What are the two basic types of loan sale contracts or mechanisms by which loans can be transferred between seller and buyer?
A)participations and assignments
B)participations and originations
C)syndications and originations
D)transfers and assignments

Question

Quizplus · Accepted Answer

The two basic types of loan sale contracts or mechanisms are participations and assignments. Participations involve the buyer purchasing a percentage of the loan and sharing in the risk and reward, while the seller remains the primary lender. Assignments involve the seller transferring the entire loan to the buyer, who becomes the primary lender. Option B is incorrect as originations refer to the process of creating a new loan, not transferring an existing one. Option C is incorrect as syndications involve multiple lenders joining together to provide financing, not the transfer of an existing loan. Option D is incorrect as transfers and assignments are essentially the same thing, with assignments being a specific type of transfer.

What Are the Two Basic Types of Loan Sale Contracts