#2020-37, October 30, 2020

OCC Issues Final ‘True Lender’ Rule

The Office of the Comptroller of the Currency (OCC) this week issued a final rule establishing when a bank making a loan is considered the “true lender” in the context of a partnership between a bank and a third party. Under the rule, if a bank is named as the lender in the loan agreement or funds the loan as of the date of origination, it is deemed to be the “true lender.”

Loan originated by banks that satisfy either part of this test would retain its status as a bank-originated loan if the loan is sold, assigned, or otherwise transferred to a nonbank entity. In cases where the bank funds the loan, the rule states that the institution has a predominant economic interest in the loan and, therefore, has made the loan—regardless of whether it is the named lender in the loan agreement as of the date of origination. The final rule further states that “if, as of the date of origination, one bank is named as the lender of 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.”

The rule also clarifies that bank are not considered the true lender in certain traditional lending or finance arrangements such as mortgage warehouse lending, indirect automobile finance, loan syndication and other structured finance.  The final rule will take effect 60 days after publication in the Federal Register.

To read more, click here.

SBA Sending Questionnaires to PPP Borrowers with $2 Million+ Loans

This week, the Small Business Administration (SBA) began sending loan necessity questionnaires to Paycheck Protection Program (PPP) borrowers with loans of $2 million or more.  The questionnaires are part of the agency’s review of larger PPP loans and are designed to provide SBA with information to evaluate the good-faith certification of economic need.

Banks that have already submitted loan forgiveness decisions for these borrowers will receive notification letters through the SBA Forgiveness Platform requesting that borrowers complete the questionnaire and providing general instructions on which documents to provide to SBA.  Lenders are not required to verify or validate borrowers’ responses or any supporting documents related to the questionnaire.  Lenders with questions should contact: PPPForgivenessRequests@sba.gov.

Agencies Propose to Lowering Fund Transfer Reporting Threshold

Late last week, the Federal Reserve and the Financial Crimes Enforcement Network (FinCEN) issued a proposal significantly reducing the transaction volume threshold subject to information collection on funds transfers and remittances that begin or end outside of the United States.  The agencies’ proposal reduces the threshold from $3,000 to $250 for when insured depository institutions must comply with the record keeping and travel rules under the Bank Secrecy Act.

The proposal cites the benefits of the change to law enforcement investigations and noted that they believe the burden of lowering the threshold on the industry would be low.  In addition, the proposed seeks to clarify that “money,” as defined in the current rules, also includes convertible virtual currencies such as bitcoin that have an equivalent value as currency or act as a substitute for currency but do not have legal status.  Comments on the change are due by November 26.

To read more, click here.

Complimentary Webinar for New Bank Directors

The Federal Deposit Insurance Corporation (FDIC) is hosting a complimentary webinar for new bank directors focused on fundamental board governance issues, Directors’ roles and responsibilities, the examination process, and effective strategies to monitor bank performance.  The webinar is designed for Directors with less than five years’ experience and there will be an opportunity to discuss participant questions.

To register for the program, please send a list of participants and their email addresses to Pat Tabolsky at ptabolsky@massbankers.org

For more information about the event, please contact William Hardy at whardy@fdic.gov.

MBA President & CEO Dan Forte Retiring

As you may know, the Association’s president & CEO, Dan Forte is retiring after more than 35 years at the Association.  On behalf of the entire MBA staff, we wish Dan all the best in his retirement!