Lender threatening to call Loan Due

[workman]

Hi

I have an "Agreement forsale" that I am to take over April 1. All the contracts have been signed and the seller has located somewhere else to live. I sent in the Authorization to release information to the mortgage companies on Monday so that the payment can be changed from the sellers account to mine. The First mortgage (MCAP) had no problem with it. The second called the homeowner and questioned them on what was going on. The seller informed the lender that he was moving out and that I was taking over the payment for the mortgage until which time I paid the mortgage out. The lender (CitiFinancial) called me today and asked for the AFS contract and more information, so I explained to them that I was acting as the manager for the property. To my surprise they informed me that even though the seller was staying on title and mortgage they would call the loan due because he is not living in the property.

Is there anyone that has had this happen? Or have had dealings with CitiFinancial? The seller contacted me because he lost his job and was going to stop paying his payments. So I want to figure out how to overcome this problem. Any help would be greatly appreciated.



Thanks

Jody Workman

 

[JimWhitelaw]

Hi Jody,

I suspect your best option will be to demonstrate to CitiFinancial how not calling the loan is in their best interest. Does the seller have a lot of equity in the property? Is Citi likely to get all of their loan back (after fees) if they foreclose? If they do
foreclose, the first mortgage holder will get paid out first and they have to know that.

 

[MonteDobson]

I agree with Jim. Citi needs to realize that it is in their best interest to let you make the payments going forward.

Since when does a bank refuse a paying customer, especially in the face of a foreclosure. They are in the business of making money, not owning real estate!

 

[RedlineBrett]

Can you qualify for the loan?

If MCAP is ok with it will they allow you to assume the mortgage without qualifying?

If you can assume the mortgages what do you need the current owner for? If he has equity you are guaranteeing just give him a caveat and be done with him...

 

[workman]

Thanks for your responses to my post. Just to update what is happening. The local office has sent all the information onto the head office (Legal department) for review. The seller is in trouble and does not care what they say he is leaving and if they want his house they can come and get it. I will try and help them understand the situation and will continue with the process of taking the home over. I think this might turn out as if I have to I will find a private lender to invest and payout the second off as the rate is 16.5%. This will make it a better cash flowing property.



Thx



Jody

QUOTE (RedlineBrett @ Mar 18 2010, 10:05 AM) Can you qualify for the loan?

If MCAP is ok with it will they allow you to assume the mortgage without qualifying?

If you can assume the mortgages what do you need the current owner for? If he has equity you are guaranteeing just give him a caveat and be done with him...

 

[Thomas Beyer]

QUOTE (workman @ Mar 17 2010, 04:33 PM) .. To my surprise they informed me that even though the seller was staying on title and mortgage they would call the loan due because he is not living in the property...
Many, but not all, mortgages have the right to call the loan due in an AfS situation. I assume this is a residential mortgage where it may be different than in commercial mortgages where the bank can treat an AfS like a sale. READ THE MORGAGE DOC !!

What does it say ?

You can always try to be persuasive, but most likely they have the right. Check the actual wording, with a lawyer, though ! Not living there by itself is possibly INsufficient. A lawyer should be consulted, possibly sending a sharply worded letter after the lawyer has studied the doc !

Keep on paying the mortgage.

Is re-fi an option to pay 2nd mortgage ?

 

[Thomas Beyer]

QUOTE (workman @ Mar 21 2010, 03:11 PM) .. I think this might turn out as if I have to I will find a private lender to invest and payout the second off as the rate is 16.5%. This will make it a better cash flowing property.
Depends on LTV .. 16.5% is what you should expect to pay to most private lenders if 1st mortgage is over 75% LTV !

 

[greg12]

QUOTE (workman @ Mar 17 2010, 03:33 PM) Hi
I have an "Agreement forsale" that I am to take over April 1. All the contracts have been signed and the seller has located somewhere else to live. I sent in the Authorization to release information to the mortgage companies on Monday so that the payment can be changed from the sellers account to mine.

Will it have been an issue if the seller changed the payment account number instead of you? This is one area I have always been nervous about with Canadian banks. Mr LeGrand did say that even though they might threaten to call the loan due, they almost never do. It will be interesting to see how this turns out. Please keep us posted Jody.

 

[workman]

Hi everyone

Just to update the problem with the lender calling the loan due. Once I spoke with the regional manager and explained to them what was happening and what an "Agreement for Sale" was they are fine with the process. So I now have the home and am placing a RTO buyer in the home this weekend.

Thanks for all the advice.



Thx

Jody



QUOTE (greg12 @ Mar 21 2010, 11:38 PM) Will it have been an issue if the seller changed the payment account number instead of you? This is one area I have always been nervous about with Canadian banks. Mr LeGrand did say that even though they might threaten to call the loan due, they almost never do. It will be interesting to see how this turns out. Please keep us posted Jody.

 

[JimWhitelaw]

Great news. Congratulations on your success!

 

[greg12]

Wow nice ending Jodi congrats! I am curious if you actually requested to speak to upper management or if you were passed to the Regional Manager as part of their procedure. I am sure that the motivation of a mortgage clerk is to follow the "official" written rules of the bank.

 

[Debbie]

Congratulations on the deal! Good news that the AFS and seller financing works here in Alberta.
Thanks for the update.

Debbie