In the event of a default (non-payment of a loan), the PeerStreet Asset Management team will lead the loan workout process on behalf of investors to protect their investment and maximize proceeds as quickly as possible. Our in-house Servicing and Asset Management teams are experienced in residential and commercial real estate investment, lending, law, and finance.
How are default interest or extension fees paid to investors?
In general, PeerStreet first pays legal fees and other foreclosure-related costs on the loan, then distributes principal, interest, and any default interest payments to you and other investors on a pro rata basis.
In the event of default, the borrower may be required to pay default interest until the loan is brought current or gets paid in full. This is interest paid above and beyond the loan’s specified interest rate. In those cases, PeerStreet will distribute 50% of the default interest it collects to you and other investors, on a pro rata basis.
Extension Fees (including forbearance fees)
There are a few types of loan extension options. There are those that are negotiated at origination (i.e., borrower extension options) and those that are granted on a case-by-case basis. For pre-negotiated extensions, there can either be an agreed upon fee associated with the option or it may be given at no fee. For case-by-case extensions, the borrower is typically charged a fee in exchange for being granted the extension. In the cases when an extension fee is charged, PeerStreet will distribute 50% of the default interest it collects to investors, on a pro rata basis.