The OCC Reaffirms the Valid-When-Made Doctrine

On his first day in office, Acting Comptroller of the Currency Brian Brooks finalized a proposed regulation that codifies the valid-when-made principle, that a loan that is legally originated continues to be valid upon its transfer, sale, or assignment (Final Rule).  Codified at 12 C.F.R. § 7.4001 and § 160.110, the Final Rule will apply to both banks and savings associations and is designed to resolve the legal uncertainty and risk created by the Madden decision.  The Final Rule, like the OCC’s proposal, does not address the related true lender issues.