How to Evaluate Loan Participations in a Seller’s Market
As of January 31, 2021 more than 1,700 credit unions list balances from purchased participations and over 850 Credit Unions list outstanding sold participations on their balance sheets. It may be a seller’s market currently, but there are still opportunities for both buyers and sellers to thrive.
Why Do Sellers Sell?
Even in an environment where institutions are challenged to grow loans, there are many reasons that a credit union may choose to sell loans. The most common include: maintaining loan origination consistency, reducing risk (interest rate, credit, concentration and regulatory limit to single borrower), increasin...