I have a loan officer who is wanting to give loan information (such as balance, payment amount, whether the loan is current, etc.) to a person that is only a grantor of collateral in the transaction. The transaction is a commercial real estate loan, and the collateral owner would like to get this information in order to start making the loan payments if the borrower stops paying. The collateral owner/grantor is not a guarantor or any other way obliged on the loan. Are we allowed to give this information to them just because they granted the collateral?

Why would you not? I am sure the LO does not want to be standing in front of a judge during the foreclosure proceeding and have the owner of the property tell the judge that they tried repeatedly to get information on the loan that was secured by their property and the bank refused to tell them anything prior to initiating foreclosure.

Right, I wasn't thinking from that angle, just thinking about privacy concerns. But the collateral owner would have every right to know if their property was in danger of foreclosure.

You said a commercial loan, so Reg. P would not apply, but even if it did under 1016.15(a)(2) you have the following exception:

(iv) To persons holding a legal or beneficial interest relating to the consumer

If pledging collateral for a loan is not a legal or beneficial interest relating to the consumer, I'm not sure what is.

As Randy points out, Privacy has exemptions. In general, there are lots of exemptions that basically say you can provide info to those that need to know. Just ensure they are who they say they are and that they have a need to know.

Too many institutions say Privacy won't let them verify checks, help other institutions find a customer that has skipped out on them, etc. That's not what Privacy says and the authors (Gramm, Leach and Bliley) have all said that's not what they intended when they wrote the Act.