Valuation
First-ranking mortgages and useful rank
First on the title is not the first dirham of the sale price.
- Author
- Serenor Capital
- Published
- Read
- 2 min read
'First rank' is often the phrase used to justify a price. The phrase describes a registration. Recovery depends on what is taken before that registration, and on what the sale actually brings.
Title rank and economic rank
The land-registry extract gives the order of contractual mortgages. The first registered creditor, if nothing is registered ahead, is first among mortgagees. That creditor is not first in the absolute: enforcement costs and certain privileges come according to the rules that apply to the file.
Useful rank is the payment capacity left once those items are deducted from a prudent sale proceed. A first-ranking mortgage on an asset whose net sale covers 40% of the claim is a partial first rank. The waterfall is set out in security ranking.
What the tape has to show
Registration date, inscribed amount, the registry, competing inscriptions, and whether the extract is current. A '1st rank' box ticked by the seller, without a recent extract, is an assertion. It gets checked.
The appraisal of the asset comes after, not instead. A valuable asset with zero useful rank does not contribute to price. See collateral appraisal.
Price consequence
Modelled mortgage cash is the minimum of the claim and useful rank, delayed by the enforcement timetable, net of cost. The surplus of the claim is analysed as unsecured, with its own probability, often low on a debtor already compromised.
Two 'first rank' files can therefore have distant values. Averaging them because the box is the same destroys the information. The general method is in pricing from face value to cash flows.
Limit
This note does not describe the enforcement procedure, which has its own article, and it does not offer a typical delay as if it were a statute. Delay is observed from the stage the file has already reached.
It also does not say a second rank is worthless. A second rank on an asset with ample cover can be the only cash in the file. Rank is calculated. It is not graded as good or bad.
In this series
- Security ranking and the recovery waterfall
- Collateral value is not recovery value
- Irregular claims are wider than NPLs
- Pledging a business (fonds de commerce)
This note is a method of reading a file or a published series. It is not legal, tax or investment advice, and it is not an opinion on a particular exposure. Serenor Capital does not buy claims for its own account, manage a fund, or carry on collection.
Sources and references
- Bank Al-Maghrib, Annual Report on Banking Supervision, financial year 2025 — PDF
- Bank Al-Maghrib, Circular No. 19/G/2002 of 23 December 2002 on the classification of claims and their provisioning, as amended — PDF
- Circular No. 1/W/2025, adopted on 5 December 2025, effective 1 January 2027. It does not restate the 2012–2025 figures discussed here.
- Serenor public series, banks, social basis — Morocco NPL Monitor and methodology
Frequently asked questions
- Is a first-ranking mortgage always paid in full?
- No. It is paid up to the net sale proceeds, after costs and rights that rank ahead. If those proceeds are below the claim, the balance is unsecured.
- Is rank on the title enough on the loan tape?
- No. The register extract, the amounts inscribed, and privileges that are not a contractual mortgage all have to be read.
Evaluating an NPL Portfolio
Serenor Capital supports financial institutions and investors in the analysis and valuation of non-performing loan portfolios in Morocco.
Serenor Capital publishes research on non-performing loans, distressed-credit valuation and the development of Morocco’s secondary credit market.
This note is general commentary on method and market structure. It is not investment advice, legal advice, or a recommendation in relation to any portfolio, transaction or financial asset.