European Whole Loan Sales Market

Summaries

Get more information from here:

http://www2.standardandpoors.com/spf/pdf/fixedincome/060605_whole_loan_salesSNAP.pdf

In accounting, whole loan sales do not have to be marked to market. (higher asset/liability flexibility)

In whole loan sales, the originator sells a pool of loans directly to other institution without securitization. The originator can then remove the loan from their balance sheet.

Compare with US, European Market:

1)      Funded mostly by retail deposits

2)      Lower mortgage-debt to GDP

3)      Lower house ownership

4)      Lacks of consistent scoring system (critical to the development of whole loan sales market)

Loan servicing is important so that investors without the expertise can join.

AVM – Automatic Valuation Models