Who is the Borrower on a Loan Document?
Section 618.8325 of the Code of Federal Regulations (12 CFR § 618.8325) defines “borrower” as “any signatory to a loan contract who is either primarily or secondarily liable on such contract, including guarantors, endorsers, cosigners or the like.”
Who is a Borrower’s Representative?
Borrower’s Representative means an individual or an organization that is designated by the Borrower to act on behalf of the Borrower by a written certificate and complying with the requirements of the applicable state. The borrower’s representative always requires some written proof of authority before being able to act on behalf of the borrower. According to § 618.8325, the borrower’s representative can receive copies of all the loan documents from the lender at the execution of the loan. Additionally, the borrower’s representative may make a written request for additional copies of any documents exchanged between the borrower and the lender, such as collateral evaluations of the borrower’s assets, etc.
What is a Borrower’s Certification?
The borrower’s certification authorizes the bank (the lender) to verify any information in the borrower’s application through public and private sources. Such information may include employment and income history, bank account balances, credit history, tax returns, etc. The form typically contains a financial privacy notice required to be provided to the borrower by the Financial Privacy Act of 1978. The privacy notice informs the signatory to the form that the creditor institution will not disclose his obtained information to a government agency or department without the borrower’s consent except as required or permitted by law.
Some banks may include an Information Release Consent form as well as a Representative’s Certification as to the Validity of Information Release Consent form. Generally, a power of attorney is necessary as well.
What Should a Power of Attorney Include?
The power of attorney naming a borrower’s representative generally should:
- Be in writing.
- Be signed by the individual borrower.
- Include the name of the representative – individual or organization.
- Include granting the agent’s powers over the loan accounts at the specific private institution.
- Be signed by a notary.
- Comply with the laws of the state applicable to the specific power of the attorney.
It is important to note that private institutions such as banks may have their own additional requirements for the certification of a borrower’s representative. Some banks include an Agent’s Certification as to the Validity of Power of Attorney form to come with the power of attorney. It is important, therefore, to check the individual bank’s website regarding the exact documents required.
