A loan participation is an agreement under which lenders—known as lead banks—originate loans to borrowers before selling portions of these loans to other financial institutions—known as participants. These institutions can include banks, credit unions, investors, asset-based lenders, mortgage companies, and more. The best practices for loan participation are the same across the country, regardless of the financial institution involved.
When these agreements start to deteriorate and litigation is required, the best strategy for solving any dispute or emerging problem is to hire a professional with experience in providing banking-related expert witness services. The majority of loan participations are aboveboard, legitimate transactions established for practical financial purposes. However, not all participations are straightforward. Occasionally, certain financial institutions choose to participate in more creative and deceitful financing strategies. In these cases, the lead bank and the participant can find themselves entangled in expensive and time-consuming litigation against each other.
An expert witness can support these parties and their attorneys by explaining every facet of loan participation and related litigation. This includes information about why lenders choose to sell loan participation, the responsibilities of all parties involved in a loan participation agreement, matters of due diligence, the intricacies of lending, and so much more.