How can private party file lien on property

[ScottS]

Interesting thought.... but if someone does not want to pay you back and knows the loan is secured, they will likely not pay the bank back...

True. But if you loan them money and don't get paid other than losing your trust there are no negative results. Do that to a bank and see what happens to your credit report.

And why would they spend their time trying to get payment when they have a chunk of cash they can take the payment anytime they want...

This is there area where I can't provide an opinion based on actual knowledge. My uninformed opinion on this scenario is that the funds securing the loan could most likely not be accessed unless the loan is foreclosed on, like any other secured debt. If other posters on the board have actual knowledge of banking policy and procedure they might be able to let us know if this is even possible.

 

[Dash man]

I don’t lend money to family members or friends. I do give occasional gifts of money if needed for something reasonable and responsible. Never expecting repayment has made life much less stressful.

 

[jazz4cash]

True. But if you loan them money and don't get paid other than losing your trust there are no negative results. Do that to a bank and see what happens to your credit report.



This is there area where I can't provide an opinion based on actual knowledge. My uninformed opinion on this scenario is that the funds securing the loan could most likely not be accessed unless the loan is foreclosed on, like any other secured debt. If other posters on the board have actual knowledge of banking policy and procedure they might be able to let us know if this is even possible.

NFCU will make a share secured loan for 2% or 3% more than the share account earns, so maybe 2.5-3.5%. Funds equal to the current loan balance are not available to withdraw. I think the term for these loans is generally much shorter than a typical student loan so it may not reduce the payment. I know the OPs situation doesn't apply since the full amount of the student loan is not being borrowed. I actually had a loan secured by a relative's shares once.

 

[Texas Proud]

True. But if you loan them money and don't get paid other than losing your trust there are no negative results. Do that to a bank and see what happens to your credit report.



This is there area where I can't provide an opinion based on actual knowledge. My uninformed opinion on this scenario is that the funds securing the loan could most likely not be accessed unless the loan is foreclosed on, like any other secured debt. If other posters on the board have actual knowledge of banking policy and procedure they might be able to let us know if this is even possible.

To your first point, nothing will happen to credit as the bank will be paid... so again no negative results...

A cash secured loan is not the same as a security on a car or home... there is nothing for them to do but declare the loan and take the money... it is not the kind of loan they chase after someone for payments as they have money sitting there....

 

[bobandsherry]

it says as low as 1.95% https://www.firstrepublic.com/student-loan-refinancing

Other conditions:

Things to know when refinancing with us:

• Know your credit score. A strong credit score can make all the difference.
• Demonstrate consistent work experience.
• Show you have between $40,000 and $ 300,000 in student loan debt.
• Validate that you have a steady income and have substantial savings.
• Live within close proximity to our offices.

 

[ScottS]

To your first point, nothing will happen to credit as the bank will be paid... so again no negative results...

I must have not made my statement clear enough. If you provided the security for a personal loan through a financial institution to family/friend and that individual did not make the payments or was habitually late in making the payments I do believe that this would be reported to credit bureaus, likely affecting their credit score. This is the negative result I was alluding to. Loaning the money directly to him/her would not have that same consequence.

A cash secured loan is not the same as a security on a car or home... there is nothing for them to do but declare the loan and take the money... it is not the kind of loan they chase after someone for payments as they have money sitting there....

Agreed. But the bank would not likely immediately declare the loan at the first instance of slow payment or non-payment. The loan would likely have to be at least 60 to 90 days past due for this process to start. Again, this would be reported against the credit report of the individual.

This is the crux of the scenario. If someone is not going to pay you back, this still won't prevent that. All it will do I make them feel some pain (bank calling them, possible effect on credit score, etc.) for their decision, and make it less likely that they will choose to ask you again in the future.

 

[Texas Proud]

I must have not made my statement clear enough. If you provided the security for a personal loan through a financial institution to family/friend and that individual did not make the payments or was habitually late in making the payments I do believe that this would be reported to credit bureaus, likely affecting their credit score. This is the negative result I was alluding to. Loaning the money directly to him/her would not have that same consequence.



Agreed. But the bank would not likely immediately declare the loan at the first instance of slow payment or non-payment. The loan would likely have to be at least 60 to 90 days past due for this process to start. Again, this would be reported against the credit report of the individual.

This is the crux of the scenario. If someone is not going to pay you back, this still won't prevent that. All it will do I make them feel some pain (bank calling them, possible effect on credit score, etc.) for their decision, and make it less likely that they will choose to ask you again in the future.

No, you made yourself perfectly clear.... I guess I am not....

I will admit that I did not work in the loan payment dept, but I did do the loan loss reserve for a bank... there was never any loan loss set aside for a secured loan... I will admit that this was decades ago, but a secured loan was never in arrears... they just took money from the secured deposit... if there is no past due, then there is no reporting to a credit agency....

Maybe someone here actually worked in the loan dept and can say for sure if your thinking is right or mine... I will keep thinking my way unless someone with knowledge comes forward...


You might be thinking of signing as a guarantor of a loan... with no money on deposit at the bank... I can see them trying to get that from the main party at first, but then going after you as the guarantor... however, if the loan is late I think it also hurt your credit rating....


Edit to add.... I am talking about a matched loan... IOW, there is cash on deposit that cannot be used for any other purpose...

 

[TrvlBug]

There was something I heard on a radio program many years ago as a suggestion for situations like this. I have never done this and have no idea if it is even possible or would actually work.
Instead of lending money to family directly use the funds as collateral for a secured loan at a bank. This takes you out of the loop as requesting / demanding timely repayment - the bank now assumes this responsibility. You still may lose your money if he/she doesn't repay but the bank becomes the "bad guy" for wanting it repaid.
Never tried this and don't even know if it would work.

My dad did this with my deadbeat brother. Used a CD as collateral. Brother paid off and borrowed from bank of dad again and again in this manner. This is the only loan my brother ever paid off . Other creditors filed suit or were discharged in bankruptcy.

Edited to add: Bro as well as dad did receive dunning notices from bank. I know because I handled dad's affairs when he was ill. Bank of dad is now permanently closed. Bro blew thru $250K+ inheritance shortly thereafter.

 

[Sunset]

Thanks all, yes the crowdsourced assessment of "shenanigans" is accurate. These were "lent" on request for assistance with home down payments and in my mind treated as "gifts". But with his liquidating home, hearing discussion how "their" equity will be split and "his" half will fund down payment on new home and get him into a newer vehicle than my daily driver and a vacation to decompress... i am done. I have resources to help other family members but it will always be in a secured manner in the future.

Good for you !!

Glad you have realized this person is a leech, and has zero respect for you, and will take all your money if you let them.

 

[Texas Proud]

My dad did this with my deadbeat brother. Used a CD as collateral. Brother paid off and borrowed from bank of dad again and again in this manner. This is the only loan my brother ever paid off . Other creditors filed suit or were discharged in bankruptcy.

Edited to add: Bro as well as dad did receive dunning notices from bank. I know because I handled dad's affairs when he was ill. Bank of dad is now permanently closed. Bro blew thru $250K+ inheritance shortly thereafter.

Good to hear from someone with knowledge... at least dunning notices were sent out....