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#2093363 - 08/15/16 10:35 PM
MLA POLL: Will you offer CD/Savings Secured Loans
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Gold Star
Joined: Sep 2007
Posts: 496
WA
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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...?
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#2093459 - 08/16/16 03:26 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
CULady
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Gold Star
Joined: Sep 2007
Posts: 496
WA
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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
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Gold Star
Joined: Sep 2007
Posts: 496
WA
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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
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10K Club
Joined: Oct 2000
Posts: 27,748
On the Net
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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.
_________________________
AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#2095348 - 08/25/16 07:26 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
CULady
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Diamond Poster
Joined: Mar 2013
Posts: 1,265
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Has everyone changed their vote to "yes" based on the Interpretive Rule??
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#2095363 - 08/25/16 08:22 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
Mel in WA
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New Poster
Joined: Aug 2016
Posts: 8
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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
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Diamond Poster
Joined: Sep 2014
Posts: 1,294
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Has everyone changed their vote to "yes" based on the Interpretive Rule??
yes
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CRCM, CAMS
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#2095616 - 08/26/16 07:44 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
CULady
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Gold Star
Joined: Dec 2006
Posts: 499
Knee Deep in Regs
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We have changed our vote to yes as well.
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What we think, we become. Buddha
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#2095637 - 08/26/16 08:42 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
Beachbum, CRCM
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Platinum Poster
Joined: May 2003
Posts: 639
South Louisiana
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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
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Gold Star
Joined: Nov 2008
Posts: 498
Texas
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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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Nothing ruins a Friday like realizing it is only Thursday
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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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Gold Star
Joined: Sep 2001
Posts: 440
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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
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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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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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#2097746 - 09/09/16 06:34 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
John Burnett
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Gold Star
Joined: Sep 2007
Posts: 496
WA
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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
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New Poster
Joined: Mar 2016
Posts: 8
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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
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Gold Star
Joined: Nov 2008
Posts: 498
Texas
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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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Nothing ruins a Friday like realizing it is only Thursday
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#2098389 - 09/14/16 01:49 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
peony
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Power Poster
Joined: Aug 2001
Posts: 7,351
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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. Andy, for us dense people....and maybe I am the only one ...would you explain your above statement?
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The more you sweat in training, the less you bleed in battle.......
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#2098665 - 09/15/16 03:46 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
CULady
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Diamond Poster
Joined: Apr 2003
Posts: 1,636
snorkeling in warm, clear wate...
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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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CRCM|CAMS
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#2098668 - 09/15/16 03:53 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
HMS Pippii
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Gold Star
Joined: Sep 2007
Posts: 496
WA
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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.
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
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Gold Star
Joined: Nov 2008
Posts: 498
Texas
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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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Nothing ruins a Friday like realizing it is only Thursday
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#2098781 - 09/15/16 09:35 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
HMS Pippii
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100 Club
Joined: Jun 2001
Posts: 231
Texas
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We will be doing savings/CD secured loans too.
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Brenda W, CRCM
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#2098783 - 09/15/16 09:40 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
CULady
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10K Club
Joined: Oct 2000
Posts: 27,748
On the Net
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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.
_________________________
AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#2098784 - 09/15/16 09:43 PM
Re: MLA POLL: Will you offer CD/Savings Secured Loans
Andy_Z
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Power Poster
Joined: Aug 2001
Posts: 7,351
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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. Ah! That makes sense! Thanks, Z.
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The more you sweat in training, the less you bleed in battle.......
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