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Reg O question for new Board Members that have existing debt

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  • #4639
    rcooper
    Keymaster

    This question was originally posted in our Compliance Master Group forum by mbarnes.

    We have a customer that may become a Board Member and he has existing loans with the Bank. We understand that the current loans are grandfathered but are we allowed to modify the loan or maintenance the existing loans? We have been doing research and the only thing we can find says it prohibits the extension of credit but does not prohibit maintenance. So is maintenance the same as modifying? We can’t find an explaination under Reg. O regarding modifing a loan vs. doing maintenance on a loan? Can anyone give me any guidance on this?

    #4640
    rcooper
    Keymaster

    What section of Regulation O are you looking at regarding “maintenance” of a loan – this will help me understand your question better? Without specifically knowing what you’re looking at I would look to how extension of credit is defined in 12 CFR 215.3. Specifically it says
    “[a]n extension of credit is a making or renewal of any loan, a granting of a line of credit, or an extending of credit in any manner whatsoever, and includes.. (5) An increase of an existing indebtedness…”

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