Answer, David:I do not believe this is a covered loan.
Answer, Andy:I agree with David and will provide a cite because I went through this in an exam. Look to the Federal Register, Vol.62, No. 161, July 23, 1997, pg. 39525. This was for an interagency Q&A and while it discusses dwellings, I believe itis on point for the question.
8. If a borrower offers a note on a single family dwelling as collateral for a personal loan but the lender does not take a security interest in the dwelling itself, is this a ‘‘designated loan’’?
Answer: No. A designated loan is a loan secured by a building or mobile home. In this example, the lender did not take a security interest in the building, therefore, the loan is not a ‘‘designated loan.’’
First published on BankersOnline.com 3/13/06