We received a notice that another lender will be making a loan to an existing customer. They state they will be taking a purchase money interst in a variety of items. The problem is that we actually provided the purchase money for said items six months ago and have a perfected lien. Do we need to send return notice that we dispute their claim?

I would definitely let them know and then I would do a full credit review of this customer - you might not have the collateral that you think you do either if he has made a habit of double pledging assets.

1) Did you do a lien search in advance of your loan?
2) Agreed. Let them know you financed certain items already and tell them you have a lien.
3) Meet with your borrower and review the credit. Determine if you need an exit strategy with the borrower or if this is a misunderstanding.