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#1833577 - 07/17/13 02:21 PM Buying Commercial Leases
manimal Offline
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Even though I've been in compliance for years, this is something I am definitely a newbie at:

Buying Commercial Leases

Basically a lease financing company would provide us with 'applicants' and if we approved them we would be assigned the lease.

I have absolutely zero experience with these kinds of transactions. Can anyone recommend anything I can read or a good resource to learn more about this type of transaction? And I'll have to dig around for any compliance concerns too.

Thank you in advance!!
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#1833727 - 07/17/13 06:18 PM Re: Buying Commercial Leases manimal
Kathleen O. Blanchard Offline

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If these are truly commercial leases, perfection of your lien will be the biggest issue. No real regs to speak of, just safety and soundness considerations.

The OCC has a booklet on direct leasing (old but the concepts are the same) and the other regulators have some guidance as well. It would give you an understanding of the underlying transactions being purchased.
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#1833785 - 07/17/13 07:47 PM Re: Buying Commercial Leases manimal
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Thank you for the resources! I will do some reading.

I just hope management knows what they are doing.........
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#1833793 - 07/17/13 07:50 PM Re: Buying Commercial Leases manimal
Kathleen O. Blanchard Offline

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I hope so as well; that would be a safety and soundness issue in itself if they do not!
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#1833828 - 07/17/13 09:09 PM Re: Buying Commercial Leases manimal
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So these types of transactions aren't considered "credit" under Regulation B?

"(j) Credit means the right granted by a creditor to an applicant to defer payment of a debt, incur debt and defer its payment, or purchase property or services and defer payment therefor."
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#1833859 - 07/17/13 10:01 PM Re: Buying Commercial Leases manimal
Kathleen O. Blanchard Offline

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Yes, they are credit of a different type. What are you trying to figure out? It sounds like the leases will already be approved and documented and your bank will then purchase.

You said they are commercial (usually equipment leases).

So not subject to Reg M.

What is it you are trying to determine?

If they are consumer leases and your bank will buy, make sure Reg M is handled properly. Or if your bank is responsible for the disclosures, get familiar with Reg M.
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#1834117 - 07/18/13 03:40 PM Re: Buying Commercial Leases manimal
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I guess I am trying to understand if these are credit transactions (Reg B covered) or not. If they are we'll have to have Adverse Action notices and what not ready to go. I've been assured everything is commercial, nothing consumer.
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#1834147 - 07/18/13 03:58 PM Re: Buying Commercial Leases manimal
Kathleen O. Blanchard Offline

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The common practice is to treat as credit and conform to Reg B.

Two references:

An old thread, and the premise has not changed.

https://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=739

And an article from a leasing industry newsletter.

http://www.monitordaily.com/surmounting-slippery-slope-ecoa-rejectingapplicants/
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#1834174 - 07/18/13 04:31 PM Re: Buying Commercial Leases manimal
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After reading those I agree, Kathleen. Thank you again for your help!

Now I'll have to figure out how we would send AA's to the 'applicants' the leasing company refers to us. crazy
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#1835193 - 07/22/13 07:00 PM Re: Buying Commercial Leases manimal
RR Sarah Offline
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We do commercial leases Mani. We had our attorney review the lease agreements and all the documentation to make sure we had our bases covered.

And on the AA's, I think the applicants are used to how the leasing company/financial institution relationship works and would not be surprised to receive an AA from a bank. We've never had an issue.
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#1835207 - 07/22/13 07:22 PM Re: Buying Commercial Leases manimal
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That makes me feel a lot better, thank you!!
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#1835220 - 07/22/13 07:45 PM Re: Buying Commercial Leases manimal
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Just got a call back from the lender: "Really? We have to send denials? Who told you that? Let me ask a bank up here."

Because the rules are different here somehow?

cry
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#1835238 - 07/22/13 08:04 PM Re: Buying Commercial Leases manimal
RR Sarah Offline
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laugh
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#1835386 - 07/23/13 04:16 AM Re: Buying Commercial Leases manimal
Kathleen O. Blanchard Offline

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Tell him it is because Kathleen sits around making things up to annoy people.

I am always amazed at the reluctance to issue adverse action notices. It seems like something that would be recommended in the "White Gloves and Party Manners Book of Banking" regardless of regulations.
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