Loan Demand Feature: A Guide to Mortgage Disclosures

A mortgage disclosure is a crucial part of the loan process, and it's required by law. The Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) mandate that lenders provide borrowers with detailed information about their loan.

The disclosure typically includes the annual percentage rate (APR), which is the interest rate charged on the loan, and the finance charge, which is the total cost of borrowing. APR and finance charge are calculated based on the loan amount, interest rate, and repayment terms.

The lender must also disclose the total amount financed, which is the amount borrowed minus fees and charges. This information is essential for borrowers to make informed decisions about their loan.

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A demand feature is a clause in your mortgage contract that allows the lender to require immediate payment of the entire loan balance, including principal and interest, at any time. This can be a scary concept, especially if you're not aware of the specifics.

The demand feature is not as common as you might think, and most lenders require borrowers to pay the loan in full if they sell the home, which is covered by the due on sale clause.

There are three types of demand features: Acceleration clause, Due on sale clause, and Demand clause. The Acceleration clause allows the lender to demand full payment if you violate the contract, such as missing payments.

The Due on sale clause means the mortgage is due when you sell the home, and the buyer cannot assume the loan. This is a common clause in many mortgage contracts.

A Demand clause, on the other hand, allows the lender to call the loan for any reason, and you'll know if this is the case because the box will be checked on your Loan Disclosure.

Here's a breakdown of the three types of demand features:

Most lenders require borrowers to pay the loan in full if they sell the home, so the due on sale clause is rather common. The acceleration clause and demand clause are less common, but are worth understanding in case it happens to you.

There are three types of demand features in a mortgage contract. An acceleration clause is the most standard, allowing the lender to call in the loan note to be paid in full if you miss payments or fail to pay insurance.

A Due On Sale clause is another standard feature, which states that if you sell the home without paying off the loan, the loan will be passed onto the new buyer, and you'll still be liable for it until the loan is transferred.

A Demand Clause is the most alarming one, allowing the lender to demand payment in full at any time for any reason. However, it's not standard in most mortgage contracts.

Here are the three types of demand features in a mortgage contract:

A demand feature is essentially the loan's ability to be demanded to be paid by the lender at any time. This feature can be included in various loan documents, such as the Note and Security Agreement.

The consumer loan disclosure explicitly states that "This obligation is payable on demand." This suggests that the loan can be demanded to be paid at any time, which is a key characteristic of a demand feature.

A demand feature can also be triggered by a default, as seen in the Note and Mortgage. These documents state that the lender may declare the entire unpaid principal balance due and payable upon default.

In the case of the consumer note, the president of the bank confirmed that the only time they would call a note due is if there is a default. However, the note itself states that it is "payable on demand", which could imply that the lender has the right to demand payment at any time.

To determine whether a demand feature is included in a loan, it's essential to review the loan documents and understand the specific language used.

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A demand feature in a mortgage contract can have significant implications for your financial stability and repayment obligations. The Consumer Financial Protection Bureau (CFPB) provides guidance on identifying a demand feature on the closing disclosure.

There are three types of demand features in a mortgage contract. The first one is the Acceleration Clause, which is very standard and says that if you miss any contractual obligations like missing payments or not paying your insurance, the lender can call in the loan note to be paid in full.

The Due On Sale clause is another type of demand feature. If you decide to sell the home without paying off your loan, this clause says that the loan will be passed onto the new buyer. You're still liable for the loan until that time, so you can't stop making payments while putting the house up for sale.

The third type of demand feature is the Demand Clause, which is the big, scary one. This clause says that your lender can demand payment in full at any time for any reason, and it's not standard in most mortgage contracts.

Here are the three types of demand features in a mortgage contract:

A demand feature can be a complex and intimidating term, especially when it comes to mortgages. A demand feature allows the lender to demand full repayment of the loan at any time, even if the borrower has been making regular payments.

In contrast, an acceleration clause is triggered when the borrower fails to meet certain obligations, such as missing consecutive payments or violating specific terms of the mortgage agreement. This clause gives the lender the right to accelerate the loan's maturity, requiring the borrower to repay the entire outstanding balance immediately.

The key difference between a demand feature and an acceleration clause is the trigger. A demand feature allows the lender to demand repayment without a specific trigger, while an acceleration clause is activated due to specific borrower defaults or breaches of the mortgage contract.

