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OCC Bulletin 1997-21
April 10, 1997
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Chief Executive Officers of all National Banks, Department and Division Heads, and all Examining Personnel
The guidance attached to this bulletin continues to apply to federal savings associations
The attached Interagency Statement on Sales of 100% Loan Participations provides guidance to national banks that are involved in loan sales programs of the type discussed in the decision of the court in Banco Espanol de Credito v. Security Pacific National Bank, 973 F.2d 51 (2nd Cir. 1992), cert denied, 113 S. Ct. 2992 (1993). Certain 100% loan participation programs raise unique safety and soundness issues that should be addressed by an institution's policies, procedures and practices. The Statement's applicability is limited to programs involving the sale of participations like those in Banco, that are short-term loans originated by an institution that sells off, without recourse, 100% participation under a continuing program, and retains no further interest in the originated loan. Policies noted in the Statement that should be addressed include (1) the program's objectives, (2) the plan of distribution, (3) the credit requirements applicable to the borrower, and (4) the access afforded program participants to financial information on the borrower. The Statement also notes where additional guidance and information may be obtained.
Jimmy F. BartonChief National Bank Examiner