Our institution is wanting to make a little change to our Check Protection Lines of Credit, and I want to see if it is permissible (with proper contract language).
While it doesn't happen extremely often, we will occasionally have a customer close their checking account while their check protection line has a balance. This becomes an operations headache because they have to manually roll due dates whenever we receive payment on these accounts.
Would it be permissible to ad language to the loan documents (for the check protection accounts) that would stipulate that if the checking account associated with the LOC is closed, that the balance of the LOC will be amortized over "x" number of months at the stated interest rate with P&I payments due monthly? I would request that when this happens that we disclose the new amounts (due dates, original amount, payment, etc.) to the customer.
We wouldn't do this as "punishment" for not paying the loan, but we would do it in response to the associated checking account being closed.
Thanks for any input.
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