IBA Compliance Connection

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Are we required to use a “same name” affidavit for loans where a customer’s name on the loan documents does not match the name on his or her Illinois driver’s license (e.g., “Bill” versus “William”)? What are the possible consequences of having a customer sign a loan document using a nickname?

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No, we are not aware of any law or rule that would require you to use a same name affidavit for a customer that signed loan documents with a name other than what is on his or her driver’s license, although this practice may be advisable. Loan documents using a nickname very likely are enforceable — several Illinois court decisions have found that commercial agreements with inconsistent party names are enforceable, and we believe that the same reasoning would apply to a loan agreement with an individual.

However, note that on a UCC financing statement, you must use the borrower’s full name as it appears on the debtor’s most recent, state-issued, unexpired driver’s license. In addition, secondary market purchasers may require the use of affidavits. For example, Freddie Mac requires a signature affidavit or name affidavit when a borrower’s signature contradicts the typed name on a loan document.

For resources related to our guidance, please see below:

  • Sullivan v. Cox, 78 F.3d 322, 326 (7th Cir. 1996) (contract enforceable even though it failed to include the full name of a business that was a party to the contract — “Central Emerald” instead of “Central Emerald Sewer Service, Inc.”)
  • Bires v. Waltom, LLC, 662 F.Supp.2d 1019, 1038 (N.D. Ill. 2009) (contract enforceable even though there was a discrepancy between a business name used in the body of the contract and the name on the signature line — “WalTom Racing LLC” versus “WalTom, LLC”)
  • Illinois Uniform Commercial Code, 810 ILCS 5/9-503(a)(4) (name of debtor is sufficient “only if the financing statement provides the name of the individual which is indicated on the driver’s license”)