I used to work for a mortgage company in the Los Angeles area. We made second mortgages. Firsts were going for about 13 – 14% and our seconds were 18 – 21% depending on the borrower’s credit rating.
We had one investor (that’s where we got the money to loan) who would save up all his monthly payment checks (borrowers paid us directly and we dispersed to the investors) until he had the appropriate amount for his next investment. My boss would call this guy and tell him he had a good loan for $xx,xxx dollars and this investor would bring in $xx,xxxx in payment checks (from us) to fund the next loan he was funding. Odd business that was. (I think a lot of investors, and my boss, really would rather foreclose because they’d be second in line to purchase the properties, but that’s another matter.) If the checks were over 6 months old, we’d do some fancy bookkeeping and reissue the funds to him so he could buy the loans. (I’m sure glad I wasn’t responsible for those checkbooks. I did the escrow books, general business books, and payroll. Others did the rental property books and the mortgage payments.)
I loved that job because I regularly got deposits in excess of $100,000 and then got to disperse the funds the next day. I loved balancing my books there.
They were told that in order to GUARANTEE the check wouldn’t be cashed, they had to put a stop payment on it. Of course that service had a fee. To make matters worse, the stop payment was only in effect for 6 months or a year. Then it would have to be renewed(with another fee). There wasn’t any way to just stop it FOREVER…
but it depends on the bank and their policies how long a check is valid. We wrote a check once to a store that never cashed it. It’s a really long story but they didn’t cash it on purpose and then eventually lost the business to someone else. The new owner said it wasn’t in the store and he had no idea what the previous owners did with it. Our bank said the check was valid for cashing for two years maybe longer. It wasn’t a hard rule. If the check came in two years and two weeks they would allow it. If it was two years and 6 months, they wouldn’t. We had to keep that account open for that check to possible clear for two years. After that we closed the account.The person never did try to cash it cause they knew if they did, my husband and father in law would have been able to find out where he was and to sue him to access his account (they owed my FIL a lot of money). But we had to leave the account open just in case. If they had presented the check for cashing and there wasn’t money in the account, it would have bounced and we would have been hit with fees.
He’ll just flat out lose them, or forget about them, or put off depositing them for whatever “reason” (one of the things we’re working on right now). You’d think that depositing a check would be simple and good news and happy and something to look forward to, but there’s a whole host of situations where folks won’t want to cash them. I’m not saying it’s logical or that it makes sense, but it happens.
Generally speaking, most checks go void at the 180 day point if no other limitation is placed on them – banks simply won’t honor them after that point. Some banks and institutions have watermarks which specifically say that any given check is null and void in less time. An employer I worked for awhile back had a watermark on their paychecks which said they were only valid for 90 days.
A bowler was complaining because the treasurer didn’t deposit her check for 2 or 3 weeks. I figured, as long as you had accounted for it in your check register(this was before Quicken), what’s the problem?
But as far as why someone wouldn’t deposit it? They forgot about it, misplaced it, etc. Or they don’t want an ex to know how much money they have yet. Or they don’t have a checking account because ChexSystems screwed them over… Just throwing out ideas… 🙂
Well, because if we had a good handle on our finances, we wouldn’t need VS.
But seriously. We’re not talking $800 rent checks here. We’re talking $2500-$3000 rent checks. So by the time they used to get around to cashing them, $6-9k or more was coming out at a time. Sure, in theory that shouldn’t be a big deal. Until an unexpected or unplanned expense hits and the check(s) either bounce or overdraft the account.
And due to the high dollar amount, (at least here in California) it opens you up to check kiting charges, even if the overdraft/bounce isn’t entirely your fault.
Just one less thing to have to deal with.
(stems from years ago, different landlord, who used to take up to 6 weeks to cash a check….)
Walmart’s limit for MO’s is $1000 at a time, so I’ll just go get the MO twice a month instead of once a month.
Does anyone know if Sam’s Club issues money orders? I ask because the Sam’s Club nearest to us also has a gas station. I’m thinking I could get an MO and fill the cars up with gas at the same time…thereby reducing the risk of spending the gas money for something DH thinks is “essential”
since you are paying the mortgage 1/2 out of each check—-make sure you put it somewhere it can’t be touched while waiting for the other check—or that could cause some big problems.
I am just mentioning this because I know if my sister were to do this—her and hubby would have issues–as they tend to say “oh we have money–we will just put it back next check”.