Banks own Notes to make money. But if interest rates are low, or if lenders aren’t paying on time, or if they just don’t want certain Notes/assets on their balance sheet…they may consider owning the Notes more trouble than they’re worth. So they might sell.
Interest rates are set by market forces beyond the lender’s control. But they do have some control over payments.
Typically, a bank works with a loan servicing partner to collect payments from borrowers (the people living in the homes). And if the servicer shows late payments or no payments for a set of Notes, the bank might sell the Notes on the secondary market (to other lenders or investors).
Each Note = capital. And if that capital isn’t doing its job—making the bank more money—than it might be worth selling, even at a discount, so that capital can be reallocated in a way that WILL make money. Every business, even street vendors, do this kinda reshuffling all the time.
And that’s one big reason a bank might sell a real estate Note.
Keep checking in at fallerfinancial.com/note-resources to learn more and get smarter.
Call 844-433-6683 or email firstname.lastname@example.org to sell your mortgage Note. Request a consultation at fallerfinancial.com/contact.
Photo by Daniel Angele on Unsplash