I'm no financial expert but I would assume that the answer is somewhere along the lines of they COULD call in your loans but they'd be mad to do it.Originally Posted by britchick, post: 56713
Say you take out a 100k mortgage with a bank. They've paid that 100k out to the sellers, and the profit is the interest you're going to pay over 25 years or whatever. Sure, there's also a house asset to consider as well but we all know that house prices are diving and people aren't buying them now.
Soooo what do you do if the bank calls in your mortgage? try and sell the house quickly? may not be possible and for some people it may not cover the amount they owe anyway
I mean there's no way you can meet their demand, so they're effectively deciding to lose the interest profit that they'd counted on in their books, AND immediately transfer your good loan to bad debt.
A good mortgage or loan, even now, has to surely be an asset to a lender. Sure, it's different once people start defaulting but before that point, they'd be pretty mad IMHO to try and call in a good loan