What Is a Criticized Loan?

A loan designation defined by the Federal Insurance Deposit Corporation (FDIC), a criticized loan has the potential to not get paid. This alerts bank officers and federal officials to potential loss by the obligor. To classify a loan as criticized, it must be in danger of default. Situations such as unpaid interest and outstanding principal often deem a loan as criticized. Because criticized loans tend to have a high rate of default by the borrower, it can raise the cost of borrowing money for other consumers who apply for loans. It can also cause financial institutions and other lenders to go to court in order to get their money back.

Expert Witnesses in the Financial Field

When a financial institution goes to court for criticized loans, they, of course, need legal representation. But they often need extra help to prove to the court that they should get their money back. In many cases, to help their client build a strong case, the attorney may find a consultant or financial expert witness to help them and the court understand the financial aspects of the case. A good financial expert witness should not only be able to understand the issues in the case, but they should also be able to communicate these issues clearly and in language that is understandable to the average person. A financial expert can also explain the potential weaknesses of the case, questions for the opposing expert and expected answers and liability and damage theories.

An expert witness in the financial field can be a great value to financial institutions that present a case to the court concerning criticized loans. Getting expert help is key to increasing the chances of winning a case and getting back the money borrowers owe to banks. In fact, without an expert financial witness, it can be difficult to prove to the court that a borrower is able to pay back the loan.

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