Can an individual buy a loan from a bank?

[Stoid]

Can an individual person go to a bank and say, hey, I'll buy that crappy home loan from you, and would the bank consider selling it? They sell them to institutions all the time.

Does anyone know?

[parzival]

There was a This American Life story about two guys who created a business doing just that sort of thing - they took over mortgages from banks - they'd buy them at a fairly low price and then re-negotiate with the people living in the house. It seemed they mostly worked on places where most people could manage to pay, once the reduced price of their house was taken into account. Obviously this wouldn't help the bank if they did it too much, but it's less 'troubled assets' on the books for them and an okay deal for the folks in the house.

I imagine there'd simply be a number of legal requirements for someone to set themselves up as a mortgage company in particular, at least in most cases. I kind of wonder if you could buy some of other types of assets that banks had.

[parzival]

Checking it again, it sounds like the guys in the story are actually buying the loans from someone else - a 'vulture fund' that gets it from the banks and sells it off to them at a profit. But they're the ones who then go out and renegotiate with the people in the house. But if they can buy it from a fund, I assume they could buy it from a bank - maybe. Probably the bank wants to get rid of a whole lot of these loans at once.

Edit - adding a link to the episode : #375 - Bad Bank.