As Indemo‘s principal loan originator, Tamarindo Vector selects the investment opportunities on the platform. With his strong background in mortgage lending, founder Ilja Hagins explains how the company became a key player in the Spanish non-performing loan (NPL) market.
In this 15-question interview, he shares his strategy: due diligence process, case selection, risk management, debtor negotiation, and market vision. An exclusive look into the world of non-performing loans in Spain !
Partnership and Professional Evolution
1. You have 10 years of experience in non-bank mortgage lending before switching to NPLs. What convinced you that NPLs offered better opportunities ?
Well, exposure to non-performing mortgage loans is almost inevitable if you’re involved in non-bank mortgage lending. As your portfolio grows, you eventually face situations where payments are missed, deadlines aren’t met, and, after going through formal procedures, you may be left with both the mortgage and the asset to manage.
During my active work in mortgage lending, I managed a portfolio of 50M€+ and dealt with 200+ non-performing loan cases. All of them were eventually resolved, through mutual agreements, auctions, or repossessions.
While this was never the core focus of the business, the numbers spoke for themselves: with about 13M€ in non-performing loans, the average ROI after case completion was significantly higher than in standard mortgage lending – around 30% p.a. at that time.
It was also clear that large institutional investors showed strong interest in purchasing NPL portfolios from banks. So, with growing experience and proven results, it was a natural next step to look deeper into this sector.
The timing was right as well: on one side, banks began selling portfolios in smaller ticket sizes that were accessible to corporate investors, and on the other, the legal process had become more straightforward and predictable.
Selection and Due Diligence
2. Less than 10% of available NPLs make it onto Indemo. What are the 3 most common defects in the 90% rejected ?
Before diving into the defects, it’s worth noting one important aspect: we focus exclusively on the residential sector, mostly targeting secondary residences. This narrows our scope and allows us to avoid risks linked to other asset classes such as offices, logistics, or commercial real estate. When it comes to the 90% of deals we reject, the most common issues are :
Not profitable
When purchasing and managing debt, we need a clear picture of expected performance. If the debt is offered at the final stages of recovery with only a minor discount, it doesn’t align with our yield expectations.
At the same time, we’re piloting other investment products such as Discounted Real Estate – where we acquire debt late in the legal recovery process with the goal of gaining possession, renovating, and selling at peak market value – but this hasn’t yet been introduced on Indemo.
Not liquid
It’s critical that the underlying asset can be sold within a reasonable timeframe once we reach that stage. This is why we focus on the mid-priced residential segment – it provides opportunities for investors and benefits from strong demand, supported by favorable macroeconomic conditions in Spain.
By contrast, even if we could acquire a loan at an attractive price, if the collateral is, say, an extravagant villa 300 km from Barcelona, we would likely pass, as selling it quickly and at the right value would be uncertain.
Legal grey zones
We carry out thorough checks of each mortgage agreement and the loan’s current legal status. If we encounter problematic clauses in the mortgage deed or any legal uncertainty that could create risks for investors, we simply walk away from the deal.
3. You sometimes accept lower discounts (40% instead of 60%) for better assets. How does this “cherry picking” strategy affect the promised 15% returns ?
Our projected investment return never drops below 15%. Whatever discounts we accept are always “cherries” – the only difference is that some of them come with a higher discount than others. But the discount is never a standalone factor, as there are always other considerations.
A higher discount usually reflects that the debt is at an earlier stage of recovery. With our business model, we avoid typical risks of real estate investment platforms (construction delays, logistics issues, rising material costs) because we only select debts secured by fully built and commissioned properties.
That means our main risk is time.
Keeping a 15% annual yield in mind, we can choose between a higher discount at earlier stages or a lower discount at later stages. While it seems intuitive that the higher the discount, the better, in practice an asset purchased at a 40% discount but realized faster can deliver the same RoI, or better, than one bought at a deeper discount taking longer to resolve.
4. How does your network of 450 real estate experts via Taurus Iberica specifically assess the “local dynamics” of each region ?
Our network of 450 real estate experts via Taurus Iberica helps us address two key areas when assessing collateral :
- Urbanization specifics : local experts provide insight into growth trends and urban development, so we can be confident the asset is liquid and not in an area facing negative demographic or economic tendencies.
- Social factors : they also evaluate the broader social dynamics that can influence asset value – such as the quality of schools, accessibility of transport, and local infrastructure.
