Reg O - Mortgage Loans Sold to Investors

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Question:

Do Regulation O provisions apply to mortgage loans extended to executive officers which are sold to investors by the bank? These loans have an investor commitment up front and are held by the bank for 30-60 days only before sale. Also, mortgage refinancing provisions appear to exclude equity extraction mortgage loans unless the proceeds are used to further improvements in the primary residence. Is this an accurate interpretation?

Answer:

If a loan to an executive officer is on the bank's books at any time, it is subject to the restrictions of Regulation O, commitments to purchase notwithstanding.

As to your second question, you have interpreted the regulation accurately.

First published on BankersOnline.com 07/18/05