decide how difficult it will be to respond to an additional request for information and prepare for it in advance.
This article has considered the main debts that are found on the market now. However, additional data may be required for your portfolio, type of debt, or state. Please take the time to prepare the file, because having all the necessary information will allow you to earn more on the sale of the portfolio, and the buyer to make the right decision and reduce the time to evaluate your portfolio.