SOOO........ Where would I find what was required for loans, particularly the note for 2004 and older?


We did some analysis of payments and principal during an audit and found some old loans with liquid security that have some odd terms. I was reading the notes and obviously things are different. Customers are paying according to the terms which seem to be 2% above the current CD rate. But there is no maturity date or term on the notes. So people have been paying just interest on the loan for a long time.

My boss thinks we need new notes, not happening, the customer signed the note and the e bank at the time agreed to the terms so the way I see we can't even ask for new notes(I have no idea why they think we can).

But I need backup for my argument. Can I get historical info from a government website somewhere?

I'm not sure what you think Reg. Z has to do with this situation? If you are not servicing the loans according to the notes, then you have a breach of contract. If you are servicing the loan according to the note, then whether or not the terms that were originally offered would be a State law issue and not one of Federal regulations. Any liability to a consumer for a Reg. Z disclosure made in 2004 would have expired a long time ago.

So a couple of the customers appear to be paying according to terms, others are not. For all the loans, my boss thinks we should demand payment and then offer to finance with new notes. I am trying say we can't do that, at not for the ones paying according to the terms of their note. Am I right?

The terms of repayment and consequences for not repaying timely should be in the contract between the bank and customer, also called the "note".

Anything other than that would be unilateral. If you have concerns, it should best be discussed with bank counsel who is familiar with the bank documents and state laws.

It sounds like your boss comes from a deposit servicing background. On that side of the ledger, account agreements commonly allow banks to change terms when they feel like it. Credit doesn't work that way. Consult with your bank's attorney and you'll learn that the terms of credit contracts can only be changed with the borrower's express agreement.

Customers who are not paying according to the terms of their agreements are subject to the remedies spelled out in their notes. If acceleration is one of those provisions, then feel free to pull the plug. You would then be free to negotiate alternate financing terms if you want to keep these customers.

Customers who are paying as agreed are "good customers." As long as they comply with the terms of their credit agreements (no matter how much you dislike those terms), you can only wait, watch, and be prepared to jump in the event of default.

OK that is what I thought. Luckily they are the only one that think we should call the loans.