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"Right of Offset' Strikes Again!

By
Mortgage and Lending with Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL NMLS 223305

In my role as housing counselor, I see people facing financial hardship - LOT's of them right now with the high unemployment rate and foreclosure rate we see here in Southern Oregon. There is a rule out there that I try to make people aware of, especially when their mortgage and checking/savings accounts are with the same banking institution. That rule is the "Right of Offset" which gives the bank the right to "sweep" the balance out of a person's checking/savings account when that person has a delinquent debt with that same institution. I just heard about it happening again recently when a homeowner who is fighting to keep their home fell behind on other bills, and those bills were with the bank where their checking account is at. They now have $80 to pay their utilities and food for the month. It's a good thing our HUD certified housing counseling agency also has an energy assistance program and supplies food to pantries throughout the Rogue Valley. This single mom and child are going to need them!

 

See you out there!

Posted by

Karen Cooper Southern Oregon|California Mortgage ConsultantKaren Cooper - Home Lending Advisor Nationwide

               NMLS #223305

 

Comments(7)

Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Karen - I too have heard of this happening, didn't know what it was called, just knew that it had happened to some people I knew.  That is so sad what happened to your client, I hope you were able to help her. 

I too have been telling people for years to transfer their accts to local credit unions or local banks and out of the big, national, retail banks like BofA, Chase, Wells & Citi and not just for the reasons you stated but simply because these banks were going to bleed them dry. 

Several years ago when Chase bought out WaMu, that was when hubby and I switched to our local credit union and we are so glad because our credit union is so much nicer to work with.  I love it when I walk in and they actually know who I am and actually talk to me.  Our mortgage is with BofA and we have never had a BofA bank acct and never will.  They're horrible!

May 19, 2011 04:48 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Karen:  I "suggested" this .. as I think most people are unaware that this can occur.  The better educated we are, the better.  And you prove the importance of keeping dollars local ... and in small entities.  There is alot of rumbling about the actions of the big banks right now.  Will we learn???  Time will tell ...

Gene

May 19, 2011 07:34 AM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States

Hi Donne - We, too, have chosen to switch to a local credit union and have our business account with a local community bank, having steered way clear of the Big 4. We went in to these decisions originally with supporting local organizations who directly support our community both through employment and tax dollars. I know the Big 4 do, too, (really only 3 in our area) but not at the same level. Glad you are keeping other perspectives in the forefront of your clients' thought processes!

May 19, 2011 02:32 PM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States

Hi Gene - thanks for the vote of confidence. I understand a bank wanting to protect their interests, but at what level have they crossed the line? Is $80 enough to feed a family? Very disturbing concept, and I think there should be a "stop gap" in place that the banks aren't allowed to drop an account balance below. I am all for supporting our local communities - probably why I went to work for our local Community Action Agency who is also a HUD certified Housing Counseling Agency.  :-)

May 19, 2011 02:36 PM
Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro

Karen, I was not familiar with this until it happened to one of my daughter's friends in NYC.  Get this her parents were late on their mortgage and the bank went to her friends account as she had her Mom's name on the account from when she first got an account.  That is just WRONG!

May 19, 2011 03:57 PM
Karen Cooper
Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL
Helping Homeowners w/Home Loans in 27 US States

Hi Marchel - I agree, it does indeed ring wrong, but the banks can absolutely do this under some circumstances - i.e. for installment loans like mortgages, but not credit card debt. They aren't supposed to take funds deposited from social security benefits, but I've heard stories of people having to fight to get those monies returned to them. http://www.helpwithmybank.gov/faqs/banking_offset.html

May 19, 2011 05:18 PM
Krista L. Walker
RE/MAX Platinum Medford - Medford, OR
Oregon- Homes & Real Estate for Sale

Just when we thought it was safe...

May 25, 2011 03:31 AM