When Can a Bank Call Mortgage Loans?

When can a bank call mortgage loans? Before we answer this question and to be able to understand the answer to it, we must first understand what a “call” from the bank is. A call stands for the bank’s request for acceleration. This means the lender wants the borrower to pay the remaining principal in full. There are few instances when a bank can do such to mortgagees. And most of them are actually caused by the borrower’s failure to fulfill the terms of an agreement in his mortgage loans. Although this could be a huge financial stressor for an individual, this occurrence is usually very rare and preventable. The following are occasions in which a bank may call for acceleration for a mortgagee’s loan.

Payment Defaults

If you’ve read the terms of your loan, most probably you have an idea of how defaulting your loan payments can lead to a bank calling you for acceleration on your payments. When you failed to pay your monthly payments for a specified span of time a bank can demand acceleration, as it is stipulated in most mortgage loan terms. But if the payable amount is still minimal, the lender and the borrower can negotiate and reach a compromise for this. A lender calling in this manner has only one objective – to foreclose a house. This especially common in cases where lenders find the borrower no longer able to pay the remaining principal in the term.

Not Paying Taxes

It is a legal obligation for any property owner to pay the government property tax. If a borrower is unable to do so, however, a lender can call in for acceleration once they find this out through a property lien which is a public document. In doing this, the lender if saved from paying an excessive amount of property tax if it sots foreclosed immediately. Therefore it if important for borrowers to pay their property taxes religiously.

Assuming Properties

Assuming properties had been popular in the past. Mortgage loaners who are unable to continue paying their loans sell their loaned property to another individual. The individual now assumes e property and the obligations the borrower had. As for common arrangements, the individuals are obliged to continue paying for the remaining duration of the term and also for the amount already paid by the former loaned property owner. A bank can file acceleration in his case in order for them to receive all at once the payable amount left in the term.