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#408414 - 08/15/05 01:36 PM Silent Guarantors?
Anonymous
Unregistered

A questions for the group:

Can an individual or business stand as guarantor for an applicant without the applicants knowledge? If so, are their any disclosure issues? If not, can you please let me know what regulation/law governs? Thanks!

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Lending Compliance
#408415 - 08/15/05 01:53 PM Re: Silent Guarantors?
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,017
Bloomington, IN
Privacy is the first thing that comes to my mind - where's your authorization to share the NPI with the "silent" guarantor.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#408416 - 08/15/05 02:06 PM Re: Silent Guarantors?
Anonymous
Unregistered

Thanks, Dan...I was thinking about the Privacy piece. But I'm wondering if we can just get a signed guaranty letter from the guarantor placed into the loan file.

But I still think the fact that if the guarantor were asked to repay at some future that that alone would be a breach of the applicant/Customers privacy...I think I just answered my question...LOL!

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#408417 - 08/17/05 02:35 PM Re: Silent Guarantors?
Anonymous
Unregistered

My loan department is committed to getting this done, so I have to think of something. Any thoughts on having the Customer giving a specific Privacy waiver to allow this guarantor access to this loan information?

I know it sounds weird, but I need to figure out a viable solution to saying we can't do it. Anyone have any thoughts they'd like to share - can the Right to Privacy be waived? I think it can, but I've never seen it done.

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#408418 - 08/17/05 03:09 PM Re: Silent Guarantors?
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,017
Bloomington, IN
I don't know what to tell you. Why is so important the guarantor remain "silent"? What will be the reason you give the borrower for asking them to waive their rights, which I'm not even sure they can do under the Regs. The Reg. is specific about what and with whom you can share information without the borrower's consent - and IMO a waiver would not be "consent", especially if the borrower does not fully understand what they are waiving and why.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#408419 - 08/17/05 03:20 PM Re: Silent Guarantors?
KrisH Offline
Gold Star
KrisH
Joined: Mar 2003
Posts: 358
Massachusetts
I assume that for the moment the applicant thinks he is applying for credit on his own? And if that's the case, and he doesn't qualify on his own, you would have the obligation to tell him that he needs a cosigner/guarantor to get the loan. I also seem to recall that the bank can't require a specific individual or entity to be a guarantor, that the applicant would have to offer one? I guess the question that needs to be asked is how exactly does this guarantor fit into the big picture in the first place?
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My opinions are my own and do not necessarily reflect the opinions of my employer.

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#408420 - 08/17/05 03:50 PM Re: Silent Guarantors?
HRH Okie Banker Offline
Power Poster
Joined: Jan 2003
Posts: 3,070
Oklahoma
I've seen a few loans like this in the past. Usually you have someone (big wig) tell your officer or executive that if John Doe comes in the bank for a loan, please make the loan and they will guaranty it. They ask you not to let the borrower know that they have helped out.

The officer should tell the "Guarantor" this is no longer possible and explain the reasons why. I'm sure this person would understand and not want to put the Bank in the position of doing anything wrong.
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Just working here until I get my letter from Hogwarts.

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#408421 - 08/17/05 05:06 PM Re: Silent Guarantors?
Anonymous
Unregistered

I agree. I just did that Okie...We'll see how it shakes out.

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