Clarification of ‘valid-when-made’ rule (Permissible interest on loans that are sold, assigned, or otherwise transferred)

Title:
Permissible interest on loans that are sold, assigned, or otherwise transferred
Subject: Valid when made
Agency: OCC
Status: Notice of Proposed Rulemaking
Summary:

Federal law establishes that national banks and savings associations (banks) may charge interest at the maximum rate permitted to any state-chartered or licensed lending institution in the state where the bank is located. Federal law also provides national banks and Federal savings associations with the authority to enter into and assign contracts. Well-established authority also authorizes banks to sell, assign, or otherwise transfer loans. Despite these clear authorities, recent developments have created uncertainty about the ongoing validity of the interest term after a bank sells, assigns, or otherwise transfers a loan. This rule would clarify that when a bank sells, assigns, or otherwise transfers a loan, interest permissible prior to the transfer continues to be permissible following the transfer.

FR Doc: 2019-25280
Date proposed: Nov. 18, 2019
Comments due date:

60 days after publication in Federal Register

Final rule effective date:
Rule compliance date:
Agency release:

OCC Proposes Rule to Clarify “Valid When Made” Doctrine

Related Reg Report item(s):

Proposal aims to clarify ‘valid-when-made’ rule made murky under Madden decision

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