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#1711090 - 06/15/12 07:39 PM Checking Line of Credit
LinMarie Offline
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LinMarie
Joined: Nov 2001
Posts: 243
Is there a regulation that requires each owner/signer of a checking account to be a borrower on the note of a credit line attached to it?

Example: Husband and wife have a joint checking account with an attached checking line of credit. The credit line is in the husbands name only. Are we required to redo the line of credit to have both names on credit line too?

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Lending Compliance
#1711147 - 06/15/12 09:20 PM Re: Checking Line of Credit LinMarie
Princess of Power Offline
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Princess of Power
Joined: Aug 2002
Posts: 406
Napa, CA
We require all owners of the checking to sign the note, if there are authorized signers on the checking they need to be authorized to advance within the note.

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#1711220 - 06/18/12 01:22 PM Re: Checking Line of Credit LinMarie
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,644
Bloomington, IN
There is no law that I am aware of that mandates you require all owners of the deposit account to become obligated on the overdraft line of credit account. However, keep in mind the overdraft agreement covers all overdrafts to the account. If you do not have all owners of the deposit account obligated on the ODL then they (the ones not on the ODL) have no liability to pay the ODL if it goes bad.

We do the same as PoP. We require all owners of the deposit account to be covered by the ODL to sign the ODL agreement. We do not require authorized signers though. They have no legal obligation because they are not owners of the account and our ODL agreements covers all advances against the account regardless of the party of the deposit account that causes the overdraft.
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The opinions expressed are mine and they are not to be taken as legal advice.

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