Topic: Participation Loans
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If we sell a loan to another bank due to our legal lending limit, can we purchase back portions of the loan without amending the related participation agreement? I know we can purchase the entire loan back, but would we be violating any laws or regulations if we purchased back only portions of the loan?
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We are not aware of any laws or regulations that would prohibit a national bank from repurchasing portions of a loan originally sold pursuant to a participation agreement, provided that the purchase does not violate your institution’s current legal lending limits at the time of repurchasing and provided that the repurchase is not in violation…