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ARTICLE · 27 NOVEMBER 2019

OCC Proposes Clarification Of "Valid When Made" In Response To Madden Case

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The United States Office of the Comptroller of the Currency has proposed a rule to clarify that when a national bank or savings association sells, assigns or otherwise transfers a loan, interest permissible ...

United StatesFinance and Banking
J. Paul Forrester
J. Paul Forrester
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The United States Office of the Comptroller of the Currency (OCC) has proposed a rule1 to clarify that when a national bank or savings association sells, assigns or otherwise transfers a loan, interest permissible prior to the transfer continues to be permissible following the transfer.

This proposal will address confusion about the effect of a transfer on a loan's valid interest rate, including confusion resulting from a recent decision from the US Court of Appeals for the Second Circuit (Madden v. Midland Funding, LLC)2.

The proposed rule would apply to all national banks and state and federal savings associations.

The OCC is soliciting comments on the proposed rule. Comments will be accepted for 60 days after publication in the Federal Register. The Federal Deposit Insurance Corporation is also issuing a proposal that will address this issue.

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