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

Permissible interest on loans that are sold, assigned, or otherwise transferred
Subject: Valid when made
Agency: OCC
Status: Final rule
Summary: Federal law establishes that national banks and savings associations (banks) may charge interest on loans at the maximum rate permitted to any state-chartered or licensed lending institution in the state where the bank is located. In addition, banks are generally authorized to sell, assign, or otherwise transfer (transfer) loans and to enter into and assign loan contracts. Despite these authorities, recent developments have created legal uncertainty about the ongoing permissibility of the interest term after a bank transfers a loan. This rule clarifies that when a bank transfers a loan, the interest permissible before the transfer continues to be permissible after the transfer.
FR Doc: 2020-11963
Date proposed: Nov. 18, 2019
Comments due date:

Jan. 21, 2020

Final rule effective date: Aug. 3, 2020
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