Loan recall

[rooky]

Just considering a scenario....

Can bank ask debters of residential loans under any circumstances(except default and cross collaterisation scenarios of course), to repay some money? For e.g. lets day property market crashes. Or they do not have any right as long as loan repayment is on track ?

 

[jrc]

If you read your mortgage you will find the Bank can do things like that. However, from a pragmatic view, if you are not in default then the Bank's efforts will be spent on defaulters rather than borrowers who are up to date.

Commercial loans might be treated differently because of other factors eg bank head office decides to get out of lending to a particular industry or to reduce use of overdrafts etc. My employer's commercial property gets revalued every 3 years as part of the bank's review process.

 

[Peter_Tersteeg]

I've heard of this happening in commercial loans, but never residential. The terms and conditions of residential loans generally do allow for it.

If lenders did start doing this to borrowers who are continuing to pay their mortgage, the general public uproar would be deafining.

 

[Rolf Latham]

default is at the control of the lender, since they can force same by doing a low val of your property ............ mostly their T&Cs allow for such things.

As Pete said, unlikely to occur..............

ta

rolf

 

[Terry_w]

You will have to look at the mortgage agreement and terms and conditions of a loan. These are constantly changing within the banks and differ between banks.

I have read a few in the past and can't ever recall anything which would allow the mortgagee to call in the loan (under NCCP) without a breach occuring.

 

[Perp]

I have twice had banks threaten to "call in" a loan.

The first was after a major conveyancing error on my solicitor's part, causing the lender to say that the asset wasn't worth as much as they'd thought and therefore they wanted to call in the loan. I managed to delay them by promising to refinance, which I did.

The second was during our prolonged dispute over PPOR repairs after our home was destroyed in the Jan 11 Brisbane floods. We managed to pay rent on a temporary home and keep our mortgage up to date, but the bank was saying that as our home was uninhabitable, and our insurance claim had been denied, they had no valuable asset securing our mortgage and thus were planning to call in the loan. Their argument was that our PPOR was worth less than land value only (because they subtracted demolition costs from land value), and our mortgage was much more than that, so they had a right to call it in.

I held them off by lodging a complaint with the Financial Ombudsman Service (FOS), and fortunately my parallel complaint regarding the insurance matter with the same agency, was resolved in our favour before matters came to a head.

I have never felt under so much stress.

We did nothing wrong; we had a natural disaster for which we'd done the responsible thing and *had* insurance (including for flood; that wasn't the issue). But purely because our insurers were a pack of pricks, and even though we continued to pay our mortgage and rent on emergency accommodation, we nearly lost everything.

Even though we ultimately prevailed, the stress nearly sent me 'round the twist.

 

[datto]

That's really nice of the bank to try and put the boot in when a customer has suffered a set back through no fault of their own ie a natural disaster. "That's the spirit"

 

[Perp]

That's really nice of the bank to try and put the boot in when a customer has suffered a set back through no fault of their own ie a natural disaster. "That's the spirit"

I plot revenge in minute detail, against both insurer and lender. Not that I'm bitter.

 

[kathryn d]

We had a mortgage (in Canada). When it came up for renewal, the mortgage company was no longer providing mortgages, and we would need to find a new lender.
Our situation had changed a bit, and we found it very difficult. Finally we were able to, but it was extremely stressful, as we were already 30 days past our deadline.

In part, because of this, we want to pay off our properties asap, as I never want to feel that vulnerable again.