Industry Standards for Loan Participation & Litigation
Loan participation and litigation can be very confusing topics for anyone who doesn’t spend most of their days dealing with just that. Thankfully, the nationwide industry standard practices for these loan participations are the same regardless of the type of financial institutions involved, be it banks, credit unions, savings and loans, mortgage companies, or asset-based lenders.
One of the biggest questions that usually comes up when an attorney requires expert witness services for a loan participation case is who is responsible for what is in a loan participation arrangement. These participations vary greatly and are controlled by the documents to which all parties agree and sign. These are typically fill-in-the-blank documents where the details of the transaction are cited.
While the originating lender is responsible for due diligence, participating lenders should still perform their own due diligence to ensure the investment they make is agreeable. All loan participants should make themselves aware of any irregularities or unusual factors in the loan and bring them to the attention of the lead lender to discuss in more detail.
Loan participation and litigation can be very confusing topics for many people. Thankfully, if you work with a financial expert witness, you are able to have this complicated information broken down into layperson’s terms, which will make it easier for you to make your case.