How to Buy Loans and Sell Loans
In these stressful economic times, many lenders and their investors are looking at acquiring existing loans, or are considering selling loans they currently own.
There are many reasons loans are bought and sold. Often times the reason has more to do with the individual situation of the seller than of the note itself, or the condition of the borrower. The most common reasons loans are sold are for liquidity, dissolution of a partnership, change of financial circumstance, deterioration of the underlying collateral, or the default of a borrower 폰테크.
There are many opportunities for buyers and brokers to acquire loans at a discount to the principal balance which may result in substantially better yields than originating a new loan. Buyers and their brokers should consider several factors when purchasing a note, including the strength and payment history of the borrower, the quality of the underlying collateral securing the loan, and the strength of the guarantors, if any.
Loans can be purchased individually or in pools. Although the legal agreement differs for each, the basic process flow is the same whether you are buying or selling one or more loans. For simplicity purposes, I’ll refer to the transaction as a loan asset transaction. The term “loan sale” and “note sale” will also be used interchangeably throughout.
The basics of the purchase and sale process are relatively straight forward, but like any transaction, the devil is in the details. Following are eight steps involved in the purchase and sale of loan assets followed by a discussion of the most common pitfalls to avoid throughout the transaction.