Skip to content
GeoDataVision
Thread Options
#2206564 - 02/20/19 04:36 PM CD Secured Loans
beegee Offline
Diamond Poster
Joined: Feb 2004
Posts: 1,098
South
We are looking at our underwriting process on CD Secured Loans. Currently we do not pull credit or require income information for a debt-to-income ratio.

Are there any predatory lending concerns with this practice? i.e. - a full analysis may show high DTI or low credit score which could impact repayment ability?

Return to Top
Lending Compliance
#2206571 - 02/20/19 05:06 PM Re: CD Secured Loans beegee
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,663
Galveston, TX
There are no ATR requirements on non-mortgage related transactions. They can either get a loan and make payments or cash in the CD. Not sure why you would need to jump through all the hoops - they can pay either way.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2206577 - 02/20/19 05:21 PM Re: CD Secured Loans beegee
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,426
Florida
The major concern in that case would be the collateral, not repayment.
Major issues might be an IRS or tax levy which might impair the collateral - anything superior to the bank lien.
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top
#2206580 - 02/20/19 05:28 PM Re: CD Secured Loans beegee
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,663
Galveston, TX
Good point Rocky
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2206587 - 02/20/19 06:11 PM Re: CD Secured Loans beegee
Skittles Offline
10K Club
Skittles
Joined: Sep 2002
Posts: 13,963
TN
And at a bank where I worked a CD held as collateral was taken through Civil Asset Forfeiture. Doesn't happen often - but it does happen.
_________________________
My Opinions Only

Return to Top
#2206598 - 02/20/19 07:17 PM Re: CD Secured Loans beegee
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,070
Toano, VA
Strangely, ECOA may be your biggest risk. From the creditworthiness standpoint, CD-secured loans are almost 100% risk-free. Eliminating creditworthiness as a variable, regulators can do reliable file comparisons looking for disparities in pricing and other terms attributable to other factors--especially gender, marital status, race, and other prohibited bases. Your policy for these loans must be air-tight and you can afford no exceptions.
_________________________
...gone fishing.

Return to Top
#2206878 - 02/22/19 06:45 PM Re: CD Secured Loans beegee
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,855
Bloomington, IN
Currently we do not pull credit

If the MLA coverage is verified through the credit report be sure you are going to the MLA Website to verify the bororwer's active duty status.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top

Moderator:  Andy_Z