Topic: Joint Accounts
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Are joint (merged) credit reports allowed for joint consumer loans? For example, if two applicants have indicated their intent to jointly apply for credit, and each applicant’s income and assets will be used as a basis for our underwriting, may we obtain a joint credit report? If so, are there any privacy concerns regarding providing a joint report to two parties, and do different rules apply to married applicants? Also, Fannie Mae and Freddie Mac require “tri-merge” credit reports — does this pose any concerns?
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Yes, you may obtain a merged credit report for co-applicants, in which vendors merge the information from two individuals’ credit reports — subject to the caveat that there may be some fair lending concerns if your vendor offers joint reports for married couples at a lower cost than separate credit reports for unmarried individuals. The…
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We are in the process of switching loan origination systems and have run into an issue with how to document a non-owner spouse waiving their homestead exemption rights. Our new mortgage documentation vendor does not support adding homestead waiver language to the mortgage and is suggesting that we edit the mortgage after the fact to include this language. What language does Illinois law require for waiving homestead exemption rights, and how should this be properly documented?
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Illinois law does not require specific language to be used in a homestead exemption waiver, but the Conveyances Act does provide that a grantor may waive the homestead exemption right in a mortgage or deed by inserting “in substance the following words, ‘hereby releasing and waiving all rights under and by virtue of the homestead…
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If we receive a citation or garnishment directed to two judgment debtors holding a joint account, is each debtor entitled to the $4K exemption under the Illinois Supreme Court’s COVID-19 order on post-judgment proceedings served after March 8, 2020? For example, let’s say there is a citation against a husband and wife who have a joint account with a balance of $10K. Are we required to release $8K of that balance (providing a $4K exemption for each debtor)? Similarly, let’s say there is a citation against a husband and wife who have a joint account with a balance of $6K. Are we required to release the $6K ($3K exemption for each debtor)? And would the same principles apply to an account held by unmarried joint owners?
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We believe the Illinois Supreme Court’s order requires garnishees and citation respondents to release $4,000 of property back to each judgment debtor, up to a total of $8,000. In your first hypothetical, the order would require the financial institution to release $8,000 back to the debtors, and in your second hypothetical, the order would require…
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We had an account with three joint owners. One of the owners died, and the account was closed by his son, who was a joint owner on the account. The deceased customer’s other son (who was not a joint owner) has requested copies of account statements and provided us with documentation that he will be issued letters of office naming him as a co-administrator for the deceased customer’s estate. Does the son who will be appointed as a co-administrator have the authority to request this documentation?
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Once the son has been appointed as an administrator for the deceased customer’s estate, he will be entitled to access information relating to the account as of the date of your customer’s death. However, since there continue to be living owners of the account following the decedent’s death, the administrator would not be entitled to…
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We have an elderly customer who added her daughter to her account as a co-owner. The daughter is going to be granted a power of attorney for the customer, and both the customer and her daughter would like the daughter to be removed as an account owner. Typically, when a joint account owner wishes to remove a co-owner from the account, we close the account and open a new account for the sole owner. However, in this case, where both consent to the daughter’s removal from the account, can we have the customer and her daughter sign a form acknowledging her removal? Is there specific language that should be included in such a form?
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Yes, we believe you may remove the daughter from the joint account by having the customer and her daughter sign a written acknowledgment of the daughter’s removal. Under the Illinois Joint Tenancy Act, funds held in a joint account may be “paid to any one of” the account owners. Unless otherwise stated in your account…
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A husband and wife who held a safety deposit box at the bank recently died. Their children would like to open the box, which they think will contain several CDs that are in the name of the children, not the parents. They also think the box might contain a will. The parents did have three CDs issued by our bank in their children’s names. Can the children open the box and remove the CDs? Two of the CDs mature this week, and they don’t want them to automatically rollover.
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The children may open their parents’ safety deposit box if they present your bank with an “opening affidavit,” but we do not recommend allowing them to remove the CDs from the box until they present your bank with letters of office, another court order, or a small estate affidavit (if applicable). The Illinois Safety Deposit…
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Are joint applicants required to sign both the statement at the top of the Fannie Mae Uniform Residential Loan Application (Form 1003) and a separate statement of joint intent — or is signing only Form 1003 enough, since it provides that the “Borrower and Co-Borrower each agree that we intend to apply for joint credit”?
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We believe that your bank may rely solely on the joint applicants’ signatures at the top of Form 1003 as evidence of their intent to apply for joint credit. Although your bank may choose to have applicants for joint credit sign a separate document indicating their intent to apply jointly, we do not believe it…
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A director of our national bank and their friend are purchasing a property. The director is paying cash for their portion of the purchase and the friend is paying their portion using funds from their home equity line of credit (HELOC) with our bank. Must the draw on the HELOC be applied to the director’s total borrowings from our bank, since the property is for the benefit of both the director and the friend? Is the shared use of the property a tangible economic benefit?
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We are not aware of any precedent or guidance indicating whether a loan to a director’s co-purchaser for the acquisition of a shared property would be considered to be providing a tangible economic benefit to the director. We contacted the OCC with this question (without identifying the type of bank asking the question), and an…
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We have husband and wife borrowers with a personal draw down line of credit to build their home. The husband is the contractor for the project and has an incorporated contracting company. The borrowers would like draws on their personal line of credit to be deposited directly into the business account for the contracting company. Both the husband and wife are authorized signers on the business account and will provide invoices and waivers to verify the use of the funds. Are there any problems with this arrangement? We are aware that depositing a customer’s personal check into their LLC’s account is not recommended.
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We believe your bank may deposit draws from a personal line of credit into a business deposit account. We are not aware of any Illinois or federal laws that would prohibit this practice. You are correct that depositing a customer’s personal check into their LLC’s account — without the proper indorsement — is not recommended,…
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For loans that are secured by savings accounts or certificates of deposit held in joint tenancy, can only one of the joint owners sign the security agreement or must all joint owners sign? If the signature of all owners is not required, does the bank need to send a certified letter to the other owners to notify them of the security interest?
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Generally, the Illinois Supreme Court has held that a joint deposit account is subject to the provisions of the contract between the bank and its depositors, and one joint depositor may unilaterally pledge the interests of an entire joint account if allowed by the account agreement. Whether all joint depositors must be notified of such…