- Firstly, and most obviously (duh!), we should only want to lend money to people in the Q1 quadrant and avoid people in the Q4 quadrant like the plague.
- The Q3 quadrant is interesting, for while ideally we don't want to lend to these, they are suitable material for subsequent legal proceedings to recover our funds. Other than the Q2 and Q4 quadrants, they do have money or assets that can be attached or seized.
- Q2 borrowers are of interest only inasmuch as perhaps it is inadvisable to sell off their delinquent loans to Junk Debt Buyers (JDBs). In due time, these borrowers may in fact recover financially to where they will make good on their obligations. It does not do the original lenders much good if such loans have been sold to the JDB at pennies on the dollar and the JDB profits from the borrower's repayment.
Monday, March 31, 2008
Posted by Old Stump at 1:11 PM