OCC Proposes Rule To Settle 'Valid When Made' Questions

Law360 (November 18, 2019, 3:00 PM EST) -- The Office of the Comptroller of the Currency has addressed fallout from a 2015 Second Circuit decision that threw the validity of interest rates on transferred loans into question, proposing a rule Monday that would clarify that rates remain permissible even after transfer.

The circuit court's decision in Madden v. Midland Funding called into question the validity of interest rates on bank-originated debt that is later transferred to nonbank partners. The decision largely rejected the "valid when made" doctrine stating that a loan's interest rate remains legal as long as it was legal when the loan was made, regardless of who...

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