Credit Evaluation School - May 2023

Reference Guide for Credit Documents

Mortgage / Deed of Trust • Contract between bankand the borrower • Real estate collateral provided by borrower toenhance payment prospects • Establishes priority and amount of lienon mortgage property • What is the date of the mortgage? • Where was it filed andwhen? • What was mortgaged (legal definition)? • Does borrower own the property being mortgage? • Releases (Development loans)

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Reference Guide for Credit Documents

Participation Agreement • Agreement between 2 or more banks to share in a credit • Identifies share of loan owned by the bank

• Establishes participant’s funding and payment timing (pro ‐ rata/LIFO/FIFO) • Lead bank (originating bank) will normally receive note rate and all other participants receive 1/8 to ¼ less as a servicing fee • Details responsibilities of the lead bank to service the loan • Details responsibilities of all parties should the loan go bad • Request list sent to bank requires confirmations be obtained on all participation loans

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