No, such a disclosure falls within certain exceptions to Regulation P’s privacy requirements. Regulation P permits banks to disclose account information to “persons holding a legal or beneficial interest relating to the consumer.”  In this situation, the third party signed the mortgage, signifying his interest in the property that is the subject of your customer’s (now past due) loan. As a result, this exception should permit you to disclose information about the loan to that individual.

In addition, Regulation P permits banks to disclose personal information “as necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes.” This exception includes any disclosure that is required, lawful, or appropriate to enforce your rights regarding the financial transaction or to service the consumer’s account in the ordinary course of providing the mortgage. Likewise, there is a nearly identical exception in the Illinois privacy law provisions. In our view, these exceptions also permit you to disclose past due payment information to a third party who signed the mortgage.

For resources related to our guidance, please see:

• Regulation P, 12 CFR 1016.15(a)(2)(iv) (Creates exception for disclosing personal information to “persons holding a legal or beneficial interest relating to the consumer…”)

• Regulation P, 12 CFR 1016.14(a) (Creates exception for disclosing personal information “as necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes …”) 

• Regulation P, 12 CFR 1016.14(b) (“Necessary to effect, administer, or enforce a transaction means that the disclosure is: (1) Required, or is one of the lawful or appropriate methods, to enforce your rights or the rights of other persons engaged in carrying out the financial transaction or providing the product or service; or (2) Required, or is a usual, appropriate or acceptable method: (i) To carry out the transaction or the product or service business of which the transaction is a part, and record, service, or maintain the consumer's account in the ordinary course of providing the financial service or financial product …”)

• Illinois Banking Act, 205 ILCS 5/48.1(b)(17) (“This Section does not prohibit:…(17) The disclosure of financial records or information as necessary to effect, administer, or enforce a transaction requested or authorized by the customer, or in connection with: (A) servicing or processing a financial product or service requested or authorized by the customer; (B) maintaining or servicing a customer's account with the bank….”)