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#2093363 - 08/15/16 10:35 PM MLA POLL: Will you offer CD/Savings Secured Loans
CULady Offline
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WA
Trying to get a feel for what others are going to be doing when it comes to the CD/Savings secured loans for the Covered Borrowers.
If you are going to offer them, how are you going to manage the "new account" and taking a "security interest after" the loan is funded?
If you are not going to offer them, are you going to put something on your website reflecting that...?
Will you offer CD/Savings Secured Loans to Covered Borrowers?
single choice


Votes accepted starting: 08/15/16 10:32 PM
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#2093459 - 08/16/16 03:26 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
CULady Offline
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So for the one person two people that said they would still be offering these loans to covered borrowers, would you mind sharing a quick overview of procedures on how you are going to accomplish this?

Thanks!
Last edited by CULady; 08/16/16 05:30 PM. Reason: Update
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#2094275 - 08/19/16 04:39 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
CULady Offline
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Hoping to get a few more people to weigh in on this...

Lending ops is considering still offering them and requiring funds to be brought in and deposited and secured after the loans is funded. I am trying to see what others are doing. Looks like the data, so far, is showing that most people will not be offering the products.

For those who are offering, anyone will to share how they will be handling the logistics?

Thanks all!

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#2094374 - 08/19/16 08:13 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
Andy_Z Offline
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"requiring funds to be brought in and deposited and secured after the loans is funded"

I would scream UDAAP. This is an obvious circumvention of the law as written.
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#2095348 - 08/25/16 07:26 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
Mel in WA Offline
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Has everyone changed their vote to "yes" based on the Interpretive Rule??

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#2095351 - 08/25/16 07:38 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
CompliantOkie Offline
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We have thankfully. We don't do a ton of CD secured loans but the military members do occasionally ask for them.

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#2095363 - 08/25/16 08:22 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans Mel in WA
alwaysquestions Offline
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In reply to Mel in WA:

I have but unfortunately my compliance officer has not as of yet.

Any other compliance experts weighing in here? I am anxiously awaiting to get more feedback on this if possible.

Thanks!
Last edited by alwaysquestions; 08/25/16 08:22 PM.
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#2095555 - 08/26/16 05:16 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
bcompliance Offline
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Has everyone changed their vote to "yes" based on the Interpretive Rule??

yes
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#2095616 - 08/26/16 07:44 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
Beachbum, CRCM Offline
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We have changed our vote to yes as well.
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#2095637 - 08/26/16 08:42 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans Beachbum, CRCM
Ski Offline
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Now that we know we will be able to offer, we will.

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#2095668 - 08/27/16 02:55 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
PStateBank Offline
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The DOD's "clarification" is about as clear as mud. Question #17, the last sentence of paragraph #2.

"...Thus, for example, a covered borrower may grant a security interest in funds deposited in a checking, savings, or other financial account AFTER the extension of credit in an account ESTABLISHED IN CONNECTION with the consumer credit transaction."

Am I just splitting hairs, or is this just a really bad example that contradicts everything stated in paragraph 1 and the first part of paragraph 2?

Additionally... Question 18. "However, the fact that 232.8(e)(3) specifies a PARTICULAR TIME when a creditor MAY TAKE A SECURITY INTEREST in funds deposited does not change the effect of the prohibition."
Last edited by PStateBank; 08/27/16 04:00 PM.
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#2095725 - 08/29/16 03:13 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans PStateBank
Breeco Offline
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The example provides no clarification and contradicts what was said in prior sentences.

My thought is it is meant for the borrower to be able to give permission to access a deposit account after the debt has been established in order to maintain regular payments. The creditor just cannot arbitrarily do it to collect payments. This portion has nothing to do with collateratizing loans, but rather stopping predators from taking money from the borrower without permission. It's just poorly written and poorly explained.

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#2095974 - 08/30/16 02:22 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans Breeco
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I'm also not sure if #17 gives us an ability to use savings account as collateral when the loan is made, due to the last paragraph that gives an example "covered borrower may grant a security interest in funds deposited in a checking, savings, or other financial account after the extension of credit in an account established in connection with the consumer credit transaction." One wonders why that example was provided that appears to contradict the first paragraph. Are there more thoughts on this?

