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?
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…