A profile of nontraditional agricultural real estate lender activity in the secondary market

PurposeThis paper uses novel data from a secondary market to assess how loans from nontraditional agricultural real estate lenders (NARELs) differ from traditional sources. Over $2 billion in loans from these entities were purchased by the secondary market between 2011 and 2020, but a lack of data h...

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Bibliographic Details
Published inAgricultural finance review Vol. 82; no. 2; pp. 397 - 416
Main Authors Lyons, Greg A., Takach, Jackson
Format Journal Article
LanguageEnglish
Published Bingley Emerald Publishing Limited 01.03.2022
Emerald Group Publishing Limited
Subjects
Agricultural economics
Agricultural lending
Agriculture
Asset liability management
Captive finance
Collateral
Commercial banks
Congressional committees
Credit risk
Federal regulation
Interest rates
Landowners
Loans
Mortgage banks
Real estate
Underwriting
United States > US
Agricultural credit
Nontraditional lenders
Secondary markets
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Summary:PurposeThis paper uses novel data from a secondary market to assess how loans from nontraditional agricultural real estate lenders (NARELs) differ from traditional sources. Over $2 billion in loans from these entities were purchased by the secondary market between 2011 and 2020, but a lack of data has prevented a robust understanding of how these institutions operate.Design/methodology/approachThe authors review loans from nontraditional lenders through their lifecycle in the secondary market from application to purchase and performance.FindingsThis paper finds no observable differences between nontraditional and traditional volumes with regards to borrower credit characteristics, loan approval rates, interest margins and loan performance. It finds significant differences between loan volumes and variable rate product use.Originality/valueThis is the first paper to use internal lender data to review nontraditional agricultural real estate loans and is the first analysis of nontraditional agricultural volumes in the secondary market.
ISSN:0002-1466
2041-6326
DOI:10.1108/AFR-06-2021-0081