Though regulators have cracked down upon the selling of consumer loans by banks to other entities, the sale of commercial loans to other businesses has continued. For better or worse, there is no shortage of bad loans that will need to be dealt with by the banks.
The Consumer Financial Protection Bureau does not appear interested in policing commercial debt collections to any greater degree. Opinions as to why this is could vary, but it seems that the opinion is that commercial borrowers are more sophisticated and better understand their legal responsibilities. Also, the CFPB has already much more upon its plate and may not wish to engage itself in additional activities policing commercial debt collections.
It is significant the amount of money that is involved when it comes to commercial loans. The sale of such loans can be financially lucrative for California banks if the collections are done properly. One sale of what are referred to as non-performing residential assets went for as much as $128 million. And one particular settlement on a commercial debt was made with a real estate developer for $44 million.
Obviously with this kind of money at stake commercial debt collections should not entrusted to inexperienced firms. Though a number of collection agencies may provide empty promises concerning the types of services they can perform, collecting on these types of debts requires individuals that understand state and federal collection laws. Commercial collection attorneys can provide services, advice and consultation that will prevent commercial lending institutions from getting entangled in needless litigation.
Source: American Banker, “Commercial Loan Sales Continue Despite Consumer Debt Flap,” Andy Peters, Aug. 7, 2013