Bank Of America Calling Loan Due

[TSH_Investor]

I have a Sub2 house with a Bank of America loan. Just received a letter from Bank of America stating that they have become aware that the title has tranfereed and I have until October 31 to re-finance or deed to house back to the sellers or foreclosure proceedings will start. On the back of the letter it basically states that they will continue accepting payments and will credit principal and interest but reserve the right to call the loan due if we sign and return the letter. Has anyone out there seen a letter like this? If so, did you sign and return? How did it go?

I am not sure how they found out about title being transferred yet.

[jaymcb2]

TSH as i am sure you know all mortgages have a DOS clause. It is what makes subject to a little more risky.  The bank has every right to call the loan Due.  They generaly find out about the sale when you transfer Insurance.  It is something they are notified of.  The people i work for have not had one called as we do not hide the fact we did purchase the property.  We tend to send out a notice to the finance company stating we purchased the house.  We generally have our real estate lawyer send this to them.  This way if they take payments they can not say they were not notified and since they did not act on the DOS clause after being notified we are in a better positon until we can place a T/B.

Jason

[StreetCopMillionaire]

That's pretty wild.  I've not heard of them doing that, ESPECIALLY in this market...you'd think that they'd be happy to get any payment they could.  Personally, I wouldn't sign anything, but would just continue to make the payments.  But that's going to be your call as you've got the interest in the deal.  Please update and let us know how this one turns out.

[Nick Brian]

Hi everyone. Suppose the title is transferred and in this case it's transferred. Is it restricted by law of the bank? If I pay the loan does it not fulfill the agreement between buyer and bank regardless of the transfer.

[BLL]

Hi everyone. Suppose the title is transferred and in this case it's transferred. Is it restricted by law of the bank? If I pay the loan does it not fulfill the agreement between buyer and bank regardless of the transfer.

Payment history is irrelevant. The bank can legally call the loan due if title changes.

[jaymcb2]

Hi everyone. Suppose the title is transferred and in this case it's transferred. Is it restricted by law of the bank? If I pay the loan does it not fulfill the agreement between buyer and bank regardless of the transfer.

I have heard of BOA calling some due.  ESPECIALLY if they feel the people were trying to hide the transaction in land trusts, or by 2 insurance policies.  Not saying anyone was trying to hide it.  Just saying what i have seen and heard happen.  I personally wouldn't expect banks to call the DOS clause unless intrest rates rise rapidly.  Just my 2 cents

[nsu1997]

My thought is they're bluffing. As StreetCopMillionaire stated they'd be loony to call a loan due on a house with payments being made. I'd certainly be surprised if they went through with this even if you returned the letter (which I wouldn't do, by the way).

Very interested to learn how they found out about the transfer, and also I hope you keep us posted on how this plays out.

[TaxLienGuru]

I'd file the warning away and forget about it.... Call their bluff.

And in the small chance they do get a bug up their butt and call it due, you've got the CYA document signed, right?   

[Jeff Corpuz]

We've done quite a few sub-2's in my 7 years in this business,
and many more sub-2's we've negotiated for others, not one
time have we received a letter or a lender call a loan due.

The most important factor is making sure the payments are received
on time.

Also, how the deal is structured, etc.

We don't send letters to the lender saying, we took over their
property subject-to, but we don't try to hide it either.

Were you ever late on your payment to the bank?

How was this structured? Did you close at a title company? Did you
use a land trust?

What state are you in?

[TSH_Investor]

thanks all for the responses.

Attorney reviewed it and I decided that signing the letter does not create any additional risk for me as they already had the right to all the loan in the first place. I am not sure how they found out about the transfer. I have had the house for over a year now and the insurance has been changed out of the seller's old policy to our own policy for months. No late payments or anything that I think we did to raise a flag (especially this far into the deal). The letter did come from some kind of servicing company at BOA, not from BOA themselves. The only thing I can think of is someone checked the county records and saw the new land trust or that the sellers talked to them. I have not received a call from the sellers indicating that they misunderstood our contract or anything so I don't think it was them.

To answer some of the questions asked:

We are in Texas, Purchased Sub2, Held in Land Trust, we have the CYA doc signed. The letter was sent a few weeks ago and we have received the November statement which we intend to pay. We'll see what happens in the future. I'll keep checking the post and let everyone know what happens.

[isacaro]

Hi,, I am facing similar situation, and this is the case

My question involves real estate located in the State of: Massachusetts.

Hi, a friend of mine got involve in a property with a desperate homeowner who didn't want the house anylonger. He accept X amount of money from my friend. My friend fix up the property and with the help of the mother of the kids of the previous homeowner., my friend was able to modify the first mortgage. Since this happend, my friend has been paying every month the amount agreed to first lien holder. The previous homeowner had in the past a HELOC with BOAf. My friend didn't know about it. With the lady ( Mother of the kids from previous homeonwer ) she was able to talk to the HELoC department and she was told that they will write off the HELOC., Now, this HELOC is with a collection company. Will my friend the one on the deed have a problem if he does not pay the HELOC. He is trying to settle with not luck yet. Will the lien from the HELOC dissapear over the years. The house is totally underwater.

Now, my friend repaired the house and spend around $ 35 K.,The house is fully rented and there is a little positive cash flow of $ 550.00 monthly  After the first lien holder was modified, my friend continue doing the payments. Now, the first lient holder find out through the insurance agent that the insurance policy was written under my friend's name not under the previous homeowner. The insurance agent called my friend and questioned why this happend. My friend just told her that he was helping the homeowner in disttress. The insurance agent just added the previous homeowner as a C0-insured

My friend is thinking it will take forever to recup all his money, he rather stop paying the first lien holder, continue collecting rent until foreclosure procedures starts and do a short sale after with another buyer.

What do you think ?,, please advise, I need your input

Thanks,

Isacaro

[SuzieOC]

I'd file the warning away and forget about it.... Call their bluff.

And in the small chance they do get a bug up their butt and call it due, you've got the CYA document signed, right?   

New to investing what is CYA document? 

[SuzieOC]

thanks all for the responses.

Attorney reviewed it and I decided that signing the letter does not create any additional risk for me as they already had the right to all the loan in the first place. I am not sure how they found out about the transfer. I have had the house for over a year now and the insurance has been changed out of the seller's old policy to our own policy for months. No late payments or anything that I think we did to raise a flag (especially this far into the deal). The letter did come from some kind of servicing company at BOA, not from BOA themselves. The only thing I can think of is someone checked the county records and saw the new land trust or that the sellers talked to them. I have not received a call from the sellers indicating that they misunderstood our contract or anything so I don't think it was them.

To answer some of the questions asked:

We are in Texas, Purchased Sub2, Held in Land Trust, we have the CYA doc signed. The letter was sent a few weeks ago and we have received the November statement which we intend to pay. We'll see what happens in the future. I'll keep checking the post and let everyone know what happens.

BOA or they servicing companies are checking into county records at least in North Central Florida. But they would be damn fools if they called a loan that was paid on time.

[jac1mill]

What is the CYA doc?