Why Would Banks Want to Sell Their Notes?

A buddy from the Eau Claire real estate investors association asking “Why would a bank want to sell their loans to you?”

Its really a simple answer, and its best to watch the video to get the best explanation. Basically a bank is in the business of loaning money and profiting on the interest on the loans. When a bank receives money from a person or company, they can loan eight to ten times that amount in loans to someone else. This is called fractional reserve banking.

When a borrower is no longer paying on their loans, the bank isn’t receiving any money and it makes sense to sell the loan at thirty to fifty sense on the dollar to make some of the money back. Banks see this as velocity of money. Banks sell their pools of assets to large hedge funds, and then the hedge funds sell the loans to us.

I hope this gives you a better idea of why banks would want to sell their defaulted debt to investors.

To your success!

Matthew Hell

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