Posted on 10/23/2005 12:24:56 PM PDT by ex-Texan
California Security Instrument (Form 3005): PDF
Multistate Fixed Rate Note (Form 3200): PDF
If I were to sell my house to a third party, after the value of the house had dropped below the loan amount, and the bank declined to allow the third party to assume the loan, then they could possibly accelerate ("call in") the loan, thus forcing me to either refrain from selling, or scrape up the difference between the new sale price and the remaining principal on the loan.
But so long as I am living in my home, am making the payments, and am not negligent in the upkeep or insurance, the lender cannot accelerate the loan, regardless of the equity situation.
A "non-performing loan" is one that is not being serviced by the customer - the lender isn't seeing a return on their investment.
An "underperforming loan" is one which is earning the lender less than the lender could get with the principal under current market conditions - the lender isn't seeing an optimal return on their investment.
The lender is entitled to recourse given the former, but has to just suck it up in regards to the latter.
Though I'm directly affected by the topic, its way outside of my normal milieu, so I speak under correction.
So "underperforming" means high debt to equity ratio?
I've got a relative with a $4.5 million house in Naples,FL; whose closing was delayed due to Wilma. Hope they still have something to sell.....
Nope. they will go down with the house... There will be such tremendous loss statements, for these banks, that no profits can be seen. But, the deeds will be in their back pockets. The south WILL rise again! So will the north, and the east and the west, and everything between!
It will destroy the credit ratings, that many people sought so hard. Now, without it, they will have to face the reality of paying cash. It CAN be the best thing to happen to them.
I got in trouble in the 80's, with debt. I was building houses, in NC. Now, I have a debit card... and a check book (with cobwebs on it). I owe nothing, but current invoices. I have accumulated five times the assets I had, when everything was held in the banks pockets...and, now, I hold the deeds!
I buy land, if anybody wants to sell! But, I only look at bargains!
Thank you for making that distinction. I had used the words interchangeably until now.
Since you are in this business you probably remember what it was like in New England in the early 90's. The two Wang Towers were auctioned for $500,000. What a deal those guys made. Theirs parents and in-laws mortgaged their homes to scrape together the cash. But it wasn't just luck. They worked full-time for John Handcock real estate division apparently. They probably don't have to work now! LOL
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