Buying Bank Loans: Getting More Than You Paid For

Law360, New York (September 11, 2009, 12:09 PM EDT) -- When the Federal Deposit Insurance Corporation determines that a bank is insolvent, it will sometimes take over that bank to ensure that the deposits are secure.

One way the FDIC protects these deposits is by selling off, often at a discount, the loans that the bank owns.

This leads to the question: If a debtor defaults on one of these loans, can the purchaser of the loan recover its full value or is the purchaser’s recovery limited to the amount it paid?

The Question

Consider the...
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