All of these insights are consolidated into presentations and appraisals, giving us a detailed picture of assets that we may not have direct access to ourselves. This local knowledge is crucial for making informed investment decisions.
Legal Process and Negotiation
5. What is the exact proportion of your cases resolved amicably versus through judicial foreclosure, and is this proportion stable ?
For Spanish mortgage NPLs, most of our files end up settled amicably – more or less 70%. The remaining 30% we push through judicial foreclosure. That split’s been pretty steady the last 2-3 years, wobbling maybe ±10 percentage points depending on rates, housing liquidity, and how far the case has already moved in court. If we shake hands during litigation but before the auction, we count that as amicable.
6. You say you establish a “new relationship” with each debtor after purchasing the NPL. How do you specifically transform initial hostility into collaboration ?
The most important step in building dialogue is to show our willingness to collaborate. Being a debtor is stressful for anyone, but what’s often overlooked is that institutions rarely engage in real dialogue. They follow formal procedures but they seldom offer tailored solutions to address the debtor’s situation – especially in more difficult cases where the debt exceeds the market value of the asset.
That’s why hostility is rare in our communication. We enter discussions openly and present several possible solutions. Our flexibility compared to banks allows us to offer debtors alternatives rather than a single path forward – and in many cases, just having options is enough to transform tension into constructive collaboration.
Performance and Results
7. The current outperformance (23% realized vs 15.1% promised) – how much comes from real estate appreciation (7-10%/year) versus your operational efficiency ?
While real estate appreciation and positive macroeconomic trends in Spain add to the attractiveness of our investment product, they are not the core drivers of our returns. The main source of outperformance is our ability to purchase debts efficiently and realize them within the expected timeframe or even earlier as shown by closed cases.
I don’t attribute the higher returns to real estate appreciation, but to our competence in selecting assets that are appealing and perform well. In some cases, we’ve been able to sell assets faster than anticipated, which naturally boosted the annual ROI. Still, our mindset remains focused on consistently delivering the 15.1% target we promise to investors.
8. You mention recent success cases where the debtor was “happy to get rid of the debt”. Are these cases the exception or are they becoming more frequent ?
As I mentioned earlier, it’s not unusual for the debt value to exceed the market value of the collateral. In a standard foreclosure scenario, this could mean the debtor not only loses their secondary property but also remains liable, which might even affect their main residence mortgage.
Through direct dialogue with us, however, it can become possible to sell the indebted property and have the remaining debt written off. For the debtor, this is often a very acceptable compromise – especially since few credit institutions are willing to enter such discussions.
Our goal is to make these solutions increasingly common. We are prepared and motivated to do so because our main concern is time. These cases allow us to resolve situations faster and achieve higher annualized yields, while the debtor walks away without debt.
It’s a middle ground where both sides benefit !
Tamarindo Risk Management
9. You identify “lack of precision” in due diligence as the main risk. How have you strengthened your processes to avoid this trap ?
We start by checking the paperwork itself – making sure the loan and security agreements are complete, consistent, and don’t contain clauses that contradict each other. We verify the lien in the Land Registry and review the court file to confirm the legal position is clean.
We then look at the collateral’s real-world liquidity: area and micro-location, infrastructure, social risk in the neighborhood, and anything that can speed up or slow down a sale.
Valuation is done both on paper and on site – a desktop review plus an external and internal inspection with a site visit. Because our team comes from the mortgage business, we know where mistakes usually hide and we build our checks around those weak spots.
10. If a 2008-type crisis occurred, how would your model withstand a 30-40% drop in real estate prices ?
Such a “stress scenario” has been analyzed multiple times since Indemo is a licensed investment platform. In the case of a severe drop in real estate prices (-30/40%), the relative loss on investments would be limited compared to other asset classes (~ -6%). Of course, such a drastic decline would be accompanied by broader macroeconomic challenges.
On the positive side, current conditions are very different from 2008. Average property values are approaching historic highs, and new construction isn’t keeping pace with the formation of new households.
Spain’s labor market is strong, wages are rising, and the economy is forecasted to grow, and Spain is quite far from geopolitical tensions around Russian borders and Middle East. These factors provide additional support and resilience to our investment model, even under stressed conditions.
11. The “Share Capital Security” where Indemo can take control of Tamarindo – in what specific scenarios could this be triggered ?
