So far I've only used 2 lenders for my financing. One said that my loans could not be called. The other lender said, "technically yes, but I've never seen it here in 10 years if you keep making your payments on time."
My questions are, why do banks typically call loans? Is there anything a borrow can do to prevent it with a lender already in place? Is it even anything to worry about? Should I only focus on loans where the note cannot be called?
You see where I'm going. Just trying to get some general info.
Trying to revive this thread because I'm also wondering about this. I'm just starting out (no properties or loans yet). Is this common language on a typical 30 year fixed in 2020/2021? I just found out about Dave Ramsey's situation where all his loans got called decades ago and it's a concern for me. I just don't understand why a bank would call a traditional loan for SFH/2-4 plex if the buyer put 20% down and is current on all mortgage payments. Is there a way to avoid this clause or potential scenario by going to another lender?
I understand one must understand ALL of the loan details but I'm not sure how to find the answers of these questions without actually finding a property and right before signing with the bank.
Lastly...is banking loan calling a possibility with most commercial loans where the buyer is putting 25-30% down? I'm not looking for legal advice from the BP community. Just looking for some general advice and knowledge.
A traditional 30 year loan can Not be called due unless you violate the terms....non payment of payments, no insurance, transfer title, etc. Some commercial loans Could be called due to your worsening financial status but these are rare. The loans can not be called arbitrarily.
@Evan D. To add to the above, yes usually can't be called unless you violate the terms of the loan, and typically transferring title is a violation and the bank could call it due. Many posts on BP about this whether or not it would actually happen.
Most commercial loans will allow LLC's. They can call for other reasons as Wayne mentioned. I have a few commercial loans and I'm required to send over a copy of my tax returns each year. I always send them and get confirmation they're received, and nothing beyond that. Been doing that for over 15 years now. So extremely rare. I did have one time during the crash around 2009 / 2010 they required a re-appraisal that I had to pay for ($1500 for commercial), but all was good.
Thank you both for the clarification!
"My questions are, why do banks typically call loans? Is there anything a borrow can do to prevent it with a lender already in place? Is it even anything to worry about? Should I only focus on loans where the note cannot be called?"
1) Find it hard to believe a loan can never be called
2) Main reasons are non-payment (even if it's stuff like impounds for taxes/insurance) and "due on sale". Due on sale would be trying an off-title loan assumption or master least kinda deal.
Now, do they have people actively going out and auditing loans to make sure you're keeping up what you said when you took out the loan, probably not. Which is why you don't want something like a non-payment or change in title issue happening.
Had similar questions. Has anyone experienced banks recalling loans for example during the crisis of 08’? If so what additional advice is out there to safeguard against this? Does this make you even more susceptible when you have portfolio loans?