The consumer lending department has proposed within our indirect lending dealers that, in an effort to avoid structuring cosigner loans, they like to have all parties be on the vehicles title. Consequently, the ownership of the asset would qualify as a benefit and they could structure the loan as joint borrowers rather than a cosigners. Only if the customers were adamant that only the maker would be on the title, then they would require the loan to be structured as a cosigner loan. We are pretty sure there are fair lending/UDAAP implications as a result of exceptions that would ultimately be allowed.

Could this be done as a matter of policy for indirect deals, could we require coborrowers rather than cosigners? Could we then, as a matter or policy, only allow cosigners on our direct loans? Do you see any issue with this?

I see no problems with it as long as you are absolutely consistent. The " Only if the customers were adamant" is the real issue.

I'm not an attorney, but by putting someone on title would indicate they have an ownership interest in the vehicle. Wouldn't that also include a financial liability in the event that their vehicle is involved in an accident, or mandated insurance covering that person too?

I cosigned for my child - she carries state minimum insurance because she has no assets (other than the Bank of Mom & Dad, If I were on title, and she wrapped the car around someone, and they sued, most likely, I would be also named in the suit, with substantially more assets to go after.

I would have your attorneys review the potential of forcing someone to be on title, and if the bank could suffer a reputational risk if the co-borrower was sued.

You are not forcing anyone to be on title. You would just say - we are not buying any indirect paper that involves co-signers. What the consumer and dealer chooses to do at that point of time is up to them. There is no requirement that I know of that says a bank has to allow co-signers.