What is the whole loan?
The full loan term is used on a secondary mortgage market for a loan discussion that is sold in its entirety than to be associated with other mortgages. When the buyer buys the entire loan, the buyer takes over the full obligation associated with the loan rather than shares the risks with other investors. Of course, the buyer also receives all potential profits related to the loan, including late fees, interest payments, etc. The products are packed on the secondary mortgage market with respect to different types of investment styles, so the bank is likely to find those who will be ready for shopping. Banks, in turn, use the money they receive, by selling loans to increase their capital, which can be used to provide multiple loans and engage in other financial activities. The debtor who owes money for a loan usually learns about the sale after this.
In the case of the entire loan, the seller usually buys a group of loans wrapped together, rather than just one. In some cases the buyers will beto conclude a contract with the seller to administer the Seller's loan. The buyer pays a fee for this service and does not have to worry about the collection of loans and the treatment of other administrative tasks related to the entire loans it has. Sellers will receive money from the sale and can enjoy a permanent profit from the loan if it is in operation.
The risk of investment in the whole loan varies depending on the credit rating associated with loan, economic climate and other factors. Investors who buy whole loans usually try to distribute their risk so that some investment failure is not catastrophic for the entire investor's portfolio.
On the other hand, go through securities and other types of secondary mortgage products or a group of loans that people can buy. Investors do not assume individual loans in the group in the same way as with the entire loan and their risk is placed instead. Lenders trying to sell loans with a combination of creditCH rating, they can use such products to create mixed quality packages. Investors would not buy loans with poor rating separately, but could be willing to take the risk if the Fund also includes loans with high credit rating.