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#2066860 - 03/01/16 06:16 PM Cross Collateralization Clause
CULady Offline
Gold Star
Joined: Sep 2007
Posts: 495
WA
Can someone help me to understand what exactly the MLA is talking about in 232.8(e)(3)?

(e) The creditor uses a check or other method of access to a deposit, savings, or other financial account maintained by the covered borrower, except that, in connection with a consumer credit transaction with an MAPR consistent with ยง232.4(b), the creditor may:
...
(3) If not otherwise prohibited by applicable law, take a security interest in funds deposited after the extension of credit in an account established in connection with the consumer credit transaction.

So we can only use the funds deposited after the consummation of the loan? And it would only be any share/checking associated with the loan account? We wouldn't be able to use other accounts that they may have within the institution?

Many thanks!

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#2068919 - 03/14/16 04:27 PM Re: Cross Collateralization Clause CULady
Questions Offline
Member
Joined: Jun 2009
Posts: 85
I have the same questions on this. Does anyone have a clear explanation?

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#2069584 - 03/16/16 04:35 PM Re: Cross Collateralization Clause CULady
Minion Offline
Member
Minion
Joined: Jun 2015
Posts: 64
Virginia
I have the exact same question and have not found an answer yet.

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#2073113 - 04/08/16 06:27 PM Re: Cross Collateralization Clause CULady
elebra Offline
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Joined: Apr 2009
Posts: 106
I'd like the answer as well.

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#2074510 - 04/18/16 04:44 PM Re: Cross Collateralization Clause CULady
JC Offline
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Joined: Jan 2014
Posts: 147
Oklahoma
Anyone...anyone???

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#2074526 - 04/18/16 05:36 PM Re: Cross Collateralization Clause CULady
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,855
Bloomington, IN
I haven't spent much time on this yet but here's my take.

You cannot extend credit to a covered borrower and require the use of a check, withdrawal slip, etc. as access to the account for repayment. You can however take a security interest in funds deposited after the extension of credit in an account established in connection with the consumer credit transaction.

I do not believe this gives you the authority to establish a security interest in an existing account where the funds may be deposited.

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