To help credit unions interested in selling and buying loans, Catalyst Corporate Federal Credit Union said it is planning to launch an agent loan participation program.
Jeff Hamilton, vice president of member credit at Catalyst Corporate in Plano, Texas, said the loan participation program will connect credit unions that want to sell loans with credit unions that want to purchase an interest in a loan pool.
‘This will help both parties in managing their balance sheets. Sellers create liquidity, while buyers have the potential to earn higher yields,” Hamilton said.
While Catalyst Corporate will serve as an agent providing detailed review packages to prospective buyers about the pools for sale, Hamilton said, buyers must still perform their own due diligence and make independent purchasing decisions. Catalyst Corporate said it will not guarantee loan performance.
The corporate credit union said it will perform certain monthly remittance and reporting functions, such as the generation of detailed monthly reports to buyers and the transfer of funds to buyers’ accounts.
Buyers and sellers are not required to be Catalyst members but members will be given first priority on loan participation transactions, Hamilton said.
Over the next few weeks, more information about loan pools for sale will be posted on Catalyst Corporate website as it becomes available.
Hamilton, who recently joined the corporate, replaces Pam Hensley, who retired in December 2012 after 19 years of service. In his position, Hamilton oversees Catalyst Corporate’s lending activities with member credit unions and serves on the corporate’s member credit committee.