Summary
On October 27, 2020, the Office of the Comptroller of the Currency (OCC) submitted for publication in the Federal Register a final rule to determine when, including in the context of a relationship between a national bank or federal savings association (collectively, banks) and a third party, the bank makes a loan and is the “true lender.” Under this rule, a bank makes a loan and is the “true lender” if, as of the date of origination, the bank (1) is named as the lender in the loan agreement or (2) funds the loan. The rule provides certainty about key aspects of the legal framework that applies to loans made as part of banks’ relationships with third parties.
Note for Community Banks
The rule applies to community banks.
Highlights
Banks’ lending relationships with third parties, such as marketplace lenders, can be effective tools to facilitate access to affordable credit. These relationships, however, have been subject to increasing uncertainty about the legal framework that applies to loans made as part of these relationships. This uncertainty may discourage banks from entering into lending relationships, which, in turn, may limit competition, restrict access to affordable credit, and chill the innovation that can result from these relationships.
The rule resolves this uncertainty by specifying that a bank makes a loan when, as of the date of origination, the bank (1) is named as the lender in the loan agreement or (2) funds the loan. The rule also specifies that if, as of the date of origination, one bank is named as the lender in the loan agreement for a loan and another bank funds that loan, the bank that is named as the lender in the loan agreement makes the loan and is the “true lender.”
Further Information
Please contact Andra Shuster, Senior Counsel; Karen McSweeney, Special Counsel; Alison MacDonald, Special Counsel; or Priscilla Benner, Senior Attorney, Chief Counsel’s Office, at (202) 649-5490.
Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel
