August 9, 2018 at 5:03 pm #13152
Is a cosigner considered a co-applicant or co-borrower for HMDA reporting purposes? A cosigner signs the “Notice to Cosigner” as a “cosigner” (not guarantor) which is below the signature line for the “borrower”. The notice to cosigner states:
You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility. You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount. The creditor can collect this debt from you without first trying to collect from the borrower. The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of YOUR credit record. This notice is not the contract that makes you liable for the debt.
Seems to me a cosigner would be secondarily liable just as a guarantor would be.August 31, 2018 at 5:02 pm #13190
HMDA and Regulation C require collection of data for the applicant and co-applicant. Co-applicants are two or more people apply jointly.
For purposes of Regulation AA cosigner means a natural person who assumes liability for the obligation of a consumer without receiving goods, services, or money in return for the obligation, or, in the case of an open-end credit obligation, without receiving the contractual right to obtain extensions of credit under the account. The term includes any person whose signature is requested as a condition to granting credit to a consumer, or as a condition for forbearance on collection of a consumer’s obligation that is in default. The term does not include a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law.
Generally cosigners under Regulation AA are not co-applicants under HMDA. Generally a co-applicant shares in the goods, services, or money in return for the obligation, so they would not be a co-signer. If a cosigner is requested as a condition to granting credit to a consumer then they did not apply jointly with the borrower.
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