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OCC finalizes 'valid when made' rule
Acting Comptroller of the Currency Brian P. Brooks issued a statement on Friday regarding the OCC's final rule, issued on Friday to clarify that when a national bank or savings association sells, assigns, or otherwise transfers a loan, interest permissible before the transfer continues to be permissible after the transfer. Approving the rule was one of Brooks's first official acts as Acting Comptroller.
The OCC's press release on the final rule explains that the rule was issued following recent developments, including a decision from the U.S. Court of Appeals for the Second Circuit (Madden v. Midland Funding, LLC), which had created legal uncertainty regarding the effect of a transfer on a loan’s permissible interest rate. The final rule addresses this legal uncertainty by clarifying and reaffirming the long-standing understanding that a bank may transfer a loan without affecting the permissible interest term.
The rule applies to loans made by national banks and federal savings associations and will become effective 60 days following publication in the Federal Register.
PUBLICATION UPDATE: Scheduled for Federal Register publication on June 2, 2020, with an effective date of August 3, 2020.