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Home >> Lending >> Home Mortgage
Bank Uses Offset for Late Mortgage Payment: Legal?
I am two months behind in my mortgage payments. The bank took money out of my checking account without my knowledge, causing a large overdraft payment for me, which they also took out. The money they took was money I was going to use for my mortgage payment. I do not have anything saying that they can take it automatically. Once I went to pay through the drive-through, and they said they already took it out, because they can do that if I haven't paid by the 23rd. My checks are social security and are automatically deposited. Can they do all that they have done?
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 Yes, banks have the right to setoff money they owe you, the deposit, against money you owe them, the payment. Banks have done this for many years and it is in your agreement with them, probably in your loan terms as well as your deposit agreement. There is no notice required in advance, but most institutions send a receipt or notice afterward. Again there is no requirement under federal laws or this.
Make payment arrangements in advance so that the bank doesn't go looking for a deposit account from which to take funds. If you had already told them when you would pay and how much, this could have been avoided.
Published on BankingQuestions.com 9/08/10
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