ีีีืA conventional bank practice that protects the lender against possible
borrower default is the requirement of loan collateral such as real estate
or chattel mortgage.
Banks use loan collateral in order to screen potential clients (as a substitute for lack of customer information) and to enforce and foreclose
loan contracts in the event of loan default. The preferred form of conventional bank collateral is mortgage on real property, which, however,
requires clear land titles and mortgage registration. In general, real
estate and land are considered to be “low risk”, while chattel mortgages