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Loan Sales Explained in 60 Seconds

Loan Sales Explained in 60 Seconds
Photo by Mike Cohen | Unsplash

As the world comes out of the COVID-19 pandemic, European banks are preparing to sell off delinquent or troublesome debt, known as loan sales, to “vulture funds.” If you’re a mortgage holder in Europe, it’s important to understand what loan sales are and how they may affect you. In this article, we’ll explain the basics of loan sales and offer tips on how to protect yourself.

What Are Loan Sales?

Loan sales are transactions in which banks sell off their loans, typically to other financial institutions or investors. These loans may include mortgages, personal loans, or business loans. The banks sell these loans to reduce their risk and to free up capital for other purposes.

Why Do Banks Sell Loans?

Banks sell loans for a variety of reasons. One reason is to reduce their risk. When banks lend money, they take on the risk that the borrower will not repay the loan. By selling loans, banks can transfer this risk to other parties. Banks may also sell loans to free up capital for other purposes, such as making new loans or investing in other areas of the business.

What Are Vulture Funds?

Vulture funds are investors who specialize in buying distressed debt at a discount. They are called “vulture” funds because they swoop in to buy debt when it’s in trouble, hoping to make a profit by turning it around. Vulture funds may be more aggressive than banks in their efforts to collect on delinquent debt. They may be more willing to take legal action and may be less patient in waiting for borrowers to repay their debts.

How Loan Sales May Affect You

If your loan is sold to a vulture fund, you may face some changes to your loan terms or payment schedule. Vulture funds are known for being aggressive in their collection efforts, so you may receive more frequent calls or letters demanding payment. If you are having trouble making your loan payments, it’s important to communicate with the new lender and try to work out a repayment plan.

How to Protect Yourself

If you are concerned about loan sales, there are steps you can take to protect yourself. First, be aware of your loan terms and payment schedule. If you are having trouble making your payments, contact your lender as soon as possible to discuss your options. Second, be cautious of any unsolicited offers to buy your loan. These offers may be from vulture funds looking to profit from your financial difficulties. Finally, consider working with a financial advisor or debt counselor to create a plan for managing your debts.


Loan sales can be a complex and confusing process, but they are an important part of the financial industry. If you’re a mortgage holder in Europe, it’s important to be aware of loan sales and how they may affect you. By understanding the basics of loan sales and taking steps to protect yourself, you can minimize the impact of loan sales on your finances. If you need help navigating the loan sales process, consider working with a professional who can guide you through the process.

Additional Resources

To keep learning and advancing your career, we highly recommend these additional resources:

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What is a Hedge Fund? A Complete Guide to Understanding Hedge Funds

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