Servicing & Recovery
Judicial auction price versus collateral value
The price at a judicial sale is not the valuer's figure.
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- Serenor Capital
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An appraisal says what an asset might be worth. An auction says what an asset found, or did not find, as a price in a constrained sale. For an NPL already in procedure, the second figure is the only one that is a cash fact.
Two numbers, two statuses
An appraisal is an opinion, dated, on a stated basis. An auction judgment is a price, or a finding that there was no price. Mixing them in one 'collateral value' column makes the loan tape unusable.
Once an auction has happened, modelled cash starts from that price, then costs and rank. It does not restart from the 2019 appraisal. The procedure itself is discussed in mortgage enforcement timelines. This note stays with the price.
A failed auction
A sale with no bidder is not a detail. It says that, at the reserve and on the day, the market in the room did not take the asset. What follows — a new reserve, a new delay — is read from the file. It is not replaced with 'take 70% of the appraisal'.
Repeating that substitute across a portfolio produces false precision. Better a pocket 'procedure open, outcome unknown', valued with an explicit low scenario. See downside case pricing.
Costs and rank
The price called out does not reach the claim in full. Court costs and prior ranks come first. An auction price above the appraisal can still leave the claim unpaid if useful rank is thin.
It is the same arithmetic as for a first-ranking mortgage, applied to a price that is now known rather than estimated.
Files not yet at sale
For the rest of the book, the auction is a scenario, not a fact. A price is not backdated. The conditions are written: occupation, whether a sale is under way, delay, exit discount, and the chance that a settlement arrives first.
A settlement can produce cash sooner and with more certainty. Comparing it with the auction scenario is often the centre of the price, not a footnote. See NPL settlement.
In this series
- Mortgage enforcement timelines
- Collateral value is not recovery value
- Collateral appraisal for Moroccan NPL pricing
- Limitation periods on Moroccan bank claims
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 the reserve price the recovery value?
- No. It is a starting point of the bidding, set in the procedure. The auction price can move away from it. An auction with no buyer does not turn the reserve into cash.
- Should every line be modelled at the appraisal?
- No. Files already sold are modelled at the price obtained, net of costs and rank. The others are modelled with an exit scenario, not with the valuer's gross figure.
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.