Green Account FAQs
Pacific Trust Bank’s
Frequently Asked Questions
- What is a Green Account?
- Why hasn't this loan been available in America before now?
- Who is the ideal Green Account borrower?
- How does the Bank make money on this loan?
- Will my loan be sold? Who will service it?
- What is my "credit limit"?
- How do I make payments?
- Can I make extra lump-sum payments in addition to my payroll and other deposits?
- Should I put all of my savings and other available funds into the Green Account?
- Should I close my old checking and savings accounts?
- Who can be authorized to use my Green Account?
- Is my Green Account FDIC insured?
- How and when does my payment change?
- How does the interest rate on my Green Account change?
- What happens if I pay off the loan quickly?
- What happens if my home's value changes?
- Do I have to pay off my loan early?
- How much faster can I pay off my mortgage with a Green Account?
- What happens if I miss a payment?
- Is there potential for "negative amortization"?
- How do I access my Green Account for my expenses?
- Do I need to change my money spending habits?
- Is there a maximum amount I can draw from the account?
- What risks do I have with this account?
- Can I use the Green Account available credit to make investments or for other purposes?
- Is the interest I pay on the Green Account tax deductible?
- Won't paying less mortgage interest reduce my tax deduction?
- Why is the margin on this loan higher than on other adjustable rate loans?
- Is there an annual fee?
- Do you need “impound account” payments for my property taxes and insurance premiums?
- Does the Green Account have any other advantages?
1. What is a Green Account?
Pacific Trust Bank’s Green Account is a first mortgage line of credit with a linked associated Clearing Account to make it America’s first fully-transactional mortgage. The Green Account combines the advantages of a mortgage, line of credit, savings account and checking account into a single relationship. The Green Account has a 15-year term, during which time you can make deposits (loan principal payments) and withdrawals (loan advances) up to your credit limit as frequently as desired, and as conveniently as using your personal checking account. Click Here for a more complete Green Account description.
A second mortgage version of the Green Account, called "Light Green" is now also available.
2. Why hasn't this loan been available in America before now?
The Green Account merges mortgage, line of credit, savings and checking account services into one relationship. However, in America there are numerous laws and regulations that separately govern all facets of loan and deposit products and banking services. This has required significant time and effort to develop account terms, operating systems and procedures, and documents to be in full compliance with all associated laws and regulations.
Development of the Green Account has taken several years, and involved every department in the Bank with the support of the Bank's regulators, lawyers, data processing system providers and other entities that help provide all of the associated banking services that come with this product.
Pacific Trust Bank has introduced the Green Account to America, because it fits our business strategy - one that's focused on real estate lending and personal savings & checking accounts to serve the banking and lending needs of its customers. Pacific Trust Bank is proud to be the first bank in America to offer such a product to its customers.
3. Who is the ideal Green Account borrower?
While almost anyone could benefit from the Green Account’s many advantages, it is ideally suited to those who are financially sophisticated, or who have uneven income or cash flows (such as investors, business owners, and those on commission), and for cash management purposes by investment property owners.
4. How does the Bank make money on this loan?
Traditionally, banks make money accepting deposits and making loans by paying depositors a lower rate of interest than they charge their borrowers.
With the Green Account, for the funds a customer would otherwise put into their savings or checking account, they effectively earn the same rate of interest as they are charged on their mortgage balance. But, from Pacific Trust Bank's perspective, the Green Account is simply a loan with a balance that fluctuates every day, and earns the Bank a specified rate of interest. The Bank has other customers making deposits into traditional savings and checking accounts as well as other sources of funding.
5. Will my loan be sold? Who will service it?
Pacific Trust Bank is a "portfolio lender". We fund and service all Green Accounts ourselves. While it is the Bank's intention to hold Green Accounts in its portfolio indefinitely, it is possible that the loan may be sold to an investor. But, in that event, Pacific Trust intends to continue servicing your loan.
6. What is my “credit limit”?
Your credit limit is the maximum amount you can borrow under the terms of the Green Account. Your credit limit will be based on the value of your home and your requested amount. It can be higher than your first draw amount, which may be used to pay off an old mortgage (in a refinance) or complete a purchase transaction.
Your credit line will remain the same throughout your Green Account's 15-year Draw Period, unless it is modified by our mutual consent. For example, if your home value increases, you may request that your credit limit be increased. Or, if desired, you could request us to lower your credit limit.
You'll need to keep your Green Account principal balance below this credit limit throughout the term of the loan. On the loan's maturity date, a balloon payment will be due for the amount of outstanding loan balance plus accrued finance charges.
7. How do I make payments?
Every time you make a deposit to your Green Account, whether by direct deposit of your payroll or funds from other sources or another account, in effect you are making a payment that reduces your outstanding loan balance by that amount.
