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.

How do you hold funds against a Mortgage?

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.

What do you do if the check bounces?? Increase the amount of the mortgage!!??

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.

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.

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.

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.

Just thinking out loud...would it matter if this mortgage was a HELOC?