Is it true that there must always be a current Form FSA-2040 in the file of a borrower with a loan secured by chattels?

There must indeed always be a current Form FSA-2040 in the file of a borrower with a loan secured by chattels. This form is critical for documenting the necessary information and ensuring compliance with federal regulations. It serves as a way to officially record the borrower's agreements and the security interests in movable property (chattels) that back the loan.

The inclusion of this form is essential for managing the loan effectively and safeguarding the interests of both the borrower and the lending institution. Maintaining an up-to-date FSA-2040 helps in managing risk and ensures clarity in the terms of the loan, which can be crucial in case of disputes or defaults.

In contexts where this form is not in the borrower’s file—such as when it's considered optional or only required under certain circumstances—it can lead to compliance issues, misunderstandings, or challenges in enforcing the loan’s terms. Therefore, its presence is not just a formality; it's a fundamental requirement for the integrity and oversight of loans secured by chattels.