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Home >> Manage Your Money >> Debt Management
What is Legality of Freezing My Account?
I have a mortgage with a credit union. I also do my savings and checking there. I am two months late on my mortgage. I recently received the money to pay for my mortgate; however, my credit union has put a hold on those funds because they wanted to discuss my situation and ensure they get their money. The hold on the funds has been between 5-7 business days. What legal right does the credit union have to freeze these funds? Can you provide any assistance.
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 In most cases the CU will have the right to setoff. That means they can take the deposits you have, which is money they owe you, and they can setoff that amount against what you owe them, the mortgage payments.
They should not hold the funds allowing the mortgage to remain past due and accrue interest. They should setoff or drop the hold. Your state laws may influence this answer, but your question to the CU, or any lender in this case, is to ask what right they do have to hold, but not apply funds?
If your interest is that they release these deposits to you and you intend to make up your payments separately, this may not be an issue you want to push. As a lender/collector, we'd have debited your account as soon as the deposit cleared and we had bona fide rights to setoff the payment.
Published on BankingQuestions.com 8/04/09
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