Yes, we believe that you can disclose information about the loan to a party who pledged collateral for the loan. There are two exceptions to the privacy requirements of Regulation P that may apply here.

First, Regulation P permits banks to disclose account information to “persons holding a legal or beneficial interest relating to the consumer.” 12 CFR 1016.15(a)(2)(iv). In the Interagency Q&As on the privacy regulations, the agencies assume that a lender to a consumer holds a “legal or beneficial interest relating to the consumer,” meaning that financial institutions are permitted reveal a customer’s private information to that lender. Interagency Q&As on Privacy Rules, Question I.5 (December 2001). In this situation, the father has a legal interest that is related to your customer, because his property is securing your customer’s loan. As a result, we believe that this exception permits you to disclose information about the loan to the father.

Second, Regulation P permits banks to disclose information “as necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes.” 12 CFR 1016.14(a). The Interagency Q&As state that a lender may respond to requests from third parties under this exception, provided that “the disclosure is in connection with servicing or processing a financial product or service from the third party that the customer has requested or authorized.” One example given is providing loan payoff information to a car dealer that has purchased your customer’s car as a trade-in. Interagency Q&As on Privacy Rules, Question I.8. In this situation, you can assume that the customer authorized the father to pledge his car as collateral for the loan, and the father is in a position similar to a car dealer requesting payoff information in Question I.8. As a result, we believe that this exception permits you to disclose information “as necessary to effect, administer, or enforce” your security agreement with the father.