Good Time for Selling Scratch and Dent Loans:
Selling Scratch and Dent Loans for a loss on the secondary market is never a good thing. However, taking the loss at the right time can be a good and prudent decision but circumstances need to dictate that choice. The mortgage provider’s financial outlook obviously needs to be taken into consideration but there are also market conditions that should be part of that decision making process.
With the current market conditions in mind, Right House Capital recommends marketing all scratch and dent loans, agency fallout loans, re-performing loans, sub-performing loans and non-performing loans within the next 30 days. It is always a good exercise to find out the current market prices on any unsaleable loans. But it becomes more important if those market conditions are changing.
There are 3 factors that are driving this recommendation. First of all, the scratch and dent niche is back to running at 100% capacity from the COVID-19 Pandemic. All buyers who halted or reduced their purchasing activity are back to running at full strength. Secondly, there has been new buyers that have jumped into the whole loan trading space as companies search for new revenue streams. Last of all, the current interest rate environment is showing signs of future uncertainty. There are signs the Fed will be raising rates due to inflation concerns. If rates go up, then loans on the books at lower rates receive lower bids. Which would increase the loss for mortgage providers.
When it comes to selling Scratch and Dent Loans, Right House Capital is only recommending marketing your scratch and dent loans to see mark to market indicators and then the individual mortgage company or bank needs to decide from there. RHC can support this marketing effort. Right House has buyers for all types of loans. Whether they are agency, near miss loans, or true scratch and dent loans.
If your company/bank would like to see the best price available for any unsaleable loans, contact Andrew Zale at 502-365-5632.