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Agreement/Advance Voucher; and either this item or the “advance proceeds check” has to be signed. Thus, signatures are generally required for collateral loans (which most CE loans are). Note: The MFOE Plans rely on advance proceeds checks being properly drawn and endorsed to provide a proper security interest under UCC Article 9. Query – pull a sampling of your current OE loans and see if: (1) The checks are always made payable to all owners of the collateral to be pledged; and (2) all of those persons actually endorse the advance proceeds check. laws have caught up with technology. Remote lending is very much possible; most likely simpler; and less likely to create the paper mistakes of current OE systems. Remote Lending See Above See above. Also with a CE Loan Application that provides the Application will serve for all loan requests, the CE system and technology can in fact facilitate remote lending. Internet banks use it exclusively – not OE loan forms. In Branch Closings See Above See Above Modifications “Skip-a-pay” Programs As an OE Plan (an ongoing relationship) many changes require disclosures under TILA/Z; of may need to be addressed via the Credit Union’s Periodic Statement with revised or additional disclosures. Require additional disclosures; or in most cases – are not allowed where fees are charged (as these fees affect the APR). As a CE loan, modifications generally require no disclosures. Though some simple confirmation is generally recommended. Readily Available as TILA/Z have no requirements; and fees are not considered in the APR. Moving forward together to meet members' needs and to exceed expectations, Todd Copyright©1994-2010 by Credit Union Resources & Educational Services, LLC. All rights reserved. Revised February 2010 44
135-2009 Community Notice // OE/CE Loan Assessment and Comparison and Understanding Common Security Interest Documentation Issues Credit Union’s Face; and comparing OE versus CE Systems Assessing Fairly and Honestly OE vs. Closed End: To Determine which is the Better Compliance Solution for the Credit Union for July 2010 AND Thereafter? Closed-end versus Open-end – Signatures Required for Secured Loans are also required for Secured Advances under an LOC where a New Collateral Interest is Pledged. Misleading Sales Programs on the Simplicity of OE Lending Plan without a Discussion of the Risks of failing to property perfect such loans -- This is intended to dispel the somewhat misleading statement that MFOE Lending Plans are Better due to the fact that a Credit Union is required to obtain new signatures on each Closed-End loan it makes (with it being considered a given that this is not the case with OE Lending). This is not necessarily true as to collateralized OE loans. In fact, a MFOE Lending Plan is not based on one set of signatures. It is based on one set to establish the plan; and then may require follow up – additional signatures as time goes on in connection with collateral pledged to secure each loan/sub-account under the MFOE Plan. It is here that a Credit Union may face greater concerns that it may necessarily understand; and in considering the following – a simpler CE option may actually lead to lesser exposure to the Credit Union. Regardless of whether the Credit Union ultimately chooses OE or CE lending (as both will work “IF” properly used) – a Credit Union must assess and understand the following issues. Why does not one signature cover all loans/sub-accounts? It is a state law issue governed by laws that establish lien rights such as Article Nine of the Uniform Commercial Code (“UCC”). These laws require that a borrower give a lien at a time that is “proximate” to the time the lien is created (and thus a signature on a MFOE Plan months or even years before is likely not considered “proximate” to the time a car loan sub-account is opened on a five year old plan). Ref. Articles 9-203 and 9-204 of the Uniform Commercial Code. What is the Risk? The Credit Union may be using a MFOE Plan with one set of signatures to open a plan; and then the Credit Union uses a separate disbursement voucher and/or security agreement or a restrictive endorsement on the back of the OE Loan Disbursement Check to address the need for a signature for the pledge of the collateral intended to secure the loan. In assessing this compare: Closed-End Loan Execution Compliance Simple, but requires Requires Execution and System is Compliant Copyright©1994-2010 by Credit Union Resources & Educational Services, LLC. All rights reserved. Revised February 2010 45
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Compliance Update - I REGULATORY AN
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Introductory Notes: Basic Obligatio
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performed by boards of directors. T
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What if an applicant “volunteers
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Please answer the following questio
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MULTIPLE ISSUES AND RESOURCES - SOM
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• Review of the negative shares r
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illustrates how certain provisions
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SAMPLE CREDIT UNION BUSINESS PLAN M
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EMPLOYMENT AGREEMENT Revise to addr
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13. Evaluate the job performance of
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2. By Employer For No Cause. Employ
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Vendor Due Diligence II Security As
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Vendor Due Diligence VII TERM AND T
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Vendor Due Diligence XII Backgroun
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Monitoring the Vendor At a minimum,
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Page 41 and 42: Compliance Update - II REGULATORY A
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