[timob1973]

I know the definition of co-signer can be found in Regulation AA. However, I do have this twist:

Daughter (with non established credit) applies for a car loan. We counter that we will do the loan with a co-signer so the daughter gets her mom to sign on the loan. Additionally, as a requirement to closing, we require that the mom be a grantor of the collateral as well and therefore the car is titled in both the mom and daughter’s name.

Is the mom in this case a co-signer? It can be argued that the mom is getting benefit of the vehicle being purchased because it is titled in her name. Does the mom need to sign a Notice to Co-Signer form? Any help would be appreciated.

[jholzknecht]

For purposes of Regulation AA the term “co-signer” means
“a natural person who assumes liability for the obligation of a consumer without receiving goods, services, or money in return for the obligation, or, in the case of an open-end credit obligation, without receiving the contractual right to obtain extensions of credit under the account.

The term includes any person whose signature is requested as a condition to granting credit to a consumer, or as a condition for forbearance on collection of a consumer’s obligation that is in default. The term does not include a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law”

The mother does not appear to be a “co-signer” since she receives “goods, services, or money in return for the obligation.”

[Author]

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