Risk Assessments

Hello all,

My Bank is purchasing the unguaranteed portion of few SBA loans. Normally when we purchase loans, we considered these loans ours and our customers NPI.  If there is an NPI involved with any vendor, we consider them High risk.

However, would this be considered the same. Since the seller, is the originator, servicer and it really is the owner of the loans.

Should we consider this vendor and loans as high risk.

Any comments will be very helpful.

Thanks

It probably depends on your level of exposure to the NPI of the borrower.

In some cases, this type of transaction is little more than an investment in a pool of loans that promise to return an income stream greater than the principal but could also result in a loss. 

If you have access to, use, and/or store the borrower NPI, you may want to treat the relationship more like these borrowers are your customers.

Do you include these borrowers in your customer statistics? Do they increase the number of customers or borrowers your reporting? 

Thank you very much for your input