"Calling up loans" - PLEASE educate me!

[Sharon in SC]

Some have spoken in other threads about hoping that their loans did not get "called up". I presume this means payoff called for earlier than the original due date.

Over the last two years we've had to unexpectedly rely on a HELOC until our old house sells. (It's been on the market since 6/2 and while we've had a multiple offer situation and other seriously interested parties, the right buyer has yet to present themselves. Our market is not typical in that homes in our area are selling for +1% of average market value. It's just taking longer for them to sell). *Can* the bank holding our HELOC demand we pay it off immediately?! :confused:

[melissel]

If the value of your house drops below your mortgage value, yes, it's possible that they can call it. So far, I've heard of this happening only occasionally, but given what's happening now? I just don't know. I really don't think it's likely for the great majority of people, but I'm well known around here for my focus on the worst-case scenario :001_huh: I'd probably call the lender and ask about the realities of that situation, though others might have better info.

[Sharon in SC]

I did find comfort in this article: http://www.washingtonpost.com/wp-dyn/content/story/2008/08/27/ST2008082703304.html. Again, so far our local market sees our homes holding their value at least and actually growing in value over time.

[forty-two]

According to my dh, it is dependent on the terms of the loan contract whether they can insist on the loan being paid off ahead of time. Even if they *can*, they probably won't unless they themselves are cash-strapped. So your best bet - to see if calling it up is a possibility - would be to either go over the contract yourself, or call the bank to ask.

[melissel]

I did find comfort in this article: http://www.washingtonpost.com/wp-dyn/content/story/2008/08/27/ST2008082703304.html. Again, so far our local market sees our homes holding their value at least and actually growing in value over time.

Oh, thank you for sharing that. My DH will be very interested to read it. So I guess, the bottom line is that they may revoke or curtail your line of credit, but they can't force accelerated repayment unless you're seriously delinquent.

[Kelli in TN]

If the value of your house drops below your mortgage value, yes, it's possible that they can call it. So far, I've heard of this happening only occasionally, but given what's happening now? I just don't know. I really don't think it's likely for the great majority of people, but I'm well known around here for my focus on the worst-case scenario :001_huh: I'd probably call the lender and ask about the realities of that situation, though others might have better info.

What if it is not the mortgage you are worried about, but rather consumer debt?

We live in an area that did not see the huge housing price ballooning. Our house is modest and we have been here for 8 years. I don't think we are such very bad shape as far as our mortgage goes.

But consumer debt? Oh. my. goodness. What could happen to people like us?

[melissel]

What if it is not the mortgage you are worried about, but rather consumer debt?

We live in an area that did not see the huge housing price ballooning. Our house is modest and we have been here for 8 years. I don't think we are such very bad shape as far as our mortgage goes.

But consumer debt? Oh. my. goodness. What could happen to people like us?

I don't see the same thing happening to consumer debt, because that typically is not secured the way a mortgage is. Mortgages are given based on the value of the home. Consumer debt is credit extended based on your creditworthiness alone, really. I don't think any lenders would be allowed to call those just for the heck of it. I could very well be wrong though! Besides, it's not in their best interest to have you repay immediately. They want your interest payments, late fees, over-credit-limit fees etc. to add up.

[Sharon in SC]

Oh, thank you for sharing that. My DH will be very interested to read it. So I guess, the bottom line is that they may revoke or curtail your line of credit, but they can't force accelerated repayment unless you're seriously delinquent.

That is exactly how I read it. The freedom to revoke or curtail the line of credit, too, has to be for very distinct reasons (i.e. the home losing value). Otherwise, things should stay as they are if I'm reading this correctly.

[Kelli in TN]

I don't see the same thing happening to consumer debt, because that typically is not secured the way a mortgage is. Mortgages are given based on the value of the home. Consumer debt is credit extended based on your creditworthiness alone, really. I don't think any lenders would be allowed to call those just for the heck of it. I could very well be wrong though! Besides, it's not in their best interest to have you repay immediately. They want your interest payments, late fees, over-credit-limit fees etc. to add up.

As bad as this sounds, that is actually a relief. If I can just be allowed to keep plodding along trying to pay a bit more than the minimum payments each month I can survive. Not thrive, but at least survive.

[melissel]

As bad as this sounds, that is actually a relief. If I can just be allowed to keep plodding along trying to pay a bit more than the minimum payments each month I can survive. Not thrive, but at least survive.

:grouphug: If it makes you feel any better, we're just wrapping up paying off $35K in consumer debt, not including the two cars (one new, one used) that we paid off several years ago. I've totally been in your spot, and it's only by pure luck that we're not right now. Heck, in a few years? We might be there again!