A loan sale is when a loan holder sells the loan to interested parties, often generating immediate cash for the institution. In some cases, a government-sponsored financial institution conducts a loan sale when a bank fails. Borrowers are usually notified once the loan sale is complete, and the sale does not require borrowers to be notified in advance. The Internet has made it possible to conduct sales in a virtual environment.
A loan sale is a transaction by a loan holder in which the loan is offered for sale to interested parties. Often a bank or similar type of institution will use this approach to generate immediate cash for the institution. As part of the transaction, the seller relinquishes all or part of the cash flow generated by the loan to the new owner, a move that often makes it possible for the seller to mark the loan as paid off and remove any details about the loan from its monthly balance. .
In some nations, a government-sponsored financial institution conducts a loan sale when a bank fails. Any loans still held by the failing bank are sold to other banks or institutions as part of the process of liquidating the failing bank’s debts. When this occurs, borrowers generally do not see any interruption in the service of the loans. What is likely to change is the shipping address for loan payments, as well as online access to the account. In most cases, borrowers are notified once the loan sale is complete and the loan is taken over by a new owner, and provided with new instructions for bidding for loan payments.
The sale of the loan does not normally require borrowers to be notified in advance that a sale is pending. In most nations, participation in the sale is limited to qualified institutions only. This means that the institutions that are invited to participate must be authorized by the entity making the sale. It is not unusual for one of the requirements to participate is to agree to continue servicing the loans being purchased, and not to call the loans early.
Whereas in the past a loan sale was generally conducted in a physical location with representatives of the prospective buyers directly involved in the sale, the Internet has made it possible to conduct sales in a virtual environment. Banks can choose to sell loans through their own websites or use a partner to manage the details of the loan sale. In either case, qualified prospective buyers can obtain login credentials, review loans currently being offered for sale, and initiate a purchase when they are ready to do so. With the online version of a loan sale, it is possible to initiate a transfer of funds to the original owner, complete the transaction, and be in control of the loan in as little as 24 hours.
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