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When a company sells
airplanes or boats with seller-provided financing and holds the notes generate
by the sale, they are creating a portfolio that can be sold on the Secondary
Market.
These portfolios are sold as a pool and are graded according to the credit
scores of the purchasers as well as the type of equipment making up the
portfolio. When selling portfolios, the creditworthiness of the holder
of the portfolio also comes into play because the seller may have to
provide warranties and representations to the funding source due to the
scrutiny of the underwriting guidelines used in issuing the
notes.
The importance of the underwriting lies in the fact the portfolio may be securitized and then sold on the Primary and Secondary Markets.
The remaining interest in the notes that the seller has can only be sold for the entire residual value of the notes, i. e., the entire remaining cash flows (purchaser’s payments).
For more information contact Capital Funding of America at 1-800-322-5985 or use this link to our CONTACT US page.
