Most of us are aware of the following in our various Sacco Societies concerning loan security:

  1. GuarantorAll loans must be secured by at least three guarantors. All guarantors should be members of the society, must have a good track record of repaying their own loans and not be guarantors of another outstanding loan which is in default.
  2. The total deposits of the guarantors should be equal to or more than the loan applied for.
  3. A borrower or guarantor may apply to the credit committee for a change of guarantors.
  4. The obligation of the guarantors shall cease when the loan granted has been repaid to equal or less than the loanees total deposits.
  5. The obligation of the guarantor may also cease upon alternate guarantors acceptable to the society being substituted.
  6. No executive officer, management and supervisory committee member shall act as endorser, guarantors for borrowers from the society.
  7. The committee may refuse to accept as a guarantor a person who is himself in receipt of a loan, and may decline to grant a loan subsequently to a member while he remains liable as a guarantor.
  8. Other than the usual deposits of a member, certain loan categories or loan amounts shall be secured from pledges in form of articles as share certificates, land title deeds or insurance policy up to their surrender value may be accepted.  The Society must deposit such articles in a bank for safe custody but must be handed back to the members immediately the loan balance equals the deposits.  Confirmation as regards the validity of the articles so pledged from the issuing authority must be obtained before such documents can be admitted as security for the loan.  Mortgage in real estate can be taken as a security for a loan not exceeding two thirds of the mortgage value.
  9. Upon the death of a guarantor, the loanee is required to find a replacement within a period of 30 days.
  10. Loanees who do not contribute their deposits through check-off system shall seek guarantors from members within the check-off system. However, where the loanee fails to get guarantors and the loan applied for is below his or her deposits, the loan shall be granted.
  11. A member’s deposits pledged as security for another member’s loan shall not be surrendered to offset his/her outstanding loan unless the former provides and alternative guarantors.

So what happens when you cannot get guarantors for one reason or another?



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