Pacific Trust makes it easy and convenient to make deposits to your Green Account with a variety of deposit options, whether through Direct Deposit (ACH), as well as deposit by mail, at over 9,000 Co-Op Network ATMs, in more than 3,800 CU Service Center shared branches across America, at Pacific Trust Bank offices, and through HomeAccess online account transfers.
At the end of each monthly statement period, your finance charge (based on your daily outstanding principal balance and the current applicable interest rate) is reported to you as your minimum monthly payment. On the due date, this charge is simply added to your Clearing Account and is effectively added to your loan's principal balance.
No separate or additional loan payments need to be made, unless you have reached your credit limit.
8. Can I make extra lump-sum payments in addition to my payroll and other deposits?
Like any checking or savings account, you can make deposits to your Green Account for any amount, as often and anytime you like. This can be very beneficial in paying down your loan balance and building equity in your home faster, as you earn a greater effective rate of return.
Moving funds from lower-interest rate deposit accounts or poorly-performing assets into your Green Account will reduce your principal instantly, and save you more interest, allowing you to pay off even sooner. It's like earning your mortgage rate on your savings. And, unlike Certificates of Deposit or other term savings and investment accounts, you can access the additional equity this creates, any time it's needed.
9. Should I put all of my savings and other available funds into the Green Account?
Putting “all of your eggs in one basket,” is not recommended. But, if you have funds earning less than your mortgage interest rate, it could be an excellent idea to move a portion of it into the Green Account. Remember, you will always have access to your funds, up to available credit limit, whenever you may need it.
10. Should I close my old checking and savings accounts?
This is the ideal account to manage your cash flow. The effectiveness of the Green Account is maximized when as much of your cash finances flow through the account as possible. The more funds you put into the account, the lower your daily principal balance, and the more interest you save.
Some of your savings, such as funds in an IRA, must be kept in separate accounts. Unless you need separate accounts for other reasons, you may want to consolidate your checking and savings accounts into your Green Account.
11. Who can be authorized to use my Green Account?
Only "borrowers" on the account should be authorized to use your Green Account. Anyone that you authorize to transact on your Green Account (whether by check, MasterMoney ATM/debit card, or through online banking transaction) is making a loan advance with every withdrawal that you are responsible for.
12. Is my Green Account FDIC insured?
Generally, No. The Green Account is a line of credit mortgage, not a savings account, and therefore your loan balance is not FDIC insured. However, at those times when your outstanding loan balance is paid down to $0, any excess funds remain in your associated Clearing Account - which is FDIC insured up to $100,000 per account holder.
13. How and when does my payment change?
The interest-only minimum payment due on your Green Account loan will change monthly, based on fluctuations in your daily account balance and changes to your loan's interest rate.
14. How will the interest rate on my Green Account change?
On each rate adjustment date, your loan's rate will change to equal the current Index value plus a margin, up to a specified maximum Annual Percentage Rate as stated in your loan agreement.
With a Pacific Trust Bank Green Account, you get to pick the Index that will be used - COFI or MTA, with your initial rate fixed for 3 years then adjustable monthly.
Please see the “Important Terms Of Our Green Account” disclosures for complete details regarding your choice of index and rate adjustment frequency terms.
15. What happens if I pay off the loan quickly?
If you pay off your Green Account loan balance, you can still keep your Green Account open and have full and immediate access to your accumulated equity, up to your credit limit, until your 15-year term is complete or you close the account.
If you continue to make deposits into the account, and your loan is paid in full, those deposits will remain in the Green Account's associated FDIC-insured Clearing Account.
If you close the account during its first twelve months, you may be assessed an early account closure fee (see the “Important Terms Of Our Green Account” disclosures for details).
16. What happens if my home's value changes?
Your home's value will likely go up over time, but it could go down. If the value of your home increases significantly, you may request an increase to your credit limit.
With any mortgage, regardless of what happens to the value of your home, you still owe the amount that you've borrowed. If your home's value declines substantially, it is possible that your credit limit may be temporarily reduced until your home's value increases again (see our “Important Terms Of Our Green Account” disclosures for details).
17. Do I have to pay off my loan early?
No. You can pay down your Green Account loan balance, and borrow again (up to your credit limit), as often as you wish and as it best meets your financial circumstances over the full 15 years
18. How much faster can I pay off my mortgage with a Green Account?
To estimate the effects of your anticipated Green Account usage and transactions (including deposit of your pay checks, transfer of other loans or savings balances to the Green Account, etc.) and see projections of your payoff timing, interest costs, and to evaluate different interest rate environments, please try our interactive Green Account Calculators.
19. What happens if I miss a payment?
During the entire 15 years term of your Green Account, your minimum monthly payment is interest-only, which is automatically posted to your Clearing Account on the due date and added to your loan's principal balance monthly. As long as your loan's principal balance stays below your credit limit, there's really no “payment” to miss. The minimum interest-only monthly payment will be increased by any loan balance in excess of your credit limit.
The Green Account is ideal for people whose income might vary from time to time.
