FDIC Publishes Advisory on Effective Credit Risk Management Practices for Purchased Loan Participations | Practical Law
The FDIC released an advisory letter cautioning financial institutions against over-reliance on lead institutions when purchasing loan participations, and reminding them of the importance of underwriting and administering loan participations in the same diligent manner as if the loans were being directly originated by the purchasing institution. The FDIC also recommends certain practices to ensure that participation lending is conducted in a safe-and-sound manner.