We normally complete a Reg O addendum to the Note for Officer loans. We failed to do so on a 2nd home loan a few months ago, which was since sold on the secondary market but we service. My understanding is we violated Reg O while the loan was on our books. Do we need to get the Reg O document signed now that the loan has been sold? Other than fixing an error I am wondering if we can be forced to buyback the loan at any point from the investor and put us right back in violation. But I likely don't understand the investor relationship well enough so I am hopeful one of you can help.

Sounds like you no longer own the loan - so it is an uncorrectable violation. If you sold it with recourse however, that might change the situation.

I don't know how an investor would be harmed by this disclosures absence if we're talking about the demand clause as it wouldn't apply to them, unless it could impact the loan itself. That would seem to be a stretch, but I'm not a lawyer connecting dots and drawing conclusions. Hopefully nothing happens requiring a repurchase.

As Randy noted, you can't go back in time and fix it, but you should now look at fixing the procedure used to prevent it from happening again. If that were to happen, especially multiple times, it would be a pattern or practice of violating Reg O that can look really bad.

Typically, if the loan will be sold in the secondary market, the demand clause will be added to the loan via an allonge to the note. The allonge would be stripped from the transaction at the time of sale. Most secondary market investors will not buy a loan that contains a demand feature.