ASSESSMENT OF THE PERFORMANCE OF FORECLOSURE AS STRATEGY FOR LOAN RECOVERY IN LENDING INSTITUTIONS IN LAGOS STATE, NIGERIA

Abstract

Foreclosure represents a forced sale of a property by a lender to reimburse the lender for the debt outstanding against the property. This study assessed the performance of foreclosure as a strategy for loan recovery in lending institutions in Lagos, Nigeria to determine the debt recovery ability and appropriateness of the recovery strategy. The study employed survey design and data were collected through the use of questionnaire administered to the 37 Commercial banks head offices and Primary Mortgage Institutions in Lagos Metropolis respectively out of which 22 were retrieved and used for the analysis. The data collected were analyzed using descriptive and inferential statistics which include weighted mean score, granger causality, t-test analysis, Kendall’s coefficient of concordance and multiple linear regression analysis. The result of the weighted mean score revealed that residential types of properties are mostly affected by foreclosure than commercial, industrial, and agricultural properties. The Granger causality test showed that the number of the property foreclosed does not granger cause the economy (GDP) and vice versa. The t-test analysis showed that there was no significant difference between the value of the collateral at inception as predicted by the estate surveyors and valuers and the actual price at foreclosure. Also, the findings of multiple linear regression indicated that the predictor factors such as state of the economy, location of the property, among others significantly affect the outcome of foreclosure in the study area. The study concludes that foreclosure as a strategy for loan recovery has brought a good level of relieve and bailed out the lenders to a good extent in their loan recovery endeavour.