Will the bank really accelerate my loan?

[jjrfm]

I currently have a commercial property mortgage. I am current and have never missed a payment for ten years. I only have 5 yrs left on the loan. I recently got a call from the bank saying they were not going to extend the loan. They are giving me 6 months to pay it off! I looked over my original documents, the payments are calculated 15yr term. The ammoritization schedule shows that the loan maturity date 12/31/2016. The note however does say that the loan matured 12/31/2011. Will they really risk foreclosing on a property that is current?

[Maurice Bedard]

So it sounds like you have a 10 year mortgage note that is just ammortized over 15 years with the right to call the note due at 10. That is unless you have missed payments or you have done a wrap around loan or transferred the mortgage to another party which would be grounds to accelerate the mortgage and call it due.

What does your note say? Is it a 10 year loan?

Invoking acceleration clauses

Few acceleration clauses trigger automatically. Instead, after the conditions in the clause occur, the lender may choose whether or not to invoke the clause. Where a lender gains the right to invoke an acceleration clause due to a borrower’s default, the lender may lose that right if the borrower corrects his or her default before the lender actually invokes the clause. In cases involving defaults for failing to make timely payments, tender is usually just as effective as actual payment at preventing the lender from invoking an acceleration clause.

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Transfer and sale

Some mortgages have clauses that allow acceleration if the borrower sells or transfers the mortgaged property. These clauses are intended to protect the lender’s security interest in the mortgaged property. Accordingly, some of these “due-on-sale” and “due-on-transfer” clauses only allow acceleration if the sale or transfer would impair the lender’s security interest, or if the borrower fails to get the lender’s consent in advance. These types of clauses may not be triggered if property ownership transfers because the borrower died and the property passed to his heirs. Due-on-sale and due-on-transfer clauses are regulated by the federal Garn-St. Germain Depository Institutions Act of 1982. 12 U.S.C. § 1701j-3(b)(1). The act only affects mortgages of real property.

Acceleration clause | LII / Legal Information Institute