The bank escrows insurance and RE taxes for some of its mortgage customers. The bank sent a check to an insurance company of one particular customer on June 20, 2006. In October, the bank contacted the insurance company, they stated that they had received the check and deposited it with no problem. The problem is the bank currently has no record that this check has ever cleared the bank's escrow account. It is still an outstanding item on this account. What needs to be done at this point, is the money suppose to be returned to the customer? Any guidance on this issue would be appreciated. Thanks.

Bump.

Can anyone help me with this situation? Any input would be appreciated!!

OK, I'll give it a shot. Having managed research and adjustments for a large, large bank, it is very possible that the insurance company did receive the check, deposited it and then subsequently the check was lost in processing. If this was a check for under $300.00, a lot of banks do not even bother trying to pull a photo and enter for collection. They have a minimum dollar limit that they just 'write off' as a cost of doing business. Its cheaper to do that than to hire labor to collect these items. If the insurance company is ok, then I would continue to show it as an outstanding item and let it escheat at the appropriate time.

Thanks PStalfort I appreciate your response. The check is for slightly more than $1100.00.

In times of extreme backlog, some banks also elect a larger threshold that they will write-off rather than try to collect. Some banks get behind and by the time they research a missing item, it is too late to try and collect it so they write it off. I would not spend time trying to research outstanding checks. If your customer has not complained that the payee did not receive the funds, the odds are it's lost in the black hole of check processing. Let it remain outstanding and escheat at the appropriate time.