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#247317 - 09/21/04 07:19 PM Check cashing & holding funds against accounts
Anonymous
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Any idea where I can find information pertaining to what accounts a teller can hold funds against when a customer cashes a check? We have a branch that is cashing a check and "holding" the funds against a mortgage. We want to tell them to stop, but I want to be able to cite something.

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#247318 - 09/21/04 10:19 PM Re: Check cashing & holding funds against accounts
Don_Narup Offline

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Joined: Jul 2001
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Las Vegas Nevada
How do you hold funds against a Mortgage?
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#247319 - 09/21/04 10:38 PM Re: Check cashing & holding funds against accounts
VMack Offline
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Joined: Jun 2001
Posts: 841
Texas
That's a new one on me. I can't imagine how you hold funds on a mortgage, but you will find the information regarding holds on other funds under Regulation CC, Appendix E - Part 229 Commentary, E. 229.19(e). This section will refer you back the definition of an account (as defined in Sec. 229.2(a). The definition does not include mortage.

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#247320 - 09/22/04 12:32 AM Re: Check cashing & holding funds against accounts
Banker Boy Offline
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Banker Boy
Joined: Oct 2003
Posts: 69
Florida
What do you do if the check bounces?? Increase the amount of the mortgage!!??

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#247321 - 09/22/04 02:07 AM Re: Check cashing & holding funds against accounts
AlwaysLearning Offline
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Joined: Aug 2004
Posts: 83
I just learned that we will cash a check against any loan and "yes" if the check comes back we will charge the amount back to the loan. I had never heard of this before.

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#247322 - 09/22/04 02:30 AM Re: Check cashing & holding funds against accounts
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 80,325
Galveston, TX
I don't think that it would hold up unless your notes and security agreements specifically allow for it. If you're talking a mortgage - don't forget the right of rescission.
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#247323 - 09/22/04 02:56 AM Re: Check cashing & holding funds against accounts
Don_Narup Offline

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Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
This is not something I would let examiners become aware of, as IMO this is so illegal, creative, but illegal. I can see no way you can legally tie a check problem to any loan.
unless the check is in payment of the loan.

Ask yourself If it was an acceptable process wouldn't everyone would be doing it.
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#247324 - 09/22/04 06:18 AM Re: Check cashing & holding funds against accounts
Princess Romeo Offline

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Quote:

Ask yourself If it was an acceptable process wouldn't everyone would be doing it.




Don...shhhhssshhhh!!!!!! PLEASE don't give those creative fee income folks any more ideas!
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#247325 - 09/22/04 01:27 PM Re: Check cashing & holding funds against accounts
Anonymous
Unregistered

It has been more of a courtesy than anything else. Technically, nothing is done with the funds...the check is cashed and the person puts the mortgage # on the back of the check. Our Security officer wants to stop the practice of allowing this, but wanted to check to see if we could stop it.

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#247326 - 09/22/04 02:12 PM Re: Check cashing & holding funds against accounts
Jokerman Offline
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Joined: Nov 2003
Posts: 12,846
Just thinking out loud...would it matter if this mortgage was a HELOC?

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