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What is a special asset in banking?

The term “special asset” is used to describe an unpaid loan or line of credit that has progressed beyond an initial period of debtor payment-delinquency and is in jeopardy of foreclosure. A special asset is also referred to as a troubled loan, a troubled debtor (a person or company), or a borrower that demonstrates financial stress, which is a key indicator that he or she may lack the ability to repay their loan.

Foreclosure often leads to bank-ownership of the special asset, and the eventual sale of the asset minus expenses. Special assets managers in banks and credit unions can greatly reduce charge-offs of non-performing assets by using ARM-Pro™ to grow recovery solution.