Whole loan sale
A whole loan sale is the sale of an entire loan, the note and the mortgage or deed of trust securing it, to a buyer who becomes the owner of the full balance and its future payments.
How a whole loan sale works
The seller endorses the promissory note to the buyer and records an assignment of the mortgage or deed of trust. The buyer pays a price, often stated as a percentage of the unpaid principal balance (par, a premium or a discount), and from then on owns the loan. Sales can be one loan at a time or a pool. The Office of the Comptroller of the Currency’s mortgage banking handbook describes the two common patterns: flow sales, where new loans are sold one at a time or in small groups, and bulk sales of a portfolio in one transaction.
The sale can be servicing retained, where the seller keeps collecting payments for a fee, or servicing released, where servicing transfers to the buyer.
Why it matters to a private lender
A whole loan sale returns your capital so you can lend again, and moves the credit risk to the buyer, subject to the representations and warranties in the purchase agreement. Because the buyer owns the loan after a post-closing sale, it usually takes the future interest; your earnings come from the points you charged, any premium in the price and any servicing fee you keep.
Example
Hypothetical. A lender funds a $400,000 bridge loan, holds it for a month and sells it at par with servicing retained. It gets $400,000 back, keeps the 2 points it charged at closing and earns a servicing fee while the loan is outstanding.
For more, read what a whole loan sale is in private lending.
Where Lender Capital fits
Lender Capital places first-lien, business-purpose real estate loans with capital partners. You apply once, then submit each loan with the full file. We send it only to capital partners whose criteria it fits, one partner funds the whole loan at closing and it is assigned to them. You keep your points (less the placement fee), earn the spread above the partner’s rate and service the loan. You pay a placement fee only when a loan funds.
Lender Capital is a business-to-business platform. This page is general information, not legal, tax or securities advice. Terms of warehouse lines and other funding sources vary by provider; confirm them with each provider and your counsel.