In loan participations, which bank is primarily responsible for underwriting?

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Multiple Choice

In loan participations, which bank is primarily responsible for underwriting?

Explanation:
In loan participations, the lead bank is the one that performs the underwriting. It originates the loan, conducts the credit analysis, sets the terms and covenants, and commits to fund or arrange the loan. The lead bank then sells participations to other banks, which buy portions of the loan and rely on the lead bank’s underwriting and servicing. The regulator does not underwrite, and a third party underwriter isn’t typically involved in this setup. Participating banks fund their share but do not underwrite the deal themselves.

In loan participations, the lead bank is the one that performs the underwriting. It originates the loan, conducts the credit analysis, sets the terms and covenants, and commits to fund or arrange the loan. The lead bank then sells participations to other banks, which buy portions of the loan and rely on the lead bank’s underwriting and servicing. The regulator does not underwrite, and a third party underwriter isn’t typically involved in this setup. Participating banks fund their share but do not underwrite the deal themselves.

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