Question: When purchasing loan, do we need to collect a beneficial ownership form? If so, will collecting after the loan is purchased acceptable?
Answer: IP guidance suggests that for purchased loans banks are required to ensure that the institution or broker that originated the loan complied with the applicable CIP requirements but the bank does not necessarily need to perform this themselves after the purchase has been completed:
“2. Are loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker within the exclusion from the definition of “account” for loans acquired through an acquisition, merger, purchase of assets, or assumption of liabilities? Yes, this exclusion is intended to cover loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker. If, however, the bank is extending credit to the borrower using a car dealer or mortgage broker as its agent, then it must ensure that the dealer or broker is performing the bank’s CIP…”
FAQ #2 CIP Final Rule: https://www.fincen.gov/sites/default/files/guidance/finalciprule.pdf
Thus, subject to any internal guidelines providing otherwise, these will often be subject to the exclusion above. As always, to avoid implicating any UDAAP/UDAP and/or fair lending considerations, the bank will want to ensure that it is treating similarly situated borrowers consistently, across the board in performing CIP/beneficial ownership on these purchased loans.
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