Can a lender foreclose on loan that’s current?

My lender who is a small bank left me an unpleasant message requesting that I sent them my financial records or they will foreclose on my property and that they need it as soon as possible. The bank has been calling me for the last couple months requesting that I send them the payment on the invoice date vs the grace period date. I have had this loan for the last 4 years and it never has been an issue. I will have to refinance the loan though in couple years as it is a balloon mortgage that matures in 2 years.

Asked on August 30, 2011 Illinois

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Whether or not the lender holding the mortgage or trust deed can foreclose upon the security for it due to not providing it financial records as requested would be determined by the terms of the mortgage or trust deed. Read it very carefully in that its terms and conditions control the obligations you owe to the lender and vice versa absent contrary state law.

Most likely the lender cannot foreclose on a current loan just because your do not provide your updated financials. I sense that the current owner of your loan is in a bad financial position and has been audited recently or will be audited soon. This is the reason for the records it wants from you to make it appear more secure from a lending position. There is probably concern about the balloon payment coming due soon.

If you need to refinance the balloon loan in the next couple of years, you might think about doing so now given the low interest rates.

Good question.


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