Part II
As discussed in
Part I of this series, note sales have significantly expanded
in recent years. Part I explained the reasons behind this
expansion, including the surplus of non-performing notes,
lenders' preference for note transfers over foreclosures, and
the federal government's shift in focus from foreclosures to
note sales. Here, Part II discusses the basics of note sales
focusing on the transfer of promissory notes and management
responsibilities.
I. Introduction
Through note sales, lenders seek to disconnect from the borrower
and essentially act as if the loan never
existed.1 Consequently, the seller's goal in a
note sale is to fashion the transaction in a manner which ensures
that it will no longer be affected by the borrower's
performance. Lenders often sell notes "as-is," which
makes purchasers vulnerable to various
risks.2 Conversely, the buyer hopes to enter into
an agreement that ensures a valuable interest in property, rather
than a