This security instrument can be applied if, as a business partner of the Indemo platform, we materially breach our obligations and fail to honour our commitments towards Indemo investors who have invested in discounted debts. The list of situations in which Indemo may activate this instrument is quite broad, ensuring discipline in our partnership.
It covers various cases from negligence in selecting, conducting due diligence, and listing debts on the platform, to poor servicing of listed debts, misleading settlements with investors, or misusing repaid funds for other purposes.
As a result of Indemo activating this instrument, Indemo may assume control over Tamarindo’s operations in order to remedy any default we have caused. As far as we know, no other P2P investment platform has such an instrument within its relationships with loan suppliers or originators.
Strategy and Growth
12. Spanish NPL stock is structurally declining. Are there sufficient opportunities to support Indemo’s growth over 5 years ?
Non-performing mortgage volumes in Spain total billions of euros, so there is no doubt that the supply side can support steady growth for Indemo over the coming years. On top of that, we have an exciting product roadmap.
In addition to the 1 Debt: 1 Note product launching this year and the Secondary Market following after, we plan to introduce additional real estate investment opportunities.
These will generate yield not only from discounted purchases but also through other innovative strategies. We encourage everyone to follow us closely and join the growing community of investors, as we will be gradually sharing more details about these future plans over time.
13. If Indemo wants to double its assets under management (AUM) to 30M€, do you have the operational capacity to absorb this volume while maintaining your selectivity (10% of NPLs)?
The sheer size of the NPL market ensures that we can maintain both selectivity and quality in our acquisitions. Regarding operational capacity, scaling to 30M€ AUM is a standard growth challenge, and we are prepared to expand our team or hire additional contractors as needed.
In addition, the management team on the debt origination and administration side is highly agile: its core responsibilities include debt selection as well as the supervision, control, and efficiency improvement of subcontractors – primarily partners involved in debt servicing and legal recovery processes.
Given Spain’s institutionalized debt market, there is a significant number of potential partners and counterparties. As a result, growth can be effectively managed through the gradual enhancement of contractors while keeping the internal team largely stable in size.
Social Approach and Communication
14. You want to “help the debtor” while guaranteeing 15% to investors. How do you specifically balance these sometimes contradictory objectives ?
One of the main ways we achieve this balance is at the selectivity stage – we focus on choosing properties and debts that allow us to maintain both profitability for investors and fair solutions for debtors. The recovery process focuses exclusively on the debt collateralized by real estate assets, without pursuing the unsecured portion.
This approach provides a strong basis for negotiation with debtors, allowing us to reach beneficial agreements that serve both their interests and our investors. We adhere to a conservative investment policy and model, acquiring only assets where there is a clear opportunity to negotiate and achieve the targeted profitability.
15. How do you justify to Indemo’s investors that your “social” approach with debtors doesn’t compromise their returns ?
We operate on the assumption that Indemo and our investors are aligned on a reasonable approach to returns. While everyone is motivated to achieve higher yields, every business involves trade-offs. Just as a factory might compromise quality for short-term profit would be unwise long term, we prioritize professionalism and ethical boundaries to ensure sustainable, attractive returns.
Our investment strategy targets 15% returns by maximizing capital turnover efficiency rather than solely pursuing maximum profit. Our investors understand that within our debt management and servicing strategy, the core objective is to achieve optimal efficiency in the shortest timeframe, viewing 15% return as a reasonable outcome.
Thus, “social” approach with debtors is fully compatible with this mindset, as it allows us to resolve cases efficiently while maintaining performance. We expect Indemo’s shareholders, management, and clients are aligned on this principle.
Future Vision (Bonus question)
The Spanish NPL market is becoming “very mature”. Are you considering exporting your model to other European countries ?
The Spanish discounted debt market includes both local and global institutional participants, with whom we maintain ongoing communication. As a result, we have a strong understanding of current market trends not only in the Iberian region but also across other European markets.
Our banking background has taught us that focus and expertise are essential before deploying capital in unfamiliar regions or asset classes, where returns and reputation are at risk. Some investment platforms encountered difficulties after expanding prematurely into new markets. Therefore, while we explore such opportunities, we do so with caution.
Countries such as Portugal, France, Italy, and Greece present promising debt opportunities that align with our medium-term product development strategy. We are evaluating these alternatives, and it is possible that assets from these regions may eventually be included in the Indemo portfolio.
