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Implementing Fees For Changing Collateral

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Question: 
The Loan Department at my bank wants to implement a new fee for customers changing collateral, i.e., vehicles on an existing loan. Evidently, they have a few customers who buy and sell vehicles quite often and instead of doing a new loan, the bank simply changes the collateral securing such loans. If this is done for all customers who change collateral, do we still have a problem? Are we required to do new disclosures?
Answer: 

Does your state allow such a loan fee? If it does, or if it is not prohibited it is reasonable since your security agreement and individual titles must be changed. Disclosures other than that should not be required.

First published on BankersOnline.com 10/21/02

First published on 10/21/2002

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