Real Estate Agent · NH & MA · Member since 2021 · 457 posts · 291 votes
So I've listened to several podcasts on this topic but can't remember if there was a way to know for sure that a lender wouldn't call the loan due if there was a due on sale clause and an investor or regular buyer tries to assume the current mortgage?
From what I understand the lender usually doesn't want to take a loan that is performing and making money, and turn it into a non-performing loan, so they wouldn't want to call it due and cause potential problems. However, with so many people now having 2 or 3% interest rates on their loan, and current rates being near 8%, would these lenders now have incentive to call the loan due or force the new owner to refinance if they tried to assume the 3% mortgage?
So I've listened to several podcasts on this topic but can't remember if there was a way to know for sure that a lender wouldn't call the loan due if there was a due on sale clause and an investor or regular buyer tries to assume the current mortgage?
From what I understand the lender usually doesn't want to take a loan that is performing and making money, and turn it into a non-performing loan, so they wouldn't want to call it due and cause potential problems. However, with so many people now having 2 or 3% interest rates on their loan, and current rates being near 8%, would these lenders now have incentive to call the loan due or force the new owner to refinance if they tried to assume the 3% mortgage?
Thanks for any insights on this BP!
You have analyzed wisely. Sure, if banks want to, they can do a cross reference on their holdings to see which loans have changed title and call the loan due.
They send a letter giving you 30 to 60 days to correct title and if you don't in that timeframe they can foreclose. You can refinance, sell, work with the lender to see if they will continue taking payments, transfer the property back to the seller, etc.
If the mortgage payments are being made, banks aren't going to touch it in my opinion...there are plenty of folks out there (even with a 3% rate) defaulting or are on the brink of defaulting, so the banks have enough on their hands without worrying about a performing mortgage.