We've got one I haven't seen before - or if so, it's never been brought to my attention. Two loans in the name of the custodian for minor children as an UTMA. There are some issues I'm not sure how to handle. These are for rental property, subject to HMDA. Do we collect monitoring info on the minors or just the custodian? Are the minors actually joint borrowers? Is interest reported in the name of the minors or the custodian? I've only encountered this in deposit accounts and the TIN collected is that of the minor, so logically, interest is reported in the name of the minor on a loan.

Thanks for any advice! I've got a call in to our attorney, just wondered if anyone else has any info!

I think you're going to need to look at your state law for a final answer. In 1992, Tennessee enacted the Uniform Transfers to Minors Act ("UTMA"), T.C.A. §§ 35-7-201.

But off the top of my head, I would question whether this loan can be made. UTMA does not establish a separate legal entity, like a trust does. The purpose of UTMA is to provide a responsible adult custodian to hold property that belongs to a minor until the minor comes of age.

I would question whether the custodian has the right to offer the property as collateral for a loan, since it doesn't belong to them. The property does belong to the minor, but they aren't able to enter into a contract and I don't believe the custodian has the ability to bind them personally.

Your title insurance company may also be able to help you. At the least, they can tell you how the underlying property is current and/or can be vested.

Thank you so much. I wondered whether this loan could be made also, but just wasn't sure.

I should have followed my own advice and check MY state law. Turns out I was wrong, at least in Washington. Our UTMA specifically grants the same powers to the custodian as are granted to a trustee. The only caveat is that they must exercise those powers in their custodial capacity. Live and learn!