Is it permissible for the bank to place a hold on a deposit account for funds that are not collateral for a loan, but are funds deposited to be used for a loan, for cash to close, to pay loan fees? Or the cash injection the customer will provide for a construction loan? If not, what can we do instead?
From a business decision – Suggestions to consider: Placing the funds on deposit into a short term CD. A draw type account for the construction loan purposes that they can make interest on.
These are of course just suggestions but are not hard fast requirements. Your FI, will need to make decisions on how you would handle and disclose this type of transaction for all borrowers to avoid potential fair lending, fair banking, and/or UDAAP issues.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE