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#1723550 - 07/26/12 01:19 PM Description of Security
Beckster Offline
Member
Joined: Aug 2005
Posts: 64
Minnesota
When Truth in Lending states that a brief description of collateral must be listed in the fed box, what is brief? In a previous exam, we were written up for not listing the address of a residence on a real estate loan, not including the s/n of a vehicle, etc. Recently I was told that was not necessary, that only the "purchase of residential real estate" or "purchase a vehicle" is needed.

Would someone help me with clearing this up? I do not want a repeat violation in my next compliance exam.

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Lending Compliance
#1723558 - 07/26/12 01:26 PM Re: Description of Security Beckster
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
You should have never been written up in a audit or an exam. You need to review the Commentary to Reg. Z section 1026.18(m).

http://www.bankersonline.com/regs/12-1026/12-1026-018.html


Purchase money transactions. When the collateral is the item purchased as part of, or with the proceeds of, the credit transaction, §1026.18(m) requires only a general identification such as “the property purchased in this transaction.”
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1723559 - 07/26/12 01:27 PM Re: Description of Security Beckster
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Your examiners are nuts and all you have to do is show them the Reg. Z commentary:

18(m) Security Interest

1. Purchase money transactions. When the collateral is the item purchased as part of, or with the proceeds of, the credit transaction, §1026.18(m) requires only a general identification such as “the property purchased in this transaction.” However, the creditor may identify the property by item or type instead of identifying it more generally with a phrase such as “the property purchased in this transaction.” For example, a creditor may identify collateral as “a motor vehicle,” or as “the property purchased in this transaction.” Any transaction in which the credit is being used to purchase the collateral is considered a purchase money transaction and the abbreviated identification may be used, whether the obligation is treated as a loan or a credit sale.

2. Nonpurchase money transactions. In nonpurchase money transactions, the property subject to the security interest must be identified by item or type. This disclosure is satisfied by a general disclosure of the category of property subject to the security interest, such as “motor vehicles,” “securities,” “certain household items,” or “household goods.” (Creditors should be aware, however, that the Federal credit practices rules, as well as some state laws, prohibit certain security interests in household goods.) At the creditor's option, however, a more precise identification of the property or goods may be provided.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1723570 - 07/26/12 01:38 PM Re: Description of Security Beckster
Beckster Offline
Member
Joined: Aug 2005
Posts: 64
Minnesota
Thank you Dan. I am sure everyone will like this news.

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