25-51 Loan participations are typically sold to correspondent banks because

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Correspondent banks are typically chosen for loan participations because they have an ongoing relationship with the originating bank and therefore offer the greatest monitoring opportunities. This helps to manage risk and ensure compliance as the loan is serviced. Insider status is not necessarily a factor and captive customers are not the primary reason for choosing correspondent banks. Pricing may be a consideration, but not always the determining factor. Regulatory requirements may also be a consideration but not the primary reason.

25-51 Loan Participations Are Typically Sold to Correspondent Banks Because