Dormant acct & right of offset

In regard to a delinquent loan, if the customer has a dormant account, do we have the right to offset the dormant account since it is classified as dormant?

I can't find any regulatory guidance on this.

Thanks for your help.

We did this on two delinquent loans when we were unable to send the funds to the customer. The addresses were invalid and instead of turning the funds over to the state, we credited the funds to our inhouse general ledger that was used to offset the delinquent loans. I don't see a major problem with using dormant funds to pay a delinquent loan provided the customer is unable to be contacted about the dormant account.

I'm not aware that the effect of an account going in to dormant status causes a bank to lose its right of offset. I would think you would be ok with this.

Most banks use the dormant status as a way to flag accounts that need to be monitored for escheatment and fraud purposes (and generate non-interest revenue to cover the increased monitoring costs). Thus, you should still have right of offset the same as if the account were not in this status unless your contract with the customer dictates otherwise.