Existing Loan Purchase

With an Existing Loan Purchase, CRF buys a loan or a portfolio of loans that are already on the books and typically have been performing for more than 12 months. Servicing can be retained or assigned to CRF. Recourse is usually not required.

Typical lender’s situation:

Funds are needed for specific projects.
Lender has limited alternatives for recapitalizing.

Key benefits:

Lender can time sales to meet cash demands.
Lender transfers risk to CRF on those loans meeting no-recourse criteria.
Premiums can be earned on loans priced above market rates.

Restrictions:

Seasoned loans (12-month minimum)
Full documentation is needed on loans.
Loans must meet CRF underwriting criteria.

Costs:

Includes servicing and transaction fees. Loan value is adjusted to current market rates, resulting in a premium or discount, depending on the interest rate of the underlying loan. Selling entire portfolio may lower costs.

Example:

Lender C would like to replenish its loan fund quickly to meet anticipated needs. Lender C has five loans worth a total of $500,000 that all have been in effect for 12 months, paying on time and as required. The interest rates of the loans are close to the market rate. CRF places the combined loan value at $485,000, based on present value, a price satisfactory to Lender C. The parties sign an agreement and Lender B receives the funds. Lender C prefers that the borrowers be unaffected by the sale. CRF pays Lender C an additional fee to continue to service the loans.