Should the seller of the loan perform due diligence with respect to the participant or assignee and vice versa?
The lender selling a participation or assignment should, in accordance with the lender’s due diligence policies and in keeping with a risk based approach, have procedures to perform due diligence with respect to the participant or assignee, and vice versa. It is understood that the parties to a loan participation or assignment typically are institutional and have pre-existing relationships such that little, if any, additional due diligence is required in this regard in the context of particular transactions.
Related Questions
- Which parties in a loan syndication should perform due diligence with respect to the borrower or lenders at the time the loan is initially syndicated?
- Should loan participants and assignees in the secondary market perform due diligence with respect to the borrower?
- Should the seller of the loan perform due diligence with respect to the participant or assignee and vice versa?
