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#121 - 11/30/00 09:53 PM security interest in deposit accounts
A D Virr Offline
Gold Star
Joined: Oct 2000
Posts: 398
Derry, NH
For years, TILs have disclosed a security interest in deposit accounts and any other right in your accounts. The other rights presumably refers to the right of setoff. The loan documentation lacks any reference to a security interest in deposit accounts. New Hampshire statutes treat the right of set off as a contract issue not an operation of law. The Regulatory Risk Monitor identified this issue on their list of violations being cited. Am I correct in my interpretation that if no security interest in deposit accounts is created in the loan docs - it should not be disclosed.
FDIC says it's not an issue for them.

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Allan D. Virr, CRCM

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Allan D. Virr, CRCM,CRP
Compliance Audit Solutions, LLC

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General Discussion
#122 - 12/01/00 01:48 AM Re: security interest in deposit accounts
Lucy Griffin Offline

Diamond Poster
Lucy Griffin
Joined: Nov 2000
Posts: 1,544
The security interest disclosure is one that you make when taking a security interest and don't make when there is no security interest. Your situation sounds like the latter. Disclosing a security interest when you don't have one could arguably be misleading -- although it is a minor issue compared to failing to disclose a security interest when actually taking one.

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#123 - 12/04/00 06:02 PM Re: security interest in deposit accounts
Mary Beth Guard Offline
Platinum Poster
Mary Beth Guard
Joined: Oct 2000
Posts: 797
Oklahoma City, OK
Things will get interesting July 1, 2001 because on that date, lenders in states which have adopted Revised UCC Article 9 will have authority under that law to take a security interest in a deposit account. Previously, that authority was lacking in many states.

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#124 - 12/04/00 06:04 PM Re: security interest in deposit accounts
Mary Beth Guard Offline
Platinum Poster
Mary Beth Guard
Joined: Oct 2000
Posts: 797
Oklahoma City, OK
I should note, however, that this authority will only extend to commercial accounts - not consumer accounts, so it will not impact the Reg Z provision discussed in the first two messages in this thread.

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#125 - 12/04/00 06:09 PM Re: security interest in deposit accounts
A D Virr Offline
Gold Star
Joined: Oct 2000
Posts: 398
Derry, NH
Yes that is true, however the new article 9 bank deposits will be covered as primary collateral for commercial (not consumer) loans. (section 9-109) With certain exceptions a security interest in a deposit account may be perfected only by acquiring "control" of the deposit account.

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Allan D. Virr, CRCM

_________________________
Allan D. Virr, CRCM,CRP
Compliance Audit Solutions, LLC

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#126 - 12/04/00 06:11 PM Re: security interest in deposit accounts
A D Virr Offline
Gold Star
Joined: Oct 2000
Posts: 398
Derry, NH
Mary Beth - our replies crossed, you are correct. thanks for your input.

------------------
Allan D. Virr, CRCM

_________________________
Allan D. Virr, CRCM,CRP
Compliance Audit Solutions, LLC

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