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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 in a bank or credit union’s financial asset management collections 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 improve debt recovery management and reduce charge-offs of non-performing assets by using ARM-Pro™ to grow recovery solution.