Dictionary of Banking Terms: loan sales
loan sales
sale of loans or loan participations to an investor without the knowledge of the borrower. Loans, if competitively priced, may sell at par or at a slight premium. If originated at rates below current market rates, loan participations are typically sold at a discount from face value. A bank selling participations in 8% fixed rate loans will have to sell them off at a discount if the competitive market rate on similar loans is 10%.
