In the sale of a loan to an investor/buyer, there are fewer agency costs associated with loan participation contracts than with loan assignment contracts.

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Loan participation contracts typically involve more agency costs than loan assignment contracts because in loan participations, the originating lender retains some control and responsibilities, leading to potential conflicts of interest and monitoring costs. In contrast, loan assignments transfer all rights and obligations to the new lender, reducing these agency costs.

In the Sale of a Loan to an Investor/buyer, There