Loan Purchase Activities: Legal Lending Limit Guidance From the OCC

Regulatory Developments

Loan Purchase Activities: Legal Lending Limit Guidance From the OCC

On August 8, the OCC issued guidance for banks regarding the applicability of legal lending limits to purchased loans. The legal lending limit restricts the total amount of credit that a bank may extend to a single borrower. Unless an exception applies, all loans and extensions of credit made by banks are subject to the lending limit.  

Determining whether a purchased loan is attributable to the seller under legal lending limit regulations involves considering more information than a credit extension made in house. Banks should examine the specific facts and circumstances surrounding a purchased loan. In particular, aggregate exposures attributable to a single seller must be part of the bank’s legal lending limit. This occurs if the bank has a recourse, whether directly or indirectly, against the seller. If the bank does not have a recourse against the seller, the purchased loan would generally be attributable to only the named borrowers on the loan, unless there is another basis for attributing the loan to an additional party (e.g., under the direct benefit or common enterprise tests).

CFPB Announces New Rulemaking Under the FCRA to Protect Consumers from Data Brokers

On August 15, CFPB Director Rohit Chopra announced that the CFPB plans to propose a rule for public comment in 2024 aimed at enforcing the Fair Credit Reporting Act (FCRA) and protecting consumers from data brokers’ misuse or abuse of sensitive consumer data and other harmful data broker practices. The rulemaking process will involve the CFPB publishing an outline of proposals and alternatives under consideration for the proposed rule, including defining a data broker that sells certain types of consumer data (e.g., payment history, income, criminal records) as a “consumer reporting agency” and providing clarification around the extent to which “credit header data” (e.g., name, date of birth, Social Security number obtained from consumer reports generated by credit reporting companies) is a consumer report. Updated rules under the FCRA will be enforceable by the CFPB, other federal agencies, as well as state law enforcement. The CFPB encourages small businesses seeking to participate in the rulemaking process to contact the CFPB.

“Compliance with the books and records requirements of the federal securities laws is essential to investor protection and well-functioning markets.”
 
- Gurbir S. Grewal, Director of the SEC’s Division of Enforcement

SEC Charges 11 Wall Street Firms with Widespread Recordkeeping Failures

On August 8, the SEC settled charges with 11 Wall Street firms for violating certain recordkeeping provisions of the Act. The SEC’s investigation uncovered employees at multiple levels, including supervisors and executives, utilized “off-channel” communications through various platforms on their personal devices to discuss business matters. The settlements underscore the SEC’s increased focus on recordkeeping obligations of registered entities to maintain and preserve off-channel communications in compliance with the Act. 

Check Out Goodwin’s Latest Industry Insights

Consumer Finance Insights (CFI) Blog
The latest on consumer finance regulation, litigation, and enforcement.

FinReg + Policy Watch Blog
Stay on top of developments affecting the financial services community.

Digital Currency + Blockchain Perspectives Blog
Stay on top of digital currency industry news, regulatory developments, and issues.

Bank Failure Knowledge Center
Timely updates on important developments following the March 2023 US bank failures.

2022 Consumer Financial Services Year in Review
This in-depth report summarizes major regulatory, litigation, and enforcement activity that impacted the consumer financial industry in 2022, and identifies the key trends for 2023.