I recently purchased a condo with a 15-year fixed mortgage through a small local lender that usually sells their mortgages. When I bought it, the condo was involved in a lawsuit, but that issue has since been resolved. Now, the lender says they might not be able to sell my mortgage as planned and suggested that I might need to pay off this mortgage and seek a cash-out refinance later. This request seems unusual to me. Could there be something in my loan agreement that would require me to do this?
They can’t make you do anything, but if they want to remove the loan from their books badly enough, they might offer you a refinance deal at no cost with a lower interest rate. It’s their problem to solve, not yours.
@Case
Exactly, stand your ground and let them figure it out.
@Case
That’s right, the lender’s issue shouldn’t become your problem. They can handle it internally as other banks do. Never feel pressured to pay off or refinance due to their oversight.
@Case
Refinancing might make it easier for them to handle on their end, but it’s still their responsibility.
@Case
They’re dreaming if they think they can push this onto you without offering something beneficial in return.
Reagan said:
@Case
They’re dreaming if they think they can push this onto you without offering something beneficial in return.
Sometimes lenders do offer to refinance ‘scratch and dent’ loans with incentives like waived fees to avoid bigger losses.
@Case
It’s rare, but a bank can demand loan repayment under very specific conditions usually outlined in the loan agreement.
Jordan said:
@Case
It’s rare, but a bank can demand loan repayment under very specific conditions usually outlined in the loan agreement.
That’s mostly incorrect. Residential mortgages don’t usually include terms that allow for such demands without cause.
Jordan said:
@Case
It’s rare, but a bank can demand loan repayment under very specific conditions usually outlined in the loan agreement.
That advice isn’t applicable here; residential loans are generally not callable without default.
Review your mortgage contract carefully. They can’t compel you to do anything not outlined in your agreement. They’re likely trying to solve their own financial misstep.
Dylan said:
Review your mortgage contract carefully. They can’t compel you to do anything not outlined in your agreement. They’re likely trying to solve their own financial misstep.
Exactly, the loss is on the lender, not you. Loans are usually not callable unless payments are missed. They might try selling it at a discount or even handling it internally.
Dylan said:
Review your mortgage contract carefully. They can’t compel you to do anything not outlined in your agreement. They’re likely trying to solve their own financial misstep.
They’re passing the buck. Don’t let them make their problem yours.
Dylan said:
Review your mortgage contract carefully. They can’t compel you to do anything not outlined in your agreement. They’re likely trying to solve their own financial misstep.
There are rare cases where a loan can be called, but those usually involve fraud or severe misrepresentation, which doesn’t seem to be the case here.
Ask them to point out the specific clause in your loan agreement that would require you to comply. They’ll likely have to deal with this loan by selling it at a discount or holding onto it, which is not your concern.
You’re not obligated to do anything. The lender will have to manage this loan either by keeping it or selling it at a loss. They might offer you a deal to refinance, but the decision is yours.
The lender is trying to shift responsibility onto you for their mistake in underwriting the loan. If they push for a refinance, it should be entirely on their dime, and ideally, they’d offer you a better rate to compensate for the inconvenience.
@Jai
Absolutely, make sure any refinance is to your benefit, or just stick with the current agreement.