To mitigate potential fraud in revolving credit accounts we service for you, effective April 1, 2015, Cenlar will be placing a 10 day hold on check payments made on revolving credit accounts that are equal to or greater than $10,000, where the account is in an active draw period. This 10 day period should allow sufficient time for the check to clear, and prevent a fraudulent draw.
As you are aware, revolving credit account transaction draws are normally performed on an as needed basis. Instances of fraud occur when an individual (the borrower or a perpetrator) “pays” down the revolving credit balance, whole or a large part, with a check that is either fraudulent or drawn on an account with insufficient funds. Because immediate access to that check amount in the revolving credit line account is given, an individual could then request a draw against all or a portion of the currently uncollected funds and receive funds that eventually do not clear. Below is an example:
Individual currently has a $500,000. revolving credit account with a $400,000. balance. Draw period is still active on the account. Individual makes a payment for $400,000. The line immediately replenishes and the individual immediately draws $400,000. from the revolving credit account. The $400,000. check eventually does not clear, yet $400,000. was provided to the individual.