When a Loan Customer Dies: What are the top 15 issues to consider?
Lenders would like to be sensitive to the customer's family or help the remaining business owner, but the compliance clock doesn't stop ticking.

Join us for 15 issues you should consider before handling a deceased loan customer’s accounts.

As lenders, we work hard to make good underwriting decisions. In addition to analyzing a consumer’s income or business cash flow, it’s common to take a security interest in collateral. Collateral types vary greatly and each has specific requirements to perfect a security interest and mitigate credit risk. One risk factor that’s difficult to predict is death. If the death involves a sole proprietor, partner or key corporate officer, it may mean that a number of high balance loans are outstanding and repayment is uncertain. Lenders would like to be sensitive to the customer’s family or help the remaining business owner, but the compliance clock doesn’t stop ticking. What happens now, and what are the critical issues?

Join us for 15 issues you should consider before handling a deceased customer’s loan accounts and learn additional tips to protect your bank when making a loan.


  • Is the “death” a triggering event for default? What type of language should be in a commercial note in the event of the death of a borrower or guarantor?
  • Are “Right to Cure Notices” required?
  • How should lenders handle questions about the estate?
  • What information can be shared and who is entitled to it?
  • What documents or information does a financial institution need before releasing the information?
  • Is there standard language that your loan agreements should have regarding the death of a borrower?
  • What protections must be extended to the surviving family members if the borrower was a service member on active duty?
  • How should notices to co-borrowers, guarantors and co-signers be given?
  • What is the effect of the death of a borrower on the foreclosure process?
  • Are Home Equity Lines of Credit impacted?
  • How can a financial institution protect its collateral?
  • How does the financial institution handle issues of guarantors, setoff and insurance?
  • What do the banking regulations and exam guidelines say?
  • How does the death of a key person affect the extensions of credit to Corporations, Partnerships, Limited Liability Companies, Trusts and other legal entities?
  • When should “Key Man” insurance be required? What are the pros and cons of credit life insurance?

This webinar is presented at the national level – state law is not addressed. Also, don’t miss When a Deposit Customer Dies with Debbie Crawford on October 28. 


CSRs, branch managers, lenders, loan operations, credit administration, compliance personnel, legal staff and anyone who handles loan accounts.


Susan Costonis CRCM, Consulting &Training for Financial Institutions, is a compliance consultant and trainer who is affiliated with gettechnical inc. She specializes in compliance management along with deposit and lending regulatory training. Most of her 34-year career was spent as a banker in several areas including lending, marketing, electronic banking, compliance, and senior management.

Credit Information

Institute of Certified Bankers: Visit http://www.icbmembers.org/login.aspx for instructions regarding self-reporting. Estimated credits: 2 hours/session


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