regulatory and compliance issues and considerations

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