Managing finances
Followup To Question Answer About Loan Finance My inlaws took out a 15 year commercial loan at 12% interest. After 3 years they asked for and received a lower rate of 9 .50% for the remaining 12 years of the loan. The bank has no records(according to them )of the change in interest although they acknowledge that it was changed and did give them that interest rate for the rest of the loan. Also it was never filed with the county even though loans are supposed to be ? Now they are at the end of their loan which according to their contract is suppose to end on or about August 2005. The problem being that the bank now says that they will still owe over $11000.00 after their August payment.
They confronted the bank about this 6 weeks ago and the bank is still telling them they don\\'t know why but that my in-laws still owe the extra. Is it legal for a bank to do this even though the contract states otherwise? For the record the paid ontime throughout the loan. Any ideas or advice would be helpful. Thank you, rob Answer - Before I say you have the sky ready to fall on your head OR that you can walk away from this with a paid in full deed; a few questions.
There are many kinds of loans. the most sneaky of them allfor the NON real estate pro, is the interest only loan. ITs interest rate can be negotiated many times but itonly reduces the amount of money the borrower must payper month--it does NOT reduce the amount of the loan. [and you WOULD owe the entire principle]
IF your relatives, instead, borrowed on a PITI loan,principle, interest, taxes and insurance, the most common type loan of all, they have no further debt.
Am not there to read the note. THE note wouldpositively say something like[either]this is an interest only loan, for \\'u\\' dollars withan interest rate of. . . . . . . . .and the entireprinciple amount will be due on \\'s\\' date. -------orthis is a loan for \\'principle amount\\' at the interestof \\'a\\', and the entire amount being paid back is\\'y\\' $ and the entire loan will be paid off on \\'w\\' date.
I will agree immediately that note LANGUAGE is writtenby attorneys for attorneys and is mostly gibberish.
BUT the law says the note must state, "interest only" or principle and interest. .somewhere.
The county must hold all paperwork regarding real estatecontracts, of which notes are one.
WHEN a bank says "we don\\'t know why" ?, it means someoneis inept, or the clerks are not familiar with the transaction.
I would bring in an attorney versed in real estate lawto get to the bottom of this.
YOU can prepare to sue the bank for fraud.
JUST read the note carefully and see if the language INTEREST ONLY LOAN is written anywhere.
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