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#2131006 - 05/18/17 07:39 PM MLA-Cosigner
DRHTPB Offline
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Would a loan where the co-signer is on active duty be a covered loan ?

Thanks

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#2131208 - 05/19/17 07:30 PM Re: MLA-Cosigner DRHTPB
Andy_Z Offline
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232.3(c) tells us a covered borrower is a person (generally speaking) on active duty when s/he becomes obligated on the loan.

Depending on your definition of a "co-signer" which I usually put in the category of a guarantor as opposed to a co-borrower, the question is when does that person become obligated? If they're not obligated until default by the borrower they are not a covered borrower at the time of the loan.

A co-signer/guarantor do not have to pay the loan until the borrower defaults. (I've heard some states have different rules, so check yours.)

This is my opinion and I have not seen anything that officially addresses this.
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#2131224 - 05/19/17 08:24 PM Re: MLA-Cosigner DRHTPB
Dan Persfull Offline
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If the "co-signer" is signing the note then they become directly liable for the debt. The Notice to Co-signer even tells them that the debt can be collected from them without the creditor fist trying to collect from the borrower.

Based on that I would say they are covered, or at least I would treat them as covered. If they are a guarantor, signing a separate guaranty agreement, then I would look at Andy's logic to determine when they become liable and only your guaranty agreement can answer that question.
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#2131648 - 05/24/17 02:16 PM Re: MLA-Cosigner DRHTPB
DRHTPB Offline
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Thank You ! We did treat them as a covered borrower.

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#2131720 - 05/24/17 05:05 PM Re: MLA-Cosigner DRHTPB
Andy_Z Offline
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I believe Dan and I are in agreement. As I have researched this in the past I've heard differing definitions of the person's capacity. "Signing the Note" sounds like a good test.
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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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#2131838 - 05/24/17 10:37 PM Re: MLA-Cosigner DRHTPB
GuitarDude Offline
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FWIW, we reached out to external counsel in preparation for MLA and they offered the same opinion as Andy and Dan.
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#2132098 - 05/26/17 03:07 PM Re: MLA-Cosigner DRHTPB
Comp@2005 Offline
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Posts: 55
I agree with Dan.

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