Due Diligence and Ongoing Monitoring

This message was posted by a user wishing to remain anonymous

​​Hello,

My Credit Union will commence loan participation business. One of the elements of the loan participation is due diligence we need to conduct on our potential partners. This is not a typical vendor review and I am trying to gather as much information as possible. Can anyone share their experience and knowledge regarding Due Diligence and Risk Assessment of loan participation partners? Do you have any checklist, risk assessment, questionnaire, guide or anything that would help us start with the program.

Thank you,

This message was posted by a user wishing to remain anonymous

Found while researching a similar question a few months back:
"Entities that put money into an organization are not vendors, they are investors. Investors are out of scope for inclusion in the Third Party Inventory (Exempt), which includes loan purchasers/loan participants/loan sellers.  Loan Servicers will be included as vendors."
Original Message:
Sent: 03-12-2021 09:32 AM
From: Anonymous Member
Subject: Loan Participation

This message was posted by a user wishing to remain anonymous

​​Hello,

My Credit Union will commence loan participation business. One of the elements of the loan participation is due diligence we need to conduct on our potential partners. This is not a typical vendor review and I am trying to gather as much information as possible. Can anyone share their experience and knowledge regarding Due Diligence and Risk Assessment of loan participation partners? Do you have any checklist, risk assessment, questionnaire, guide or anything that would help us start with the program.

Thank you,

You are correct that this is not a typical vendor review, as the due diligence required for partnerships is significantly more extensive and considers other risk areas not commonly examined in vendor due diligence. Unfortunately we don't have checklists or specific questionnaire appropriate for this scenario. However when doing some research on this topic I ran across a few items online that could be useful. 

I would love to learn more on this specific topic. Does anyone have more they can share?

https://www.ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/due-diligence-over-third-party-service-providers

https://blog.swbc.com/lenderhub/due-diligence-for-loan-participation-programs-a-comprehensive-guide

https://www.kaufcan.com/news/articles/a-loan-participation-checklist-the-devil-is-in-the-details/

https://www.ncua.gov/newsroom/ncua-report/2016/abcs-loan-participation-due-diligence

https://cubg.org/wp-content/uploads/Lead-Lender-Participation-Checklist-2017.pdf

Original Message:
Sent: 03-12-2021 09:32 AM
From: Anonymous Member
Subject: Loan Participation

This message was posted by a user wishing to remain anonymous

​​Hello,

My Credit Union will commence loan participation business. One of the elements of the loan participation is due diligence we need to conduct on our potential partners. This is not a typical vendor review and I am trying to gather as much information as possible. Can anyone share their experience and knowledge regarding Due Diligence and Risk Assessment of loan participation partners? Do you have any checklist, risk assessment, questionnaire, guide or anything that would help us start with the program.

Thank you,