Lead Lender | Propertylogy

Lead Lender

By on November 21, 2018

A lead lender is a lender that originates a loan and retains ownership of it, while selling a portion of it to financial institutions.

Lenders do this for the purpose of reducing their exposure to risks.

At the same time, institutional investors who are also known as participants, are attracted to these loans as investment assets.

In such relationships, the original lender remains the owner and retains the control of the relationship with borrowers.

At times, the lender can also hold a minority interest in the loans but continue to be the leader.

Many borrowers were not aware that the corporations who own their mortgages were not the original lenders they borrowed from during the financial crisis of 2008. And the question of whether such reselling of loans are an ethical practice even though they are legal.

Being a lead lender can enable lenders to offer better peace of mind to consumers by remaining the lender, and reduce their exposure while improving liquidity at the same time.

However, there are no obvious benefits to the consumer.

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