The Oil Drum

151 comments on DrumBeat: July 23, 2006

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AlanfromBigEasy on July 23, 2006 - 1:29pm

If your mortgage payments, as outlined in the mortgage contract, are on-time, and every other contract covenant (property taxes paid, insurance in force) you cannot be foreclosed upon.

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TechGuy on July 23, 2006 - 4:14pm

>f your mortgage payments, as outlined in the mortgage contract, are on-time, and every other contract covenant (property taxes paid, insurance in force) you cannot be foreclosed upon.

This is incorrect. A Mortgage lender can forclose at anytime. They are lending you money just like a bond investor, If they no longer wish to loan money to you they can withdrawl from the loan at anytime. A borrowers option would be to find another lender.

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AlanfromBigEasy on July 23, 2006 - 5:16pm

A bond investor (holder) cannot issue a call either. Only the bond issuer (debtor) can decide to pay off early, and the times and premium paid for doing so (paying off early) are clearly set out in the prospectus.

In the special case of convertiable bonds, the bond holder can convert their bond to stock in the company at the holders option. Again with clearly spelled out dates and conversion ratios.

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ThatsItImout on July 24, 2006 - 4:01am

Alan, you are on your game here, your right, despite the hysteria loose in these part of the woods, the power of contract still stands for something....on someone being a few payments shy of being payed off and being foreclosed upon, where did thier equity go? One assumes that that they could take a loan for some portion of the property and shake off the first lender....

Of course, if they have already refinanced multiple times they could not, given that they may be within a few payments of having the first mortgage paid, but still owe a considerable amount on the property, perhaps even more than it is worth....

Roger Conner known to you as ThatsItImout

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