Utah Administrative Code (Current through November 1, 2019) |
R331. Financial Institutions, Administration |
R331-12. Guidelines Governing the Purchase and Sale of Loans and Participations in Loans by all State Chartered Financial Institutions |
R331-12-3. General Rule
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(1) A written participation agreement covering multiple or individual participations will be on record at each participating institution, and shall include, at a minimum, the following:
(a) The party to the agreement to be paid first from the loan repayment proceeds;
(b) Party responsible for collection of the note in the event of default;
(c) How collection or other expenses related to the participation will be divided among the participants;
(d) Recourse arrangements in writing outlining the rights and obligations of each party. Generally, loans will not be sold on a recourse basis except in cases where the sale is made for the purpose of obtaining temporary funds for operations.
(2) In addition, a financial institution which buys and sells loans or participations in loans shall establish written policies setting forth satisfactory controls over such sales and purchases. At a minimum, the following conditions shall be met:
(a) The loan must comply with applicable state and federal laws;
(b) The purchased loan must conform to the financial institution's lending and loan approval standards;
(c) Complete and current credit information must be maintained during the term of the loan;
(d) The financial institution must maintain evidence of sufficient overall loan documentation including an analysis of the value and lien status of collateral;
(e) The status of principal and interest payments including accrual status must be available.