question for bank smart people - Dallas Dance Music - Dallas nightlife, music, tickets, and more

kit'n · 10-24-05, 07:22 PM

why do banks buy and sell loans to other banks? this annoys me. i carefully select a bank with which to take out a loan only to find out a couple months later that it has been sold to another lender.

OMG WHY!??!?!?1

thankyou.

Edwin Watson · 10-24-05, 07:33 PM

because they sell it to eachother for a profit based on the assessed yield spread (the amount of money you are paying to finance the loan vs what they are paying to finance the loan).

calulations of what they want to keep in their portfolio, what they can keep in their portfolio, their net worth, monthly/quarterly profit margins, risk, return, etc etc. all get mixed in as well.

does that make sense?

next time, ask if they will service the loan for the life of the loan if you wanna stay with 1 place.

Satchel · 10-24-05, 08:31 PM

or just go with the best deal you can get

boo-bryant · 10-24-05, 09:00 PM

some banks may have overextended themselves and need to up their cash reserves while other banks may have to much cash and not enough investment to turn a profit...loans are assets in the eyes of banks because they generate revenue from interest...

kit'n · 10-24-05, 09:13 PM

Quote:

Originally Posted by Edwin Watson

because they sell it to eachother for a profit based on the assessed yield spread (the amount of money you are paying to finance the loan vs what they are paying to finance the loan).

calulations of what they want to keep in their portfolio, what they can keep in their portfolio, their net worth, monthly/quarterly profit margins, risk, return, etc etc. all get mixed in as well.

does that make sense?

next time, ask if they will service the loan for the life of the loan if you wanna stay with 1 place.

you lost me after because....

i kid. thanks for the info of askking for a loan for life/loan. will do next time.

bitchez.

kit'n · 10-24-05, 09:14 PM

Quote:

Originally Posted by boo-bryant

some banks may have overextended themselves and need to up their cash reserves while other banks may have to much cash and not enough investment to turn a profit...loans are assets in the eyes of banks because they generate revenue from interest...

that makes sense. still dont like it tho.

Edwin Watson · 10-25-05, 12:02 PM

Quote:

Originally Posted by kit'n

that makes sense. still dont like it tho.

me either, that is why i always ask....

also, ask if they sell it on the secondary market, but continue to service it.... or if they hold it....

10-24-05, 07:22 PM	#1 (permalink)
kit'n Squishy Master Join Date: Dec 2001 Location: in the beehive. Posts: 3,533	question for bank smart people why do banks buy and sell loans to other banks? this annoys me. i carefully select a bank with which to take out a loan only to find out a couple months later that it has been sold to another lender. OMG WHY!??!?!?1 thankyou.

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