If the lender wants to take collateral not at the time of lending, but later than that, he should not do so except as instructed by a court.
A person should always distance himself from cosigning and from collateral as much as possible.
This latter se’if is not intuitive. The basic idea is that it is better to operate on trust, even though here we mean trust in a third party, the witnesses on the contract recommended back in se’if 3. In that se’if he tells the lender not to just loan without evidence, since that is too tempting of a scenario, but to instead use a collateral or even better, a contract. Here we see collateral being described as the inferior choice in stronger terms.
This notion that lending should be about trust ties back to my recurring theme when we discussed interest. I argued that interest wasn’t immoral; because if it were, accepting it from a non-Jew would also be prohibited. Instead, it’s unbrotherly to charge another Jew interest. And in fact, the verse describes the borrower as “akhikha” (your brother) in that prohibition. The notion that lending money reflects the fraternal bond of all Jews would also explain the prioritization here.