Similar to identity theft, this type of fraud happens when an unauthorized individual gain access through online banking applications, capturing the account information to create and write bad checks.
Account-centric enterprise content management solutions allow users to access account holder information based on their account numbers.
An adverse action notice is a document sent to a loan applicant stating a bank’s rationale for denying a loan. It may also contain a counteroffer, such as a lesser amount or a request for an approved co-borrower.
The term “aging exceptions” refers to a group of critical exceptions that have not been resolved within a reasonable amount of time.
Altered check fraud occurs when a fraudster changes the amounts and Payee from a stolen check.
API is short for “application programming interface.” Technology companies like Alogent rely on APIs to connect multiple software applications, thereby enabling a two-way exchange of information to support users’ needs.
Audit and exam prep is a process that financial institutions go through in order to adequately prepare for upcoming audits and exams.
An authorized signer form is a document that allows an account holder to grant a range of clearance levels to individuals to perform certain functions within a bank account.

In a loan participation, two or more banks or credit unions fund one loan to a customer or member. The lead institution makes the loan and then sells a portion to at least one participating bank or credit union.

Loan Participations & Legal Lending Limits

A loan participation can enable a lead bank or credit union to approve loans that, under normal circumstances, would be above its legal lending limit—the maximum amount that a financial institution can loan directly to an account holder. Legal lending limits are set by regulatory bodies and are in place to manage institutional risk.

For example, if a bank or credit union receives a loan application above its legal lending limit, it may solicit other institutions to “participate” in the loan. A lead institution’s loan presentation to a potential participating bank or credit union would normally include information such as:

  • Amount loaned by the lead institution
  • Collateral value
  • Appraisals

The prospective participating financial institution then determines whether to approve the offer. If it does, the participating bank or credit union must fund its portion when the loan closes so that the lead institution is never over the legal lending limit with that borrower.

Lead Bank Responsibilities on a Loan Participation

Loan participation administration can become complicated for lead banks or credit unions. Not only do these financial institutions issue participating institutions their pro-rata shares of incoming loan payments, but lead banks or credit unions also bear the burden of ongoing due diligence. They are required to send copies of pertinent documents as they acquire them to participating banks or credit unions. These include the recorded deed of trust/mortgages, as well as updated financials, tax returns, and other documents. Some loan management systems, such as AccuAccount, provide loan participation features that automatically send new items to participating banks.

In the event of loan foreclosures, lead banks invoice participating banks or credit unions for their share of legal fees and then distribute pro-rata shares of the net proceeds from sale of the collateral.

Additional Loan Management Resources

Looking for more information about loan management in the banking industry? Be sure to check out our extensive resource library with free spreadsheets, whitepapers, and eBooks.

Browse our banking definitions page for more terminology.

Explore more resources

AccuAccount Feature Overview

Simplify loan administration and document management with AccuAccount, our core-integrated software trusted by over 15,000 bankers. AccuAccount is the only loan imaging solution that combines exception tracking with automated reporting, offering a unified...
Read More »

Related articles

Monday 31 March 2025

Enabling "Person-Centric" Experiences with AccuAccount Views

Organizing account holder information by document type or identification number is common in banking, but doing so inhibits person-centric experiences. Is there a better option?

Read the Blog

Wednesday 26 March 2025

[Playbook] Early Capture in AccuAccount

Here’s the Situation: Your financial institution wants to leverage early capture to improve efficiency and reduce commercial lending bottlenecks. For years, you’ve used AccuAccount to…

Read the Blog

Thursday 20 March 2025

Protecting Against Check Fraud During Tax Season: Essential Solutions for Financial Institutions

As consumers and businesses navigate tax season, it's important to be aware of the risks associated with mailed checks and take steps to protect sensitive…

Read the Blog

Monday 17 March 2025

Boosting Compliance and Reducing Costs: How ECM Solutions Solve Document Management Challenges for Banks and Credit Unions

Banks and credit unions rely heavily on information, but managing the growing volume of structured and unstructured data—ranging from account holder records to institutional documents—presents…

Read the Blog

Thursday 13 March 2025

Streamlining Subpoena Responses: How Banks and Credit Unions Can Overcome Data Challenges and Improve Efficiency

When a financial institution receives a subpoena for transaction records, it impacts every part of the organization, from operational efficiency to compliance risks. Understanding the…

Read the Blog

Wednesday 5 March 2025

Taking a “Person-Centric” Approach to Enterprise Content Management

Simply digitizing and storing documents in a general repository doesn’t cut it. To increase the impact of modernization efforts and ensure smooth experiences for customers…

Read the Blog

Monday 24 February 2025

Alogent Ways of Working: Driving Innovation and Excellence in Banking Technology

Rooted in agile principles, Alogent Ways of Working (AWW) is not just our methodology; it’s our commitment to delivering exceptional products swiftly and efficiently. This…

Read the Blog

Tuesday 11 February 2025

Enhancing the Retail Experience: How Self-Service ECM Capabilities Are Transforming Banking

As account holder expectations evolve, banks and credit unions must adopt innovative solutions to remain competitive. Self-service capabilities within enterprise content management (ECM) systems provide…

Read the Blog