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#21880 - 06/25/02 06:25 PM Participation Loans and Rescission

Our bank was asked to do a 100% participation on a HELOC from an affiliate bank due to Reg O considerations for one of the affiliate's executive officers. It is secured by the principal dwelling. The loan was prepared using our HELOC agreement. Just want to make sure, but did our bank need to provide the right to rescind in this situation? Thank you.

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Lending Compliance
#21881 - 06/25/02 06:47 PM Re: Participation Loans and Rescission
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Your bank is the creditor here, since the documents say so and since you will advance the funds. You also issue the rescission notices.

In what respect is this even considered a participation?
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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#21882 - 06/25/02 07:31 PM Re: Participation Loans and Rescission

John - you're absolutely right, it seems I jumped too quickly. I checked and found out that our bank will not do a "participation" for a HELOC, so we originated the loan and therefore that answers my question. The right to rescind should have been provided. Too much coffee today! Thanks.

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#21883 - 06/25/02 07:34 PM Re: Participation Loans and Rescission
Ted Dreyer Offline
Diamond Poster
Ted Dreyer
Joined: Apr 2001
Posts: 2,245
Anonymous: Keep in mind that section 215.4 of Reg O applies to extensions of credit to insiders of your affiliates as well as to your own insiders.

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