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Has any NZ bank ever recalled a mortgage....?

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  • Has any NZ bank ever recalled a mortgage....?

    If you look at your mortgage loan agreement, you will see the bank can at any time recall the loan from you....even if you never missed a payment and are an A+ customer.

    I want to ask - whether this has ever happened in NZ? Or any other country?
    What do you think could bring this on?

    This could happen if you are with a bank or lender that goes bust...?

  • #2
    Nothing.

    When they need to do that, calling in the loan will not work.

    They will not get the money back if you have not got it, and the house is not worth it.

    so... there is no point doing it.

    Sleep easy.

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    • #3
      Cheers McDuck
      Good then...nothing to worry about.
      But there is probably a good reason why they would bother putting this in the contract.

      I was thinking that IF the lender was very cash poor, and needed to sell the house from under you, would they.....knowing it has not happened is good.

      Cheers

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      • #4
        The only concern would be if you had a revolving credit and needed it. If they froze it you suddenly wouldn't have access to the funds
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        • #5
          Yes it has happened. I heard about a case maybe 18 months ago where the bank forced someone to sell an investment property that they had never missed a payment on.
          You can find me at: Energise Web Design

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          • #6
            Originally posted by drelly View Post
            Yes it has happened. I heard about a case maybe 18 months ago where the bank forced someone to sell an investment property that they had never missed a payment on.
            Any idea what the reason was behind it?

            I guess ya would just go to another bank and get a new loan... would annoy ya if you had a nice low rate locked in.
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            • #7
              I don't know details but it was apparently something to do with low equity and their *new* perception of his ability to service the loan.
              You can find me at: Energise Web Design

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              • #8
                Look, this happens all the time.

                One reason might be that a bank has a whole bunch of crappy loans, they need cash, so they tap their BEST clients on the shoulder knowing they can pay!

                David
                Squadly dinky do!

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                • #9
                  Originally posted by Davo36 View Post
                  Look, this happens all the time.

                  One reason might be that a bank has a whole bunch of crappy loans, they need cash, so they tap their BEST clients on the shoulder knowing they can pay!

                  David
                  Banks don't have "Crappy loans"

                  Bank's don't mess around with their "Best" customers.

                  If they did, they would be finished.

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                  • #10
                    I'll have to read my loan contract a little more closely.

                    What's the point of a fixed-interest loan if the bank can, at any time, demand repayment of the full amount, even when you're not in default? The "fixed-interest" is just an illusion.

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                    • #11
                      Banks will usually only call on loans that are "in default" ... remember that loans can still be in default if the payments are up to date.

                      An extreme example would be if a customer had committed or attempted fraud, abused bank staff, or poor account conduct in other related entities.

                      In practice banks don't call up loans for good customers, its just not good for business and benefits nobody. Multiple major NZ banks confirmed in a media article recently that they wouldn't call up loans with negative equity if they were up to date and so long as customers were making all good all obligations.

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                      • #12
                        Just as long as they don't "suspend repayments" on term deposits.

                        Comment


                        • #13
                          Originally posted by McDuck View Post
                          Banks don't have "Crappy loans"

                          Bank's don't mess around with their "Best" customers.

                          If they did, they would be finished.
                          I reckon you're 100% wrong, but that's our perogative, to disagree, I guess.

                          I have personally spoken to 3 people to whom this has happened. Back in the 1980s, early 1990s, after the crash.

                          The commonly held belief is that banks will only call in loans if you miss a payment or are delinquent in some way, others have said that here. But think about it, what if you lose your job? Or property values all slide by say 15% and you don't have much equity?

                          There's actually heaps of reasons why this happens. Just look at the mortgagee sales in the papers. The banks don't care too much about their reputations, they care more about the money.

                          Anyway, believe what you wish.

                          David
                          Squadly dinky do!

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                          • #14
                            I agree David. I know many older investors who were bankrupted post 87 by banks and mezz funders. It is not uncommon.
                            I have a developer friend who had 3 loans recalled in July and was not in arrears on anything. He may yet go under.

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                            • #15
                              interest only loans

                              I do recall a mate of mine landing himself in trouble after the bank refused to refinanace his interst only loans after the five year term had ended.
                              I remember him warning me about interest only loans and advising me to stick with P&I mortgages.
                              He approached several banks about refinancing, but I think the concern was his low equity position.
                              He did lose all of his assets, including his own home. It was a sad situation that saw him leave for Auss. He started again, and is by all accounts doing very well.
                              I heeded his advice and have always stayed with P&I loans over a 30 year term.

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