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Pledging a Jointly Owned CD as Collateral

Answered by: 
Andy Zavoina

Question: 
When a Joint CD is used as a collateral on a loan must both parties pledge the collateral or is the one borrowing the money the only one necessary? If a loan is secured by a CD the has a POD on it must the POD pledge the collateral also for the loan?
Answer: 

I can answer part of this. If either of those "or" owners could close that account, they generally have the ability to pledge that asset.

But check your state laws. Texas, as an example, just passed a law clearly allowing the pledge this way but requires a notice to be sent to the co-owner advising them of the pledge.

First published on BankersOnline.com 11/17/03

First published on 11/17/2003

Filed under: 
Lending
Filed under lending as: 
Collateral
POD

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