Investment Banks Attempting to Force OCC Rule Change That Defines “True Lender” as Anyone They Say

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.

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.

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Bryan Hubbard
(202) 649-6870

The fact that the investment banks are trying to use their influence to create this rule change corroborates what I have been saying for 14 years — they have known from the start that their plan was illegal.
Securitization is not a mystery process but the investment banks want everyone to believe it is a mystery — and that only they can define it. Securitization is as old as securities. It has always meant and still means the sale of an asset to investors.
The essence of the Wall Street plan is to NOT sell the loan but rather SAY it was sold. Under law dating back centuries, a debt is not sold unless someone pays value for it exchange for receiving a conveyance of legal ownership of the debt.
The same laws state unequivocally that enforcement of the debt is impossible unless done on behalf of the party/creditor who paid for the debt in exchange for a conveyance of legal ownership.
The essence of the Wall Street plan to change the OCC rule is to overturn centuries of law for fun and profit. It provides the context for allowing a debt to be enforced by a nominee of an investment bank who has no interest in the debt.
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.


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7 Responses

  1. Posted on Facebook and was reported as an error.

  2. And Brian – the past is the past. Obama sealed it. Agree, Treasury dude no help. The damage was done. I would like Treasury dude to explain what is going on that is going to massively occur again, and, maybe even in greater volume. Hey, he has first hand experience. Can explain well. But, let’s get Pelosi to also explain what happened the first time. She and Treasury dude can confer across party lines. No one even paying attention. Shocked at Pelosi. Where is she? I know her pink mask matches pink outfit. Nice focus touch, but, come on Nancy – Trump won’t revisit? How about you revisit? What did you do the first time around? Clue Biden in. Whoops – you made a mistake. Who will get to first? Trump or Pelosi/AOC/BIden? Probably none.

  3. No co-accident Summer.

  4. Not an attorney, but not likely Brian.

  5. Will comment tonight on the website… Q? If this is pushed through will it be retroactively applied?

  6. Mnuchin wants to rewrite the laws via his OneWest crony OCC Brooks to get $1 billion from a new bailout like Paulson did ?

    With the most seasoned securities Scoundrels as OCC and Treasury secretaries I have very little doubt if anything will work well for America.

    I will write but banks will continue do anything they want – until they collapse the Country completely. They fraud is supported by the fellow bankers in the Government.

    BTW, I started re-posting Neil’s post how Wall Street makes money – and Yahoo suspended all comments on their articles. Co-accident?

  7. Thank you for alerting us to this Neil. TILA and RESPA should be rewritten if this goes into effect. Table funding would no longer be violation of RESPA. Title issues would be compounded. And, predatory lending would be concealed.

    All should write to OCC.

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