3 ms·

Wow, thanks; I have never heard of such a contractual clause.

dhimes 16y ago
My understanding is that those clauses (or similar ones) are standard. We have one on our house. The point is, the bank doesn't gain anything, usually, by foreclosing. They are (at least in theory) better off receiving the payments they are certain to get rather than trying to find someone new to make them (for probably a smaller loan amount- because the property wouldn't sell for as much).
- anamax 16y ago
  > My understanding is that those clauses (or similar ones) are standard. We have one on our house. Really? Where and what originating financial institution? I read my notes and I don't remember anything like that. (I found a lot of other things that I wasn't happy about.)
  - dhimes 16y ago
    They call it "acceleration." It's applicable as a "remedy" for certain acts the lender doesn't like. My latest was with GMAC, FWIW. For example, his friend may not have, by law, owned the houses, but may have transfered rights to his business. If the lender somehow knew this and didn't like it (not a "natural person), it may have triggered an "acceleration." Don't know his contract details, just a possible scenario.
- michaelcampbell 16y ago
  Exactly, so what is the point of such a clause? Just to give them a reason to take away the property whenever they want to if such a condition exists?
  - stcredzero 16y ago
    Yes. Not only are you working for the bank, they can fire you whenever they want for no reason.
  - melvinram 16y ago
    I honestly couldn't believe that my friend, who is a very street-smart, intelligent man who built literally an empire in the construction business, would agree to crazy conditions like this. He said that it never seemed like a possibility for him as he was paying down the loans much faster than loan required. I'm really not sure why the banks would do something this stupid to loans that were getting paid on-schedule. My friends theory (just a theory) is that were going to be able to write-off the loan and get part of it back through TARP funds. This way, they'd be able to cash-out faster without loosing much and build up a cash-reserve for uncertain times. I'm not sure what the real story is on why they would pull this kind of nutty behavior.

My understanding is that those clauses (or similar ones) are standard. We have one on our house. The point is, the bank doesn't gain anything, usually, by foreclosing. They are (at least in theory) better off receiving the payments they are certain to get rather than trying to find someone new to make them (for probably a smaller loan amount- because the property wouldn't sell for as much).

anamax 16y ago
> My understanding is that those clauses (or similar ones) are standard. We have one on our house. Really? Where and what originating financial institution? I read my notes and I don't remember anything like that. (I found a lot of other things that I wasn't happy about.)
- dhimes 16y ago
  They call it "acceleration." It's applicable as a "remedy" for certain acts the lender doesn't like. My latest was with GMAC, FWIW. For example, his friend may not have, by law, owned the houses, but may have transfered rights to his business. If the lender somehow knew this and didn't like it (not a "natural person), it may have triggered an "acceleration." Don't know his contract details, just a possible scenario.
michaelcampbell 16y ago
Exactly, so what is the point of such a clause? Just to give them a reason to take away the property whenever they want to if such a condition exists?
- stcredzero 16y ago
  Yes. Not only are you working for the bank, they can fire you whenever they want for no reason.
- melvinram 16y ago
  I honestly couldn't believe that my friend, who is a very street-smart, intelligent man who built literally an empire in the construction business, would agree to crazy conditions like this. He said that it never seemed like a possibility for him as he was paying down the loans much faster than loan required. I'm really not sure why the banks would do something this stupid to loans that were getting paid on-schedule. My friends theory (just a theory) is that were going to be able to write-off the loan and get part of it back through TARP funds. This way, they'd be able to cash-out faster without loosing much and build up a cash-reserve for uncertain times. I'm not sure what the real story is on why they would pull this kind of nutty behavior.