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#2096004 - 08/30/16 03:35 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
John Burnett Offline
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I do think that the DoD could have made it a lot clearer, but I read the second paragraph as an addition to the first. In the second paragraph, the DoD is saying that the covered borrower can also grant a security interest in funds yet to be deposited to the account (a "future balances" security interest), over and above a security interest in the account and its current balance. But I do understand how the second paragraph can appear to conflict with the first.
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#2097746 - 09/09/16 06:34 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans John Burnett
CULady Offline
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Okay, so bringing this topic up again...

232.8(e)(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.

Are people going to require a new account/suffix/savings/certificate EVERYTIME they want to do a savings/cd secured loan?

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#2097830 - 09/09/16 08:55 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
JWC Offline
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From Question 18:

However, the fact that § 232.8(e)(3) specifies a particular time when a creditor may take a security interest in funds deposited in an account does not change the general effect of the prohibition in § 232.8(e). Therefore, § 232.8(e) does not impede a creditor from exercising a statutory right to take a security interest in funds deposited in an account at any time, provided that the security interest is not otherwise prohibited by applicable law and the creditor complies with the MLA regulation, including the limitation on the MAPR to 36 percent.

I'm reading this to say that the timing of when the security interest is granted or the account is established isn't the critical piece of the rule. In conjunction with 16 and 17 it seems to be clarifying that a creditor cannot create a payment instrument simply on the basis that they have the accounts specifics in which to generate a payment whether through a remote checking printing option such as Quick Collect or through an Electronic payment.

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#2098238 - 09/13/16 04:33 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
PStateBank Offline
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Wolters Kluwer updated the consumer notes and the MAPR statement to comply with MLA, but did not update any of the Assignment of Accounts documents, and said they will not be autoselected for MLA transactions.

This tells me WK doesn't think CD or savings accounts are allowed to be pledged as collateral.

Anyone have any thoughts on this?
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#2098242 - 09/13/16 04:53 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
peony Offline
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Attended an webinar hosted by WK for ARTA and from what they said, the software was released before the August 29 MLA clarifications. They are supposed to get involved with their compliance team about CD/savings products and get back with us.

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#2098389 - 09/14/16 01:49 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans peony
swiggles Offline
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Quote:
"requiring funds to be brought in and deposited and secured after the loans is funded"

I would scream UDAAP. This is an obvious circumvention of the law as written.


Andy, for us dense people....and maybe I am the only one eek...would you explain your above statement?
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#2098665 - 09/15/16 03:46 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
HMS Pippii Offline
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We're doing it, we're a military bank, and we just talked to the OCC (local team). No heartburn from them.
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#2098668 - 09/15/16 03:53 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans HMS Pippii
CULady Offline
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WA
Originally Posted By HMS Pippii
We're doing it, we're a military bank, and we just talked to the OCC (local team). No heartburn from them.


Will you be opening a new account (in conjunction with the loan) and securing the funds after the loan is funded? I am seeing some interpretations that still believe this is now it needs to be done.

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#2098690 - 09/15/16 04:39 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
PStateBank Offline
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After reading more on this, the prohibition of taking a security interest in funds deposited after the extension of credit in an account established in connection with the consumer credit transaction is currently in the John Warner National Defense Authorization Act

https://www.bankersonline.com/regulations/32-232-008 BOL's read a reg

Both laws are referring to accounts established "in connection" with the loan.
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#2098781 - 09/15/16 09:35 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans HMS Pippii
BrendaW Offline
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We will be doing savings/CD secured loans too.
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#2098783 - 09/15/16 09:40 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans CULady
Andy_Z Offline
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Swiggles, the scenario I envisioned was one of, we'll make this loan, but after the loan is made you must deposit money and say you want it pledged as security. That wouldn't fly. It would completely circumvent the intent of what was written, not to mention the fact that the bank would have no ethical way to enforce such a condition.
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#2098784 - 09/15/16 09:43 PM Re: MLA POLL: Will you offer CD/Savings Secured Loans Andy_Z
swiggles Offline
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Quote:
Swiggles, the scenario I envisioned was one of, we'll make this loan, but after the loan is made you must deposit money and say you want it pledged as security. That wouldn't fly. It would completely circumvent the intent of what was written, not to mention the fact that the bank would have no ethical way to enforce such a condition.
Ah! That makes sense! Thanks, Z.
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