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#517408 - 03/20/06 06:59 PM Reg CC Hold Question
dm7 Offline
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dm7
Joined: Oct 2002
Posts: 78
Illinois
Is an exception hold form notice necessary when funds are being held in account because the customer cashed a check against the account?

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#517409 - 03/20/06 07:04 PM Re: Reg CC Hold Question
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,226
Galveston, TX
If you have included the following model disclosure in the bank's Availability Disclosure, you can place the hold, but your notification requirements are no different than if the check was deposited.


Model Clauses
C-6--Holds on Other Funds (Check Cashing)

If we cash a check for you that is drawn on another bank, we may withhold the availability of a corresponding amount of funds that are already in your account. Those funds will be available at the time funds from the check we cashed would have been available if you had deposited it.
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#517410 - 03/20/06 07:09 PM Re: Reg CC Hold Question
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
You must provide the same notice that you would provide had the check been deposited to the customer's transaction account, and the hold may not be for longer than you could impose if the check were deposited to that account.
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#517411 - 03/27/06 06:44 PM Re: Reg CC Hold Question
BY THE RULES Offline
Member
Joined: Jun 2004
Posts: 91
NC
Quote:

If you have included the following model disclosure in the bank's Availability Disclosure, you can place the hold, but your notification requirements are no different than if the check was deposited.


Model Clauses
C-6--Holds on Other Funds (Check Cashing)

If we cash a check for you that is drawn on another bank, we may withhold the availability of a corresponding amount of funds that are already in your account. Those funds will be available at the time funds from the check we cashed would have been available if you had deposited it.




Are you saying that if our deposit account agreement contains the 'Holds on Other Funds' language then we can place holds/pledges on/against savings and IMMS accounts (as long as the length of the hold/pledge does not exceed the Reg. CC hold times)? Would this apply to Time Deposits as well? We would provide the same Notice of Hold form when placing a pledge on a savings account.

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#517412 - 04/19/06 09:07 PM Re: Reg CC Hold Question
tjbanker Offline
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Joined: Jun 2002
Posts: 310
Do you use the case by case hold notice with the two days hold for local? Has anybody had any experience with what the regulators say about this? Thanks for any replies.

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#517413 - 04/20/06 10:15 AM Re: Reg CC Hold Question
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Quote:

Are you saying that if our deposit account agreement contains the 'Holds on Other Funds' language then we can place holds/pledges on/against savings and IMMS accounts...




No, rlcarey is not saying that. He's quoting model language in C-6 that allows you to put a hold on an account even though the check was cashed; his answer responds to the question asked.

If your bank wishes to accept an item for deposit to a transaction account, but impose a hold on a different account, your initial disclosure must contain this language:

C-7--Holds on Other Funds (Other Account)

If we accept for deposit a check that is drawn on another bank, we may make funds from the deposit available for withdrawal immediately but delay your availability to withdraw a corresponding amount of funds that you have on deposit in another account with us. The funds in the other account would then not be available for withdrawal until the time periods that are described elsewhere in this disclosure for the type of check that you deposited.


Monicamn,

As John indicated, you would use the same hold notice you would use if the item was deposited to the transaction account and a hold was placed on that account. Depending on the circumstances, it may be a case by case or an exception hold notice. The regulators are aware of the model language and understand how it applies - John and rlcarey are not offering personal opinions.

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