20. Is there potential for "negative amortization"?
Negative amortization occurs when a borrower's loan payments are insufficient to pay the accrued interest on the loan.
If the amount of deposits you make into the Green Account for any monthly billing period is less than the amount of withdrawals plus your monthly finance charge, then your Green Account loan balance will increase. Your Green Account monthly finance charge will be added to the account balance effectively resulting in negative amortization (to the extent of your remaining available credit limit). However, this effect is offset by your Green Account deposits accounted for as loan principal payments.
21. How do I access my Green Account for my expenses?
You can access funds from your Green Account, just as you would for any Pacific Trust Bank checking account. You can use a check, debit card, ATM, EFT, ACH and bill-pay to access your funds, and you have Pacific Trust Bank's HomeAccess online banking service to view your account balances and transactions.
22. Do I need to change my money spending habits?
No. There should be no need to change anything you do. Your income and other funds are simply deposited into your Green Account instead of your checking account. Since the deposits will be going towards principal, and reduce lower your finance charges, you'll likely come out way ahead and be able to payoff your loan faster. Also, since your minimum monthly payment is interest only, compared with making traditional mortgage payments you’ll have more funds available if needed for other purposes.
23. Is there a maximum amount I can draw from the account?
You can draw up to your credit limit. At any point in time during your 15-year Draw Period, the amount you have available is the difference between your Green Account loan principal balance and the credit limit.
For security purposes, there are some daily transaction limitations for ATM withdrawals and when using the MasterMoney debit card. Please see the “Important Terms Of Our Green Account” disclosures for details).
24. What risks do I have with this account?
With the full credit limit of the Green Account at your disposal, you should be prudent on how you decide to use your funds.
As with any of your finances, you need to be disciplined. You probably get several credit card offers each week, and could easily open a line of credit to access your home's available equity. Any time you have the ability to access available credit, and especially when your home is securing the loan, you need to be careful about how you manage your finances (see "When Your Home Is On the Line") .
25. Can I use the Green Account available credit to make investments or for other purposes?
Absolutely. There are no restriction on the use of your Green Account funds (except as required by law that funds cannot be used for gambling or for use in any illegal activities). Your Green Account provides an opportunity to “borrow” money at attractive rates from your available equity, and put it to productive use or “reinvest” it at a higher rate of return.
26. Is the interest I pay on the Green Account tax deductible?
Since this is a mortgage, the interest you pay may be tax deductible. Please consult your tax advisor for more guidance.
27. Won’t paying less mortgage interest reduce my tax deduction?
Yes, but you win this tax game! A dollar of additional interest paid by you results in only about a thirty-cent tax deduction - that's a no-win game. So, the less you spend in interest, the better off you will be.
28. Why is the margin on this loan higher than on other adjustable rate loans?
The margin on your Green Account may be higher than that of other adjustable rate mortgages (ARMs) to help pay for the additional costs of all of the added transactional features of the Green Account. However, most borrowers will find that a slightly higher margin will have a minimal effect on the overall payoff timing, particularly when compared to the costs and lengthy payoff times for traditional loans.
29. Is there an annual fee?
The Green Account annual fee (0.20% - two-tenths of one percent - of your credit limit) is waived the first year, and also waived every year thereafter when your average outstanding balance is greater than 50% of your credit limit.
Most mortgages do not have the ability to do transactions, and traditional home equity lines of credit only let you write a low number of checks (often with a minimum draw). The Green Account gives you full transactional capabilities, which is what the annual fee helps offset. Compared to the amount of interest you'll be able to save, it's a relatively small fee that can be easily avoided.
30. Do you need “impound account” payments for my property taxes and insurance premiums?
No. Because of the line of credit, interest-only minimum payment characteristics of the Green Account, it would be impractical to require additional separate impound account payments. This can be a real advantage to the borrower. Instead of being forced to save funds in a low-yielding impound account, you can make your money work harder and earn more for you by keeping it in your Green Account. Then, when it’s time to make your property tax or insurance payment, simply write them a check to access your Green Account funds.
31. Does the Green Account have any other advantages?
Yes. A big bonus of a Green Account is that you can greatly simplify your money management activities. You may currently spend significant time and effort deciding where to place your funds to your best advantage, researching, analyzing and comparing savings or investment alternatives, rates and terms, then need to manage account balances and transfer funds between accounts. You would have great difficulty finding a better savings or investment return with less risk than investing in your own home by making deposits to your Green Account, and getting a guaranteed rate of return equal to your Green Account mortgage rate.
The Next Step
Visit the Green Account Calculator section of our web site for illustrations of how a Green Account can work for you.
To see if a Green Account is right for you, or to find out more information, talk over your home financing needs with a Pacific Trust Bank loan officer. We're here to help. Call us toll-free at (877) 441-BANK.
To request via e-mail additional information about Pacific Trust Bank's loan programs, please Click Here.
 Pacific Trust Bank is an equal housing lender.
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