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#2233444 - 03/20/20 09:31 PM BO - Pandemic-Related Loan Mods
BSA Aficionada Offline
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Joined: Sep 2015
Posts: 89
Looking for insight from peers relative to whether beneficial ownership requirements will be triggered for pandemic-related loan modifications. Will same rules apply, with triggering event conditioned on underwriting and credit approval?

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#2233710 - 03/26/20 05:16 PM Re: BO - Pandemic-Related Loan Mods BSA Aficionada
BSAsport Offline
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Joined: Jul 2013
Posts: 19
Do the below types of COVID-related amendments to existing facilities trigger benefical ownership? Is it contingent on the level of underwriting and/or credit approval required as well as whether a change in terms agreement is signed?
• Short-term requests for payment deferral which may prompt maturity date extensions
• Short-term increases for lines of credit
• Rate and/or payment reduction

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#2234121 - 04/02/20 04:43 PM Re: BO - Pandemic-Related Loan Mods BSAsport
travelgirl1 Offline
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Joined: Sep 2015
Posts: 83
Curious about the same thing. Some loans will just have payments deferred with no change in maturity date. And some will have payments deferred and the maturity date extended. Does that make a difference? Putting my Beneficial 101 hat on, I'd say yes if extending the loan but these are crazy times.

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#2234129 - 04/02/20 05:16 PM Re: BO - Pandemic-Related Loan Mods BSA Aficionada
Pat Patriot Act Offline
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Joined: Apr 2009
Posts: 450
I think FinCEN's Exceptive Relief from Beneficial Ownership Requirements for Legal Entity Customers of Rollovers, Renewals, Modifications, and Extensions of Certain Accounts Exceptive Relief (FIN-2018-R003), states it by saying that exceptive relief (i.e. no BO requirements) are granted for a renewal, modification, or extension of a loan (e.g., setting a later payoff date) that does not require underwriting review and approval.

I don't claim to be a lending compliance expert, but I believe where folks get tripped up is the definition of "underwriting." IMHO, FinCEN hints at that on page 3: "some loans are subject to automatic renewal, modification, or extension within a specified time and require no action from the customer for that renewal, modification, or extension to take effect."

So, for the above questions, my interpretation of FinCEN's ruling is:

- Loan Modification's require updated BO
- Deferments that don't change the terms in any way don't require updated BO and vice-versa
- LOC increases (past their limit) require updated BO
- Rates/Payment reductions require updated BO

But my stance is to err on the side of caution, so if there is a change in terms that requires some action from the customer and a review/approval from the FI, new BO is necessary. I'd be interested to hear other interpretations.
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