Structuring Participation Agreements in Commercial Finance: Lender Due Diligence | Strafford
Strategies for Lead Lenders and Participants to Minimize and Manage Risk; FDIC Guidance
| WebinarOctober 10, 2024 1:00pm-2:30pm EDT, 10:00am-11:30am PDT
WHEN:
October 10, 2024 1:00pm-2:30pm EDT, 10:00am-11:30am PDT
Jim Schulwolf will present: Structuring Participation Agreements in Commercial Finance: Lender Due Diligence.
This CLE course will examine current trends in the loan participation market, critical provisions of participation agreements, and best practices in due diligence for participating lenders. The panel will also discuss FDIC regulatory guidance regarding risk management for purchased loans and purchased loan participations.
Description
Banks and other lenders have historically purchased loan participations to achieve growth, employ funds, diversify credit risk, and deploy liquidity. Litigation between originating and participating banks highlights the critical nature of the loan participation agreement in protecting the interest of all parties to the transaction.
Primary provisions of the participation agreement include, among other things, lender voting and other rights and obligations of each party to the participation, seller representations and warranties, transfer provisions, and reclaiming or buying back the transferred participation. Getting these terms right and understanding the necessary diligence reviews are crucial for successful participation.
The FDIC, in its Financial Institution Letter 492015, sets out the risks of loan participations originated by non-bank lenders and guides lender due diligence in managing risks associated with these transactions. The agency's concern is that banks rely on these alternative lenders to underwrite the loan origination without proper review and analysis of the underwriting models of these alternative lenders.
Listen as our authoritative panel of finance practitioners looks at the current state of the loan participation market and discusses best practices for drafting or reviewing high priority provisions of participation agreements and sufficient due diligence for lenders. The panel will also discuss the FDIC guidance on risk management for purchased loans and purchased loan participations, as well as some recent case studies related to loan participations.
For more information about this event, please visit the event site here.