When the collateral is forfeited due to non-payment of loan

[Alexandoy]

I hope you have not experienced this kind of problem. When we were prospecting a house via bank mortgage we were lucky to find one that we liked with a cooperative owner. From the asking price of 2 million the owner agreed to my wife’s offer of 1.6 million (in our currency).

When the deal was finalized the owner admitted that the property is a collateral for a loan. Worse, the loan was unpaid for months. It is fortunate that my wife wanted to try to talk to the lender. The principal amount was 250,000 but the balance with interest and penalties was 410,000. We paid the balance in cash and we got the title that we submitted to the bank for the mortgage. It was a scary situation.

 

[sincerem]

That's why i wouldn't involve myself in a deal that has to do with loan borrowing from the mortgages or money lending organization. The penalty is high when i fail to meet up deadline. I just prefer to manage whatever i have, work hard in life to never engage in loan borrowing from any one or in the mortgages.

 

[Augusta]

Well, you were lucky to have been able to pay off the balance to be able to get the property. If not you would have been in a huge trouble because you might just have to forfeit that property. Collateral for a loan can be auction when there’s a renege in full payment. I’m sure that was the initial agrrement

 

[Sammyesx]

That is just the issue with acquiring loans, most of the collateral is of very high value compared to the amount of money being received as loan, which in a situation of inability to pay back, the collateral might be lost. Good thing in your case you were able to pay. Personally if am in a situation where I have to get a loan I will prefer selling the collateral than using it to get a loan.