Strategies for selling smaller pools of loans

Proceedings of the Conference on the Secondary Market for Community Development Loans In September 2006, the Federal Reserve hosted a conference on secondary markets for community development loans. A theme that emerged was that techniques, programs, and structures that work for large loans do not necessarily work for small ones. In this article, I briefly outline why smaller deals can be more difficult to finance, and describe two ways in which the Community Preservation Corporation (CPC) has used unrated transactions to overcome these obstacles. Finally, I suggest that a broad secondary market for small loans is more likely to grow organically from numerous small transactions, rather than by a herculean effort to create a copy of the commercial mortgage-backed securities market. I also suggest how the Federal Reserve could help speed this growth.