There are some circumstances where a loan could be called. What they all have in common is that it is one of the terms agreed to by the borrower and the lender, in advance. For instance, a commercial line might be withdrawn and/or called if the borrower (a business) violated certain financial covenants, ie losses exceeding a certain amount, current assets falling below certain threshholds, etc etc. What is never true though is that a residential mortgage can be called when the mortgage is sold. A residential mortgage can never be called unless the borrower defaults on the loan. Again, the typical default has to do with not making the payment. OldTrader
We basically agree, but this is not entirely true. A bank does have a right to demand extra collateral on a mortgage should the house's appraised value fall below what is owed. If that collateral is not supplied within a specified period, they can call in the entire loan.
Ask a thousand people (with mortgages) if they "own" their home. I'll lay big odds that the great majority of women will say yes. And that the majority of men will say "Well, yes....but..." If you're married, you know what I mean. Women have this ownership/home/hearth thing going on, and will deny even the thought that they don't actually own the home. Two years ago I suggested to my wife that we sell at what was obviously the top of the market and take our considerable profits of 50% in 2 years...and take a couple years to move into a very nice rental home. I'm not talking a trailer here. More like 4,000 SF with pool, mountain views, etc. No way, no how. Despite my long and brilliant lecture on the reality of renting versus paying a mortgage wherein we don't own the friggin home in either case, the argument could never be won. Not the first time I've run into it, and friends have reported the same experiences. An interesting difference in point of view between the sexes.
You stated: "A bank does have a right to demand extra collateral on a mortgage should the house's appraised value fall below what is owed" That blanket statement is false. Period.
One of the easiest types of mortgage fraud to perpetrate is an overvalued appraisal. Almost half of all home appraisers have complained that they have been pressured to overvalue homes. And home buyers, eager to get the most home possible at the best possible terms, often accept these appraisals without fully understanding them. In the short term, an overvalued home may even seem desirable. If buyers should want to refinance or sell their homes, they would find themselves in the hole financially. There would be less equity in their homes than the homeowner thought. In some cases, the homeowners might even find themselves with an âupside downâ mortgage; that is, owing more than the home is actually worth. In the most severe cases, an overvalued appraisal can even lead to foreclosure. http://www.googobits.com/articles/2...aud--protecting-your-most-valuable-asset.html The statement is not false. I was renting a house in California that it actually happened to.
(1) That link about appraisal fraud is the only source that you can cite to back up your claim that all mortgages contain a provision that allows the bank to require more collateral if the home value declines? Seriously, that should tell you something. (2) You made a blanket statement. A single data point about a home that you were renting does not mean you statement was true. Do you understand basic logic? I have a mortgage. It does not have the provision you stated, therefore your blanket statement is false, regardless of what happened to you in California. Do you have a mortgage yourself? If so, perhaps you should read it. If not then....