An arrangement pursuant to which a real estate loan originator (Originator) agrees to originate loans and sell these on to a funder (bank, financial institution or otherwise)(Purchaser)

This can either be structured as

• • a “dry-funded” facility whereby the Originator uses its own capital to originate the loans and then once originated (can be on the same day or in weekly or monthly batches) sells the loans to the Purchaser; or
  • a “wet-funded” facility whereby the Purchaser lends money to the Originator which it uses to originate loans

The Originator enters into a receivables sale agreement pursuant to which it sells and assigns its rights and beneficial title to the real estate loans (the Receivables) to the Purchaser.

The underlying borrowers under the real estate loans are not notified of the sale/assignment and therefore only equitable title passes whereas legal title remains with the Originator.

The Originator enters into a Servicing Agreement with the Purchaser pursuant to which it will continue to service the Receivables as it did prior to the sale of its beneficial title.

Collections in respect of the loans which are sold to the Purchaser are paid into a Collections Account which is usually subject to a trust pursuant to which the Purchaser is a beneficiary.

Loans which can be sold to the Purchaser have to comply with a set of pre-agreed Eligibility Criteria