Why do banks sell off performing loans?

Why do banks sell off performing loans?

There are many reasons banks sell performing loans. When a note becomes non-performing, the bank must hold large cash reserves to service the note. Banks often sell their performing loans to generate the reserves quickly to service their non-performing loans. Another reason is that most of the interest on a loan is paid on the front-end, therefore the front-end is the most profitable for a lender. That is why a lender can sell a performing loan before it is fully paid off and still make a profit. By selling a performing loan, a bank can generate cash to make loans without waiting for more deposits from customers.

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