Skip to content
BOL Conferences
Thread Options
#2164296 - 02/13/18 07:28 PM Variable Rate Commercial Loans
HubbaBubba Offline
Gold Star
Joined: Sep 2002
Posts: 311
Not really a compliance question but...

If we will be changing our base (internal, not tied to an outside index) for variable rate loans, do we have to give the customers affected a prior notice to the change?

I know for a consumer loan we would, but what about Ag or Commercial?

Return to Top
Lending Compliance
#2164299 - 02/13/18 07:35 PM Re: Variable Rate Commercial Loans HubbaBubba
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
You do whatever your notes allow. If there's any question how to interpret the notes, discuss with your legal counsel.
_________________________
...gone fishing.

Return to Top
#2164327 - 02/13/18 08:27 PM Re: Variable Rate Commercial Loans Richard Insley
HubbaBubba Offline
Gold Star
Joined: Sep 2002
Posts: 311
I am more interested in if there is a regulation governing commercial or agricultural variable rate loans....??

Return to Top
#2164335 - 02/13/18 08:50 PM Re: Variable Rate Commercial Loans HubbaBubba
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,650
Florida
State statutes cover rates - not federal. May want to post in your state's forums.
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top
#2164338 - 02/13/18 08:59 PM Re: Variable Rate Commercial Loans HubbaBubba
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,965
TN
And I also believe this is more of a legal question than a regulatory. I don't believe you can change your 'base' during the term of the loan unless the former base no longer exists.
_________________________
My Opinions Only

Return to Top
#2164372 - 02/14/18 03:17 AM Re: Variable Rate Commercial Loans HubbaBubba
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
You are wise to cover all bases--especially if you're still in the product development stage. Ruling out specific requirements in state or federal law, your research comes down to contract risks--a topic that can only be discussed with your legal counsel. Work with counsel to draft credit agreements that get you as close as possible to what you want to do, and then service the loans according to the credit agreements.
_________________________
...gone fishing.

Return to Top

Moderator:  Andy_Z