|
|
|
 |
Compliance Gurus
Operations Gurus
Security Gurus
Marketing Gurus
Technology Gurus
eBanking Gurus
|
Spreader Clause & New Customers
by Richard Insley, BOL Guru
BIO AND CONTACT INFO
Question: Our loan documents contain a spreader clause indicating that collateral securing other loans may also secure the new loan. Should we be marking this box, when this is a new customer with no previous loans. Do we have the right to secure loans that have not been made. We are under the impression that this box should be marked all the time including unsecured loans.
Answer: First, review the language in all deeds of trust you use for all types of residential credit. You are looking for spreader clauses--provisions that pledge the subject collateral to secure all existing or future advances to the same borrower.
Next, assuming you find at least one type of collateral document that "spreads" the residential lien, decide whether you want the risk of rescission violations on other types of consumer loans. If not, revise these notes to specifically disclaim the pre-pledged collateral. Now, no disclosure is necessary. If you do want to spread the lien, then you should make the disclosure box to indicate that it may apply.
First published on BankersOnline.com 8/05/02
Home | Compliance | Lending | Operations | Security | Marketing | Technology | eBanking
BOL Archives Privacy Policy Important Disclaimer Recommend This Site ! Contact Us
BankersOnline is a free service made possible by the generous support of our
advertisers and sponsors. Advertisers and sponsors are not responsible for site content. Please help us keep BankersOnline FREE to all
banking professionals. Support our advertisers and sponsors by clicking
through to learn more about their products and services.
|
|
|
Print Friendly!
Email This Article!
Discuss NOW!