Why Do Banks Sell Their Notes?
The primary reason that banks sell bad notes is to mitigate any risk that implicates the bank. Selling distressed paper takes the weight off of their shoulders, improves their investor relations and alleviates an aspect of unpredictability. Banks are most definitely not in the business of real estate management, nor do they wish to be.
Bottom line, selling notes is vital to the successful operation of a bank. The overhead costs of surveying and maintaining properties is too costly and not beneficial for them while regulations by the federal government drive foreclosure costs sky high for the bank.
For a deeper understanding of why banks sell their notes, check out this short video clip!