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#2106124 - 11/04/16 09:47 PM Right of Setoff on Mortgage loan
deh Offline
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I it allowed to take a delinquent primary, owner occupied mortgage loan from the owner's checking account if it is held by the same bank?

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#2106131 - 11/05/16 01:20 PM Re: Right of Setoff on Mortgage loan deh
MScarn6942 Offline
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Land Lacking in Lakes, IL
What does your note say?
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#2106191 - 11/07/16 03:45 PM Re: Right of Setoff on Mortgage loan deh
MyBrainHurts Offline
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Illinois
I don't have a regulatory citation, but I recall from a number of years back that the State regulators frowned on repeated unauthorized debits from a customer's account under the guise of set off. Set off was to be used as a final act to extinguish the debt to the extent possible, with the customer's account being closed. Unfortunately, Illinois law doesn't say much about set off.
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#2106197 - 11/07/16 04:15 PM Re: Right of Setoff on Mortgage loan deh
rlcarey Online
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rlcarey
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Galveston, TX
You need to talk to an attorney. In some State this can significantly jeopardize any possibility of foreclosure. You have to give right to cure and under certain circumstances you get one shot at collecting deficiencies.
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#2106198 - 11/07/16 04:16 PM Re: Right of Setoff on Mortgage loan deh
deh Offline
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Posts: 866
I was going to see if there were any court cases relating to UDAP that might be helpful as well. I am a new manager in our Loss Mitigation department and attempting to set a precedent of not pursuing setoff on first lien owner occupied properties as a standard. My manager is commercial oriented so I have to explain everything.

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#2106240 - 11/07/16 07:26 PM Re: Right of Setoff on Mortgage loan deh
deh Offline
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Joined: Mar 2006
Posts: 866

I found this reference online from a credit union. Does this mean not setoff of delinquent account but of a matured, delinquent one only?

Common law set off requires three elements to be met: (1) mutuality of obligation, (2) the debtor member’s owns the funds used for set off, and (3) the debt is mature at the time of set off. Citizens Fed. Bank, FSB v. Zierolf, 119 Ohio App. 3d 46 (1997). Mutuality of obligation requires that the credit union hold funds on behalf of the member debtor and the member is obligated to the credit union. In a typical situation the member has a loan, which makes the member obligated to the credit union. The member also has a share savings and share draft account with the credit union, which makes the credit union obligated to the member. It can include a joint account even though one of the joint owners is not obligated to the bank. Id.; Chickerneo v. Society Nat’l Bank of Cleveland, 58 Ohio St. 2d 315 (1979). It requires, however, that the credit union has rules and regulations to permit the offsetting of funds in a joint account where one of the joint account holders is not obligated to the credit union. Chickernero, at syllabus. In absence of such rules, the funds may not be offset. Nichols v. Metropolitan Life Ins. Co., 137 Ohio St. 542 (1941).

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#2107304 - 11/15/16 01:30 PM Re: Right of Setoff on Mortgage loan deh
Elwood P. Dowd Offline
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Elwood P. Dowd
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Posts: 21,939
Next to Harvey
Note that all 3 cases cited were in Ohio. They have absolutely no bearing on the law in Illinois.

Even if the statutes were identical, the language (or lack of it) in the note and the deposit agreement could drive a different result.

As suggested, talk to your attorney.
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