Answer: The guaranteed portion of the loan is sold in the secondary market. The unguaranteed portion is retained by the lender. The loan must be fully funded before it can be sold in the secondary market.
Answer: ACC has established relationships with a number of secondary market pool assemblers who bid on loans placed for sale. The first step is to solicit bids from the pool assemblers. Once all bids are received, ACC determines the highest bid and whether it is sufficient to proceed with the sale. Assuming the bid is sufficient, ACC accepts the bid. At this point, SBA Form 1086 is completed and submitted to the pool assembler. The executed document is then submitted to Colson Services, the fiscal transfer agent, who settles the sale of the loan. Once the loan has settled, funds are wired to purchase the guaranteed principal and accrued interest sold. The premium dollars are included in the wired funds.
Answer: ACC is paid an annual servicing fee of 1% (based on the outstanding principal balance of the sold portion) to service the loan over its lifetime.
Answer: Once the loan is fully funded, it can be put out for bids. Once a bid is accepted by ACC, the loan usually settles with funds wired in 2-3 weeks.
Answer: The premium received is driven by markets conditions. It could range from 1% up to 10%. The upfront premium is a one-time premium that will be split pro-rata between ACC and its participant.
Answer: The premium received by the selling lender (and participant) would be refunded if: 1. The loan prepays within 90 days of the sale date, or 2. If the borrower does not make the first three payments due after the sale.
Answer: ACC, as the servicer of the loan, will receive 1% a year servicing fee for the life of the loan (based on the outstanding sold principal balance).
Answer: It does not. Since the loan was sold in the secondary market, the SBA on-going basis points fee is no longer due by the lender. Also, since ACC is being paid to service the entire loan, ACC will not charge the bank participant any fees on the sold or retained portion of the loan. ACC's normal servicing fee of 80 BP is waived.
Answer: The lender, at the request of the Borrower, may approve one payment deferral for up to three consecutive months, without obtaining permission from the registered holder (investor). No other modifications to the promissory note are allowed, without written investor permission. Other servicing actions, such as release of collateral, etc. can be facilitated if deemed to be appropriate by ACC.
Answer: According to the secondary market rules, once the borrower is past due beyond 60 days, the loan is to be bought out of the secondary market. In reality, the lender likely will not have to take action until the loan is 90 days past due. At this point, the lender and participant will be required to repurchase the loan on a pro-rata basis (principal and accrued interest) from the secondary market.
Answer: The next action is up to ACC and participant. The loan could be brought current, modified in some fashion or the liquidation process could be put into motion.