Anyone know what "loan acquisition business" is?

[Phokus]

I'm getting interviewed for an internship and i'm trying to find out more information about the company i'm applying for. The company is capital crossing bank http://capitalcrossing.com/default.asp and they say they're in the 'loan acquisition business'. WTF is that?!? Im trying to look all over google and i can't find out a good definition of what it is.

Is this like refinancing of loans or something?

 

[KLin]

sounds like they purchase loans for cents on the dollar, and go and break the loanee's legs if they don't pay up.

 

[PlatinumGold]

they are actually a branch of the mafia and you are interviewing to become a goombah.

 

[Phokus]

Originally posted by: KLin
sounds like they purchase loans for cents on the dollar, and go and break the loanee's legs if they don't pay up.

So if company A owes company B $1000, the bank purchases that loan from company B and now the bank is the loaner to company A?

 

[Argo]

They buy out loans from other banks and accumulate loan packages. In other words, let's say you have loan from bank A for 10 years, at 5%. Bank B buys out that loan from bank A. As the result, Bank A gets smaller income but immediately, so it can go ahead and give more loans. Bank B, buys a bunch of those loans and over the long term, make pretty decent income. Sorta like Fanny Mae foundation.

 

[dullard]

My guess:

There is a federal law (stemming much from the bank failure in the great depression) that caps the amount of loans a bank can have. The loan cap is a multiple of the amount the bank has in savings. Once a bank reaches that cap, they cannot legally give more loans. Thus the bank's income is capped.

How do banks get around this income cap? They sign up loans with customers, then sell the loan to other groups (keeping a small portion of the interest for themselves). Thus they turn over the loans, the more you sign up with customers and the more you sell to other companies, the more the bank earns.

Someone has to aquire these loans. My guess is that is what a loan acquisition business is. I may be wrong.

 

[DaveSimmons]

google "kneecapping" "vigorish" and "capisce"

 

[ActuaryTm]

Loan acquisition is essentially the purchasing of a debt at a value less than or equal to (suppose it could be more as well, but that would make little sense) the face value of said debt. In other words, buying up a promise to pay. The debts vary across a wide spectrum, from personal to commercial debt.

 

[Phokus]

Ah, ok thanks guys, that clears up a lot!

 

[HardcoreRobot]

you might be calling delinquent people on the phone saying where is so and so credit cards money

 

[Phokus]

Originally posted by: HardcoreRobot
you might be calling delinquent people on the phone saying where is so and so credit cards money

Nah, it's an accounting position, they say i'll be working with general ledger/reconcilliation of statements type stuff.

 

[Vic]

Originally posted by: Argo
They buy out loans from other banks and accumulate loan packages. In other words, let's say you have loan from bank A for 10 years, at 5%. Bank B buys out that loan from bank A. As the result, Bank A gets smaller income but immediately, so it can go ahead and give more loans. Bank B, buys a bunch of those loans and over the long term, make pretty decent income. Sorta like Fanny Mae foundation.

More or less correct. And this is not mafia-related or bad debts being sold for pennies on the dollar. Loans on the secondary market sell for more or less principal balance, with some adjustment for expected future income and risk.

 

[Vic]

Originally posted by: ActuaryTm
Loan acquisition is essentially the purchasing of a debt at a value less than or equal to (suppose it could be more as well, but that would make little sense) the face value of said debt. In other words, buying up a promise to pay. The debts vary across a wide spectrum, from personal to commercial debt.

Why would more make little sense when there is the expectation of future revenue from finance charges (interest)? Quite the contrary, more makes a lot of sense, happens in the lending industry every day, and is usually referred to as "rebate" or "yield spread premium".

 

[BooGiMaN]

its a front for money laundering prostitution and assless chaps manufacturing by blind and mute midgets in a 3rd world country.....

damn i wish you luck but i hope you dont get put in the assless chaps division...

 

[3chordcharlie]

There's two kinds: banks sell things like mortgages sometimes to free up capital for more loans.

Companies also sell bad debt at pennies on the dollar, to speculators hoping to collect on a percentage of the debt. Most of the time these debts are so old that they cna't even be legally enforced, but it doesn't stop the companies form using threatening tactics to try to make money.

One of these practices is perfectly normal. It's hard to believe the second could be considered a legitimate business.