Sub2 and Increased Interest Rates

Hey All.

Personally, I have never seen or heard anything except anecdotal evidence of a lender calling the note because of a DOS clause violation. But, one thing that has been in the back of my head recently is this question.

Will we start seeing banks calling performing notes when or if interest rates climb significantly?

This question isn’t causing me to stick my head in the sand and drop the Sub 2 side of my business. But, I am just wondering if I need to plan for this as a realistic scenario.

What do you guys and gals think.

Cheers

Chris

I honestly don’t think that would be in their best interest. If they do, then just refinance and move forward. Wit that said, the reason I think it would be in their best interest is because so many homes are going into foreclosure, if they call the loan due and no one can make it up, wouldn’t that be a bad loan on them. Yes, it would hurt the seller, but the bank does not want another foreclosure.

I’d like someone else to respond to this, as I am just speculating on this question. Good question by the way…