OCC issued a final rule to determine 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, such as a marketplace lender. The final rule establishes a clear test for determining when a bank makes a loan, by interpreting the statutes that grant banks their authority to lend. Under this rule, a bank makes a loan if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan. The final rule will become effective on December 29, 2020.
Through this rulemaking, OCC is providing the legal certainty necessary for banks to partner confidently with other market participants and meet the credit needs of their customers. However, OCC understands that there is concern that the rulemaking facilitates inappropriate "rent-a-charter" lending schemes—arrangements in which a bank receives a fee to "rent" its charter and unique legal status to a third party. These schemes are designed to enable the third party to evade state and local laws, including some state consumer protection laws, and to allow the bank to disclaim any compliance responsibility for the loans. These arrangements have absolutely no place in the federal banking system and are addressed by this rulemaking, which holds banks accountable for all loans they make, including those made in the context of marketplace lending partnerships or other loan sale arrangements. 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.
Effective Date: December 29, 2020
Keywords: Americas, US, Banking, True Lender Rule, Credit Risk, Loan Origination, OCC
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