Most Popular Lending Content
Meeting BSA on Participation Loan Requirements
07/23/2023
Pertaining to large corporate secondary market participation / syndication loan questions: What time frames, waivers, or legal letters are reasonable / acceptable regarding BSA compliance, specifically, CIP and CDD Beneficial Ownership Forms, when purchasing a share of a large corporate (not consumer or mortgage loans) participation / syndication loan a few years after its origination (secondary market)? For example: Purchasing a 3.7% share ($20 million) in an existing ($550 million originally) syndicated corporate (not consumer or mortgage loans) secured term loan for publicly traded and non-publicly traded corporations. The loans are purchased in the secondary market through attorneys and agented by global investment banks such as Credit Suisse Group AG. Some syndicated loans have more than 80 borrowers with more than 100 banks that participate in the loan. Further, our bank is not a Legal Bank of Record for the loan until our initial Funding Date (years after the loan originated) and therefore we cannot request and are not provided with any BSA required documentation such as Beneficial Ownership Forms, and CIP Documents for numerous borrowers, or non-BSA documentation such as Organization Documents, prior to the Funding Date. Typically, it takes 90+ days to receive Beneficial Ownership Forms, CIP information, etc., after the Funding Date, and in some instances, we aren’t provided with some requested documentation at all. What are reasonable / acceptable timeframes for collection of Beneficial Ownership Forms, CIP, etc. that we can specify in our BSA Policy for these specific syndication loans? Is 90 – 180 days acceptable? If we specify a shorter timeframe we would constantly be up against the due dates, or past due, causing BSA policy exceptions / violations, which we want to avoid. Is it acceptable to obtain only the main borrower’s Beneficial Ownership Forms and CIP? Alternatively, is it acceptable to create and utilize a standard legal letter signed / certified by the agent bank or attorney that managed the transaction stating that they have in their possession, and thoroughly reviewed for adherence to Regulatory Requirements, specific documents, and information, such as CIP for guarantors, Beneficial Ownership documents, or other BSA or Compliance related documents? Additionally, the legal letter would include a statement that they agree to provide documents or information should the need arise for audit or examination purposes or in the event of a triggering event when the bank would be required to complete enhanced due diligence. Would we be subject to regulatory criticism in either of those processes?
Credit Card Use Claims
07/23/2023
Under Reg Z Section 1026.12(b) - Liability of cardholder for unauthorized use: Can credit card unauthorized use claims be limited to those where we are notified by the cardholder within 60 days of the transaction appearing on the billing statement? Is there a time limit for these claims?
When Does Rescission Begin
07/23/2023
This question is on rescindable mortgage transactions. Let's assume one borrower comes in to sign all the loan documents today, with a coborrower scheduled to sign later that same day. But that second borrower doesn't come in until the following day to sign. Does rescission period start the next day after all those signatures were made and all documents have been signed, that being consummation?
Upping Force Placed Policy Procedure
07/16/2023
A flood policy expired on a loan that had deferred principal due to a COVID Deferral program. The customer didn't renew their policy and force placement of coverage was implemented, notices went out on time and the force placement happened on day 46. The problem came one week prior to the renewal of the force placed policy, when evaluating to renew, it was discovered that the number used to calculate coverage last year was incorrect. The principal used was a much smaller amount which is the one agreed on the COVID deferral, but not the real one. Since the policy is a forced placed policy, and regulation doesn't require a new set of notices, we only send one courtesy letter advising the client of the imminent force placed renewal. My counterparts think that we should restart the letters since we will renew the policy for a higher amount but I don't agree with that assessment. What do you think?
Source for lending activity in low- to -moderate income communities
07/16/2023
How can I find out what the lending activity is in LMI communities?