The final rule, which seeks to resolve the effects of legal uncertainty on banks and their third-party relationships, will take effect on Dec. 29.
11/3/2020 8:30
The Office of the Comptroller of the Currency (OCC) has issued a final rule outlining the roles when a national bank or federal savings association makes a loan and is the “true lender,” including in the context of a partnership between a bank and a third party.
Banks’ lending relationships with third parties can facilitate access to affordable credit. However, increasing legal uncertainty regarding such relationships may discourage banks and third parties from partnering, limit competition, and chill the innovation that results from these partnerships. This may ultimately restrict access to affordable credit, according to a news release on the rule.
After carefully considering stakeholders’ comments, the OCC adopted the final rule to resolve this uncertainty.
The rule specifies that a bank makes a loan and is the true lender if, as of the date of origination, it is named as the lender in the loan agreement or 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, according to the news release.
The rule also clarifies that as the true lender of a loan, the bank retains the compliance obligations associated with the origination of that loan, thus negating concern regarding harmful rent-a-charter arrangements, the OCC reports.
It also includes comprehensive guidance on third-party risk management. Pursuant to this guidance, the OCC expects banks to institute appropriate safeguards to manage the risks associated with their third-party relationships, according to the rule.
The rule has been published in the Federal Register and will take effect on Dec. 29, 2020.