Full text of FDIC Consumer News : June 1981

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EDITOR: Josie Downey

The Bank Customers Publication

June 1981
Volume I No. 6

Dormant Accounts May
Invoke Service Charges
Many bank customers are not aware
of their bank's and State's policy
toward dormant accounts. There are
instances in which depositors, believing
they have money in their accounts and
not knowing that the bank has declared
the accounts dormant, request their
money from the bank only to discover
the bank has assessed service charges
and drained the balance down to zero.
When a customer makes arrangements with the bank to open an account, he or she should understand the
bank's policies. The customer's rights
and responsibilities as well as those of
the bank are contained in a contract
and stated on the signature card, contract card, or other written agreement
between the customer and the bank.
The right to apply a service charge to
the customer's account is specified in
the contract. For example, the bank's
stated policy may be to assess a service
charge if the customer doesn't maintain a minimum balance on his or her
checking account or if the account
becomes inactive or dormant.
If the customer doesn't make any
withdrawals or deposits but still keeps
in contact with the bank, the account
becomes inactive. When the customer
doesn't initiate any transaction for a
period of time and the bank loses all
communication with the depositor (the
bank cannot contact the customer by
phone or letter), the bank considers the
account dormant.

When accounts remain dormant for
a considerable period of time, banks
often begin assessing service charges
periodically. In most states if the account is dormant for several years,
State law makes the funds escheat to
the State. This means the money in the
dormant accounts becomes the property of the State.
Some State statutes deem checking
accounts dormant when the consumer
has not deposited or withdrawn
money, or corresponded with the bank
regarding his or her account for more
than a year. There are also State
statutes that deem time and savings
deposits and certificates of deposit dormant when the customer has not deposited or withdrawn money from the
accounts for more than five years from
the date the deposit first became eligible for withdrawal.
If consumers have allowed their accounts to become dormant, they
should check with their bank about
their rights and what procedures to
follow to retrieve or retain money in
their accounts. If the account has been
escheated to the State, the consumer
may be able to recover it. The consumer should contact the State Bank
Supervisor to learn what steps to take,
keeping in mind that States don't dictate bank policy.
If you don't know how to contact
your State's bank supervisory authority, call FDIC' s toll-free consumer
hotline 800-454-5488.

What To Do If You
Are Denied a Loan
Many people are not aware of the
procedures to follow if a financial institution denies them a loan.
When you apply for a loan, you
should make sure that you have properly filled out the loan application
form. If the bank does not use a written loan form, it is important the loan
officer taking your oral application
receives factual information about
your work history, income, debts and
payments.
After you file the application, the
bank has thirty days to inform you
whether your loan will be granted. If
the bank decides not to grant the loan,
it must inform you in writing that the
loan will not be granted, state the
reason why you are not receiving the
loan, tell you that you have a right to
ask for and receive a statement of the
reason, and provide a statement informing you of your rights under the
Equal Credit Opportunity Act that includes the name and address of the
federal agency that supervises the
bank's compliance with this law. The
bank must also inform you if the information it obtained from the credit
reporting agency or a third party contributed to the denial of credit.
The Equal Credit Opportunity Act
prohibits lending institutions from
discriminating against a loan applicant
on the basis of race, color, religion, national origin, sex, marital status, or age
(provided that the applicant is of legal

PREPARED BY THE DIVISION OF BANK SUPERVISION
Federal Deposit Insurance Corporation
Washington, D.C. 20429

(Cont. on page 4.)

Consumers Should Know About Mortgages And
Related C9,~-1s ~Bef ore Buying A Home
..
Part III
This is the final segment of a three
part series dealing with mortgage costs
and other fees involved in buying a
home. The first part in our April issue
dealt with interest rates and types of
mortgages. The second part in May
discussed closing or settlement costs.
This last installment addresses insurance and other costs and mortgage
application information.
Closing and settlement costs can be
surprisingly high. You should try to
estimate them early in the homebuying
process so you can be sure to have
enough money to cover these charges.
Following are insurance costs you
should inquire about before settlement.
• Mortgage insurance cost-a fee
you pay to the company or
government agency that insures
the loan in case you fail to make
payments. This insurance often is
required in cases where a small
down payment (usually 5 to 20
percent) is used.

• Mortgage life, accident and
health insurance-these optional
insurance costs protect a family
in case the mortgagor is disabled
or dies. In such an event, the insurance company automatically
pays off the mortgage. If you
become seriously disabled and
can't work, payments are made
after a specified number of days
and stop when you are able to
resume working. Either way,
your mortgage payment is always
paid. This insurance can be very
expensive.
• Title insurance cost-title insurance is paid for by the homebuyer and usually protects
lenders against loss of their interest in property due to legal
defects in the title. This insurance
only covers the amount of the
loan and diminishes as the loan is
reduced. A homebuyer can protect his or her interest by purchasing optional separate coverage. The homebuyer' s insurance

covers all of the property and the
amount of insurance does not
decrease.

