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Top-notch, separate credit analysis is essential in loan purchase tasks.

Top-notch, separate credit analysis is essential in loan purchase tasks.

A bank should perform research before buying loans. Research encourages a well-performing, stable loan profile with identified dangers which are in the bank’s abilities to regulate. Generally speaking, homework contains

Top-notch, separate credit analysis is very important in loan purchase tasks. A purchaser would conduct an initial (i.e., pre-purchase) credit analysis independent of the seller to confirm that the loans meet the purchaser’s standards and risk appetite to make a prudent credit decision. For instance, a bank having a well-defined procedure for assessing participations or syndicated loans could leverage its interior underwriting policies and procedures to accomplish the separate credit analysis.