A loan is under consideration for a purchase of commercial property from an insider of the bank. The loan has a 30 yr. term. This is in conflict with our Loan Policy which states a maximum 25 yr. term for this type of credit. The Loan VP thought Reg O had changed to allow this type of credit modification. I see that Reg O, as amended in 1994, says that the "tangible economic benefit" rule does not apply to arms length transactions. Since this loan is in conflict w/ policy, I don't think the case can be made that these terms are nonpreferential and that the loan is therefore at arms length. Comments? Thanks.
[This message has been edited by karenS (edited 07-23-2001).]
[This message has been edited by karenS (edited 07-24-2001).]