• Hazard insurance cost-most
lenders require that you carry
hazard insurance on the house at
least in the amount of the mortgage. For your own protection,
you should seriously look into
getting a comprehensive Homeowner's Insurance Policy to
cover the house and its contents
in the event of major loss. The
Homeowner' s Policy should include not only insurance against
fire, storm damage or wind
damage, but also liability insurance (if someone sues you for
an injury received while on your
property) and insurance against
theft and vandalism. Check
several insurance companies to
locate the best coverage for the
least cost. Also, if you are buying
a house in an area that could be
subject to flooding and the community participates in the National Flood Insurance Program,
federal law requires that you get
flood insurance.
You also should take these steps:
• Ask the lender about the taxes
and insurance payments collected
in advance and held in an escrow
account. An escrow account is
money collected monthly by the
lender and held for the payment
of taxes and insurance when they
are due.
• Ask the lender whether you will
have to pay a penalty if you
decide to pay off or refinance
your mortgage before the due
date.
REMEMBER: Closing costs differ
from state to state.
When filling out the mortgage application form, the lender may ask you
the following information:
• information about the house
(price, age, location, etc.)

• personal data: name(s) of applicant(s), address, marital status,
number of dependents, age, etc.
• employment and income history
• amount of your assets (car, savings account, etc.)
• debts you have now (credit cards,
current loans and installment
payments, etc.)
• credit references (banks, major
credit cards, etc.)
It is important for you to have a
good credit history. You will not have
any difficulty obtaining a loan if your
credit rating shows that you pay your
debts on time and have no outstanding
liens on your car or other property. A
lender may deny you a mortgage loan
if you have a poor credit history, or too
many other debts.
It is best to know ahead of time what
lenders will find when they get your
credit report. If you don't know, check
with your local credit bureaus. If the
information in your credit record is
wrong, you can clear up any mistakes
before you apply for a mortgage loan.
This will save you time and trouble
later.

If you wish to be placed on the FDIC
Consumer Newsletter mailing list
please fill out the form below and mail
to:
Josie Downey, Editor
Federal Deposit Insurance Corp.
550 17th St., N.W.
Room 5134G
Washington, D .C. 20429

Name:
Address:
Apt. _ _ _ _ __ City _ _ _ _ __
State ______ Zip _ _ _ _ __

Antes De Comprar Una Vivienda Los Consumidores
Deben Es tar Inf ormados Acerca De Los Prestamos
Hipotecarios Y Los Costos Correspondientes.
Tercera Parte
Esta es la ultima parte de un articulo de
tres partes que provee informaci6n
acerca de los costos hipotecarios y
otros costos envueltos cuando usted
compra una vivienda. La primera parte
de este articulo fue publicada en la
edici6n de abril y brindo informacion
acerca de las tasas de interes y
diferentes tipos de prestamos
hipotecarios. La segunda parte ofrecio
una explicacion acerca de los costos de
cierre o liquidacion. Esta ultima parte
informara acerca de seguro, demas
costos e informacion acerca de la
solicitud del prestamo hipotecario.
Los costos de cierre y liquidacion
pueden ser sorprendentemente altos.
En el proceso de comprar la vivienda
usted debe tratar de estimar estos
costos a tiempo, para asegurarse que
tenga suficiente dinero para cubrir
estos gastos. Antes de la liquidacion
usted debe indagar acerca de los
siguientes costos de seguro:

• Costo de seguro hipotecario:
U sted paga este cargo a la compafiia o agencia gubernamental
que asegura el prestamo en caso
de que usted no cumpla con sus
pagos. Este seguro usualmente se
requiere cuando se hace un pronto de pago bajo (usualmente de 5
a 20 por ciento).
• Segura de linea hipotecaria, accidente y salud: El costo de este
seguro opcional protege a la
familia en caso que el deudor
hipotecario muera o se incapacite. Si el deudor hipotecario
muere, la compafiia de seguros
automaticamente amortiza el
prestamo hipotecario. Si usted
esta seriamente incapacitado y no
puede trabajar, los pagos hacia el
prestamo hipotecario se efectuan
despues de un numero de dias
especificos y se descontinuan
cuando usted regrese a su trabajo. De cualquier forma, su pago
hipotecario siempre se paga. Este
seguro puede ser muy caro.

• Costo de seguro de tftulo: El
seguro de ti tulo es pagado por el
propietario y usualmente protege
a los prestamistas en caso de una
perdida de SU interes en la propiedad, debido a fallos legales del
titulo. Este seguro solo cubre la
cantidad del prestamo y aminora
segun se reduce el prestamo. Un
propietario puede proteger su interes al comprar por separado
proteccion opcional. El seguro
del propietario cubre toda la propiedad y la cantidad del seguro
no aminora.
• Costo de Segura de Riesgo:
Muchos prestamistas requieren
que usted tenga seguro de riesgo
de la vivienda, por lo menos por
la cantidad del prestamo hipotecario. Para su proteccion propia,
usted debe considerar tener una
poliza de propiedad de gran extension que cubra la vivienda y
sus contenidos en caso de una
perdida mayor. Esta poliza de
propiedad debe incluir no solo
seguro en caso de fuego, dafios de
tormenta o de viento, pero tambien, seguro en el que usted
asume responsabilidad (si alguien
lo demanda por lesion recibida en
su propiedad) y seguro en caso de
robo y vandalismo. Verifique con
ciertas compafiias de seguro hasta
encontrar la mejor poliza por el
menor costo. Tambien si usted
compra una vivienda en un area
que esta expuesta a inundaciones
y la comunidad participa en el
Programa Nacional de Seguro de
Inundaciones, la ley federal requiere que usted tenga seguro de
inundaciones.
U sted tambien debe seguir los
siguientes pasos:
• Preguntele al prestamista acerca
de los pagos de contribuciones y
pagos de seguro recaudados en
adelantado que se retienen en su
cuenta de plica. Una cuenta de
plica contiene el dinero
recaudado mensualmente por el

