We are hearing very scary stories in our area about banks calling in loans if they suspect you may be a risk. Times are hard enough without fearing that your life savings will be wiped out because you have a loan the bank decided you may have trouble paying on time. Should we be separating our loans from our cash, or live in fear of losing our life savings?
The location of your depositaccounts won't affect a bank's ability to call a loan if it deems itself insecure. It will, however, make it impossible for the bank to take funds under a right of offset if the funds are in a different institution. Offset can happen when a bank holds a loan in default and a deposit account, with an obligor and depositor in common. Offset may or may not be restricted or regulated in your state, or by contract.
Don't get complacent just because you move deposit funds to another institution, however. Those funds could be reached via legal process if the lender brings legal action to collect on the defaulted loan.
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