Would a loan where the co-signer is on active duty be a covered loan ?

Thanks

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.

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.

Thank You ! We did treat them as a covered borrower.

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.

FWIW, we reached out to external counsel in preparation for MLA and they offered the same opinion as Andy and Dan.

I agree with Dan.