prestamista y retenido para el
pago de contribuciones y seguro
cuando se deban.
• Preguntele al prestamista si usted
va a tener que pagar una multa si
decide amortizar o refinanziar su
prestamo hipotecario antes de la
fecha de vencimiento.
RECUERDE: Los costos de cierre
difieren de estado a estado.
Cuando usted llene el formulario de
solicitud del prestamo hipotecario, el
prestamista puede preguntarle la
siguiente informacion:
• informacion acerca de la vivienda
(precio, edad, localizacion, etc.)
• datos personales: nombre(s) de
solicitante(s), direcci6n, estado
civil, numero de dependientes,
edad, etc.
• historial de empleo e ingreso
• cantidad en activo (automovil,
cuenta de ahorros, etc.)
• deudas que usted ha contraido
(tarjetas de credito, prestamos
corrientes y pagos a plazos, etc.
• referencias de credito (bancos,
tarjetas de credito etc.)
Es importante que usted tenga un
historial de credito favorable. Usted no
tendra dificultad en obtener un
prestamo si la evaluacion de credito
muestra que usted paga sus deudas a su
debido tiempo y no tiene gravamen
sobresaliente en su automovil u otra
propiedad. Un prestamista puede
negarle un prestamo hipotecario si
tiene un historial de credito negativo o
tiene muchas deudas.
Es mejor conocer en adelantado lo que
los prestamistas encontraran cuando
verifiquen su expediente de credito. Si
usted no conoce esta informacion,
verifique con su agencia de informacion de credito local. Si la informacion que contiene su expediente de
credito es incorrecta, usted puede
aclarar cualquier error antes de
solicitar para un prestamo hipotecario.
En el futuro esto puede ahorrarle tiempo y problemas.

Questions From Bank Customers

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FDIC CONSUMER HOTLINE ,,,,--

- 800-424-5488-

Q: Can the bank charge a penalty if a consumer pays off
his loan early?
A: This depends on the loan contract between the bank
and the consumer. Also, individual state law may limit
the prepayment penalty that a bank may assess . The
Truth in Lending Act requires specific disclosures of
prepayment penalties for consumer loans.
Q: ls there a limit on the service charge a bank can assess
for an overdrawn checking account?
A: No. This is a matter of bank policy and is determined
by the management of the individual bank .
. Q: Can a bank require the social security number of a person depositing funds into a corporation account?
A: According to Treasury Department instructions, if the
person has a financial interest in the account, he will
have to provide his social security number to the bank.
Normally, a corporation has an IRS employer identification number which is provided to financial institutions.
Q: What are mutual savings banks and who regulates
them?
A: Mutual savings banks are called "thrifts" and are very
similar to savings and loans. They are owned by their
depositors and are located mostly in New England,
New Jersey and New York; 323 of them are regulated
and insured by FDIC.

What To Do If You Are Denied a Loan (ConLfrompagel.)
age to contract for debt), or because all
or part of the applicant's income
derives from any public assistance program, or that the applicant has in good
faith exercised any right under the
Consumer Credit Protection Act.
If you believe that the bank, in denying your credit request, has discriminated against you, you may file a complaint with the federal agency listed on
the written notice of credit denial.
If you decide to submit a complaint,
send a copy of the written notice of the
credit denial, a copy of the loan application (if available), and a short letter explaining why you believe the
lender may have discriminated against

you. Be sure to include the name of the
loan officer that was involved in processing your application.
When the supervisory agency receives your complaint, it will conduct
an investigation. This investigation
may include requesting documentation
from the bank and/ or an on-site investigation to determine the bank's
lending practices. After completing the
investigation, the agency will send you
its conclusions including a statement as
to whether in the agency's opinion, the
bank has violated any federal law, rule
or regulation. If the agency fails to find
sufficient evidence of discrimination,
you may still initiate civil action

through the courts by contacting an attorney, if you still believe you have
been discriminated against by that
financial institution.
Before you initiate court action keep
in mind that the federal supervisory
agencies do not dictate bank policy. If
the bank denies you a loan for valid
reasons; i.e., poor credit history,
unstable employment (changing jobs
too often), or an insufficient down
payment to be applied to a loan, the
bank is only following its policy. If you
still believe you are being discriminated
against, pursue the matter with your
attorney.

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