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Signatures Open-End Loan Complex – Multiple documents and Signatures are needed. Signatures when loan is obtained. Note is combined with the Pledge of Collateral – so only (1) set of signatures is required. Risks: De Minimis Assuming all parties who are borrowers or owners of the collateral sign the note and security agreement to document the pledge of collateral to the Credit Union. Execution Requires Execution and Signatures when loan is obtained on Credit Plan. Later is Time – when collateral is pledged the Credit Union is required to obtain a second set of signatures by way of a Disbursement Voucher and Security Agreement; or by use of a proper restrictive endorsement on the back of the loan proceeds check. when properly used. System is also Compliant when properly used. Risks: De Minimis Assuming all parties who are borrowers or owners of the collateral sign the note and security agreement to document the pledge of collateral to the Credit Union. In assessing just how compliant the Credit Union has been on the assumption that it uses its current MFOE system well – we recommend the following to test your understanding and use: Pull 30 current OE Loans where a Security Internets ins Car, Boat, Truck, etc., was pledged to the Credit Union. Assess the following: As to collateral loans, did the Credit Union in fact obtain the signatures of all owners of the collateral pledged on the Security Agreement used? This item will need to have been created and sighed close in time to the loan/advance secured by the collateral. If any one needed signatures was not obtained – the If the Credit Union relies upon the execution of a loan proceeds check with a restrictive endorsement assess: (1) IS the check payable to all owners?; and (2) did all owners in fact endorse the check? If the owners did not sign the restrictive endorsement If there Credit Union relies on the third party owner who is not a borrower to pledge a security interest -- If the collateral pledged is owned in whole or in part by Copyright©1994-2010 by Credit Union Resources & Educational Services, LLC. All rights reserved. Revised February 2010 46
Credit Union’s lien right are not complete. on the check properly and the Credit Union has no other manner to document the pledge of the security interest – then the Credit Union’s lien rights may not have attached. If there were a third party owner who was not a borrower the Credit Union could not list the third party owner on the check, but would have to use a separate security agreement or third party pledge form. another person who is not a borrower – did the Credit Union obtain a properly third party pledge from the other owner. Many Credit Unions make misstates in documenting the giving of security interests based on the requirement of OE lending and the options discussed above. As noted, both can work if used properly, but one is much easier ands does not require as many “parts” to document compliance. Intimately the forms systems question is for the Credit Union to assess and determine. However, you need to also assess what you are using, determine if you are using it as intended; and whether or not doing so – in order to understand the risks the complexity of OE Lending exposes you to. How to verify if your credit union is in proper compliance with Fair Credit Reporting Act / FACT Act Copyright©1994-2010 by Credit Union Resources & Educational Services, LLC. All rights reserved. Revised February 2010 47
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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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NOTE: The BSA also contains a “wh
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Page 41 and 42: Compliance Update - II REGULATORY A
Page 43 and 44: Introductory Notes: Knowing if you
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Page 53 and 54: IV. POLICY REGARDING CONFLICTS OF I
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Page 67 and 68: A Review of ‘Red Flags’ and wha
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Page 83 and 84: Underwriting Advertising In July 20
Page 85: 135-2009 Community Notice // OE/CE
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