Reg B says generally that for secured loans you may only require owners of any collateral for a loan to sign the documents necessary for the lender to access the collateral, and not require them to sign the promissory note.

Is the inverse of this a problem? Suppose a bank purchases contracts from auto dealers. Assume too that there has been a problem with the dealers placing individuals names on vehicle titles, but failing to have them execute security or pledge agreements. Can the bank instruct its dealers to have vehicles titled only in the names of the signatories to the promissory note? Would this be a Reg B violation? Can you direct me to any language that clarifies this? Are there issues other than with Reg B? Thanks in advance for any assistance.

If I were a buyer and was told I couldn't title the car in both names because someone has decided that I can't own the car unless I sign the note, I would be furious. This is even worse than matter-of-factly learning that I'm a victim of the USUAL type of MS discrimination. Next stop after the dealership would be my lawyer's office.

I'd suggest you check your dealer agreement - if there's a mismatch between what you approved and the title of the vehicle in terms of the security agreement, don't cash the contract. Make the dealer get it right.

If you impose your suggested approach, what's your response when the dealer sends you a contract that still has mismatches?

As for the Reg. B implications, I think you'd be setting yourself up for a huge problem. If I'm reading your proposal right, you're saying that my wife, who applies alone and is approved, can't place me on the title unless I sign the note. Textbook spousal-signature violation, and clear gender-based discrimination. Prepare to release me from the obligation. This may also show up in your CRA P/E. PLEASE find another alternative.

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- Bart Jonker, CRCM

Opinions stated are not legal advice, and are not necessarily the opinions of OAK Financial Corp.

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Can the bank instruct its dealers to have vehicles titled only in the names of the signatories to the promissory note?

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Perhaps a better approach would be to require that anyone named in the title to the vehicle must also sign the security agreement or collateral pledge?

It may be hard to leave out the Promissory Note, since most dealers (or at least the ones I have seen) have that 4 foot long document that includes the Purchase Contract, Reg Z Disclosure, Promissory Note, Security Agreement, Insurance offer, warrenty offer, and general-kitchen-sink-boilerplate.

I guess the question is - what are the repercussions if you try to repossess a vehicle when one of the owners has not signed the collateral agreement? Or does the Dealership have a separate form for the non-borrowing owner?

[This message has been edited by Bonnie M (edited 02-14-2002).]