We have a couple that is obtaining a consumer loan secured by another consumer's motorcycle. The grantor of the motorcycle is in the military as active duty. He is not a dependent of the couple obtaining the loan either. Would MLA apply to this loan?

I wouldn't think this would be a covered loan becasue the individual in the milititary is not a covered borrower. He is just pledging collateral for the loan. I would however ensure controls are in place to ensure the motorcycle isn't reposessed without following SCRA guidelines if the loan goes bad.

I agree, and personally HATED loans like that. I believe the SCRA protections might apply in spirit, but in reality the SM has zero obligation to the bank and it couldn't be inferred the SM has to repay the debt. I'd have to study the language as that would be uncharted territory. But what happens if your borrower ships the bike to Europe, Hawaii or otherwise parks it while deployed and cancels insurance... Lots of possibilities, lots of things that could go wrong.

Andy, I didn't check into the SCRA for this but was just mentioning they should. Do you think the SCRA provisions would apply based on the fact that you're reposessing their vehicle if the loan goes bad? Sounds like a bad spot to be in if it would come to that.

What it really comes down too is taking a third party pledge of collateral on wheels is just a really poor lending decision, regardless of MLA and SCRA implications. Someone needs to go back to lending school.

I'm looking for the "Like" button, Randy.

In this spirit, check out this article. It seems SM's will abandon their vehicles when they leave Hawaii and because of the SCRA protections, the City can't dispose of them. They are now parking them at golf courses and old city buildings.

https://www.stripes.com/news/honolulu-pl...95#.WXt9bYgrKF4