We have an officer that is very fond of adding to the principle of our in house loans for different purposes. I know that it is acceptable for taxes, forced placed insurance, and legal fees in connection with the loan and collatoral. Here is my current question, a customer has a charged off checking account so they are drawing the funds from the loan and adding that to the principle to bring ckg account to a zero balance. We are in Wisconsin. Can they do that??? Thank you in advance for any help on this one.

Counsel, counsel, counsel. I have heard both yes and no. Some of this depends on your contract, state laws and may be influenced on whether or not you are charging interest on this amount added.

And, if this is a any type of improved real estate loan - you are advancing new monies and I believe Flood would be required all over again. If consumer real estate home loan - right of rescission on funds advanced.

Thank you both for your help. I will try to talk a different officer into contacting our legal council.