The proposed rule change would basically change the effect of all statutory and common law. It defines a “true lender” as EITHER someone who funds the transaction OR anyone who is called a lender in the closing documents for the homeowner transaction.
If this rule goes into effect it would conflict with state law in all jurisdictions and federal law governing lending practices and servicing. It will be used as an administrative finding which means that under judicial doctrine it will be cloaked with a legal presumption that it is correct.
It allows anyone who muscles in on the homeowner transaction to enforce it even if they their goal is profit and not restitution for an unpaid debt.
Homeowners should be writing letters and calling the OCC, and their representatives in Washington, D.C. to express their objection and rejection of this proposed rule as a blatant attempt to subvert the law.
OCC Proposes Rule To Settle ‘True Lender’ Question
The Office of the Comptroller of the Currency proposed a rule Monday to clarify that a bank is the “true lender” of a loan if that institution is named on the loan document at the date of origination or if it funds the loan, as the agency seeks to address ambiguity amid the proliferation of bank partnerships in lending.
https://www.occ.gov/news-
issuances/news-releases/2020/ nr-occ-2020-97.html News Release 2020-97 | July 20, 2020
Office of the Comptroller of the Currency Issues Proposed True Lender Rule
WASHINGTON—The Office of the Comptroller of the Currency (OCC) today proposed a rule that would determine when a national bank or federal savings association (bank) makes a loan and is the “true lender” in the context of a partnership between a bank and a third party.
Banks’ lending relationships with third parties can facilitate access to affordable credit. However, the relationships have been subject to increasing uncertainty about the legal framework that applies to loans made as part of these relationships. This uncertainty may discourage banks and third parties from entering into relationships, limit competition, and chill the innovation that results from these partnerships—all of which may restrict access to affordable credit.
The proposed rule would resolve this uncertainty by specifying that a bank makes a loan and is the “true lender” if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan.
The deadline for comments on the rule is September 3, 2020.
Related Link
- Federal Register Notice (PDF)
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