Financial Expert Witness Services Can Clarify Loan Participation Contracts
Selling off part of a loan to another lender is a standard practice within the banking industry, with most transactions originating for practical financial reasons. Lead lenders can sell a portion of the original loan to other lenders while continuing to service the loan. They are then paid a fee for providing the service. There are nationwide industry-standard practices for loan participation, no matter what the financial institution.
Benefitting Both Sides
In addition to benefitting the originating lender, in some cases, the loan participation purchasers benefit as well. Lenders may require financial expert witness services if a participation loan comes under dispute. Several reasons exist why a lender may sell off participation in a loan, from increasing profits by earning the service fee to accommodating a good borrower.
Agree to Fair Terms
Establishing loan participation arrangements vary greatly, and both parties must agree to the terms. Usually, the controlling document is a Loan Participation Agreement with an accompanying participation certificate, or in some cases, just the participation certificate. These are often fill-in-the-blank documents that cite the details of the transaction.