Understand what buyers and sellers should be looking for when considering loan participation transactions.
Buying and selling loan participation can be a very valuable investment asset in any credit union loan portfolio. However, loan participation transactions do attract regulatory attention since they can get complex. It’s important for all parties involved to have good and effective due diligence practices and procedures to be ready for regulatory inquiries, but also to better ensure a robust lending program. This presentation will focus on what buyers and sellers should be looking for when considering loan participation transactions to better understand these types of transactions - from knowing the parties involved to contract negotiations to monitoring loan performance and other general best practices.
Learning Objectives
- You will be able to review general due diligence considerations.
- You will be able to discuss general loan participation due diligence considerations for sellers.
- You will be able to identify the parties involved.
- You will be able to explain contract negotiations.
Agenda
General Due Diligence Considerations
- Clear Communications With Internal Stakeholders
- Practicing What You Preach
- Role of the Board
General Loan Participation Due Diligence Considerations for Sellers
- How Will the Seller Make Loans Available for Participation to Buyers?
Loan Participation Due Diligence Requirements for Buyers
- Loan Is One That the Buyer Is Authorized to Make
- Borrower Is a Member of a Participating Credit Union in the Deal
- Purchase Complies With the Buyer’s Policy on Loan Participation Purchases
Knowing the Parties Involved
- Party Lending Experience
- Legal Issues?
- Financial Stability of Parties Involved
- Role of Third Parties
Contract Negotiations
- 701.22(D)(4) Requirements
- Reporting Obligations
- Remittances
- Loan Modifications/Exit Strategy
- True Sale
Monitoring Loan Performance
- Internal Transition From Due Diligence to Monitoring
- Communications Between the Parties
- Evaluating Loan/Seller/Servicer Performance
- Internal Assessment of Loan Participation Due Diligence
Speakers
Michael Heller
Messick Lauer & Smith P.C.
- Attorney at Messick Lauer & Smith, P.C.
- Primary focus is providing guidance and expertise on contract terms for vendor contracts and agreements.
- Begins with an understanding of the client’s business objectives and works with the client to ensure appropriate mitigation of risk to accomplish those business goals
- Assists clients with CUSO formation and lending services
- Has several relevant publications
- J.D. Degree, Mitchell Hamline School of Law
Who Should Attend
This live webinar is designed for attorneys, presidents, vice presidents, branch managers, loan officers, loan department personnel, credit and collection managers, controllers, accountants, and real estate professionals.
