Is using a line of credit issued on real estate after that real estate has been sold illiegal?

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Is using a line of credit issued on real estate after that real estate has been sold illiegal?

an equity line of credit was opened in 2004. The property was sold in 2005. The equity line remained open. The line was mistakenly accesed and used in 2008-09. The bank realized the mistake in 2009 and closed the account. The credit ws being paid back on regualr payments for a year before the mistake was discovered. The bank has avised that the total amount should be rapid immediatly in full. What are the customers rights?

Asked on April 24, 2009 under Criminal Law, Illinois

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

The bank documents most probably allow for the acceleration of the loan in this instance as a term of default.  Without seeing the documents it's hard to say for sure but I'd be willing to bet that there is a default clause (general or specific) in the loan papers that would cover this.  Technically, the loan would be immediatley due and payable.  

However, it was the bank's mistake and I'm sure you (or your attorney) could work out reasonable repayment terms because of this.  Also, if the loan documents do not cover this situation (unlikely) or if you are able to find a consumer law that's applicable you may be able to stop acceleration of the loan.  This would mean that it is not immediately due and payable.  In these tough economic times I'm sure that some type of arrangement can be worked out, especially if you have been making regular payments as you say.  Frankly, that's more than many borrowers are able to do these days.

Also, not that you mention it,  but if you were thinking about possible criminal liability don't.  It was not your intent to defraud which is evidenced by your continuing payments.  Additonally, the bank created this situation due to it own negligence not by any act on your part.

Before this goes on too long your best bet is to consult with an attorney on this matter.  Find one that specializes in consumer law.  You can refer to www.AttorneyPages.com for help.

 

Best of luck.


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