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#2254936 - 06/07/21 03:57 PM Loan to an Estate
TaraTLR Offline
100 Club
Joined: May 2013
Posts: 128
I could really use some help with this. We have a customer who applied for an Unsecured Line of Credit. The loan is to the estate. This is not a trust. The personal representative is the person signing on behalf of the estate. If the loan is for consumer purpose, would it fall under Reg. Z? I know there is language in Reg. Z for Trust loans, but not loans to an estate. Would the estate be exempt as an entity like LLC's, Corporations, etc? Thank you in advance for your help.

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Lending Compliance
#2254940 - 06/07/21 04:02 PM Re: Loan to an Estate TaraTLR
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,032
Galveston, TX
Estates are not addressed in Regulation Z and I would say it is exempt. But an estate borrowing on a unsecured basis and for a line of credit is highly unusual and I have never actually ever heard of such a need. Has this transaction been vetted by your legal counsel?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2254943 - 06/07/21 04:10 PM Re: Loan to an Estate rlcarey
TaraTLR Offline
100 Club
Joined: May 2013
Posts: 128
I did actually just find out that it will be secured by a wealth management account. I also found out that it is to refinance the loan from the individual that passed away to their estate. It was previously a consumer purpose loan to the individual. I honestly don't know if it has been vetted by our legal counsel. I would assume it has, only because it has been approved by our Board. In your opinion, would this be considered a non-natural person now that it is being refinanced into the name of the estate and should be a commercial loan and not a consumer loan? Sorry for not having all of the information beforehand.

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#2254944 - 06/07/21 04:12 PM Re: Loan to an Estate TaraTLR
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 77,032
Galveston, TX
An estate is not a natural person. How you categorize a loan internally is a business decision, but it would not fall under the Regulation Z open end rules.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2254945 - 06/07/21 04:25 PM Re: Loan to an Estate rlcarey
TaraTLR Offline
100 Club
Joined: May 2013
Posts: 128
Thank you.

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