Here's a summary of the differences between a demand feature and an acceleration clause:

Understanding the difference between a demand feature and an acceleration clause can help you navigate the complexities of your mortgage and make informed decisions about your loan.

Reviewing your closing disclosure is crucial to determine if your mortgage has a demand feature. The Consumer Financial Protection Bureau (CFPB) provides guidance on identifying a demand feature on the closing disclosure.

The loan disclosure section will show more detailed information about the conditions of your loan, including the assumption, demand feature, late payment, negative amortization, partial payments, security interest, and escrow account.

A demand feature allows the lender to demand full repayment of the loan at any time, even if you've been making timely payments. If your loan has a demand feature, the lender can require you to immediately pay the entire loan balance (principal and interest) at any time.

Here are some key points to look for in the loan disclosure section:

Movement Mortgage is a notable exception when it comes to demand features in mortgage disclosures.

All closing disclosures contain a checkbox that says “Your loan has a demand feature”, but Movement Mortgage closing disclosures typically do not have a demand feature.

Movement Mortgage closing disclosures usually have the box next to the demand feature checked “no”, indicating that there is not a demand feature on a mortgage from Movement Mortgage.

This means that borrowers with Movement Mortgage are not at risk of facing unexpected demands for full repayment.

Movement Mortgage does not include a demand feature in their mortgage agreements, which gives borrowers more stability and certainty in their mortgage obligations.

It's essential to review the specific terms and conditions of your mortgage agreement to fully understand the repayment terms and any potential clauses related to repayment.

Loan disclosures provide a detailed overview of the conditions of your loan. This information is crucial in understanding your mortgage agreement and avoiding any potential surprises.

The assumption section of the loan disclosure will tell you whether the loan is assumable, meaning it can be transferred to another person with little to no change in terms, including the interest rate.

A demand feature is also indicated in the loan disclosure, which allows the lender to require immediate payment of the entire loan balance if certain circumstances are met. This can have significant implications for your financial stability.

Late payment fees and penalties are also outlined in the loan disclosure, so it's essential to review this section to understand the consequences of missing a payment.

Negative amortization means that the loan does not fully mature, and any interest payments not met throughout the term of the loan are added onto the original principal balance.

The loan disclosure will also indicate whether partial payments are allowed. If you're unable to make a full mortgage payment, this section will explain how your partial payment will be handled.

A security interest is a crucial aspect of the loan disclosure, which means that if you stop making payments or don't fulfill your mortgage agreement, the lender can take your home and sell it to pay off the loan.

Here is a summary of the key points to consider when reviewing your loan disclosure:

The demand feature in mortgage contracts can be a bit scary, but understanding it can help you navigate the process with confidence.

The demand feature means the lender can call your loan at any point, requiring you to pay the principal and interest due at that time.

There are three different features that can fall under the demand clause: acceleration clause, due on sale clause, and demand clause.

An acceleration clause gives the lender the right to demand full payment of your mortgage if you violate the contract, such as missing payments.

The due on sale clause means the mortgage is due when you sell the home, and the buyer cannot assume the loan.

A demand clause is less common, but it allows the lender to demand payment in full at any time for any reason.

To determine if your mortgage has a demand feature, review your closing disclosure carefully, as the Consumer Financial Protection Bureau (CFPB) suggests.

If the demand feature is checked "yes" on your closing disclosure, it means the lender has the right to demand full repayment of the loan at any time.

There are three types of demand features in a mortgage contract:

Knowing what type of demand feature is in your mortgage contract can help you prepare and make informed decisions about your loan.

A demand feature in a mortgage loan can seem intimidating, but it's not as common as you think. Most lenders require borrowers to pay the loan in full if they sell the home.

The demand feature is less common, but it's worth understanding in case it happens to you. It's not like lenders are just looking for an excuse to get paid in full if you're delinquent.

Lenders may include a demand feature in a mortgage loan if they don't have faith in your ability to pay. This could be due to issues with your employment or credit history.

If you're offered a loan with a demand feature, it's worth asking why your lender is insisting on it. You may be able to negotiate your way towards having that clause removed or at least knowing what to fix before moving onto a new lender.

Here are some reasons why a lender might include a demand feature in a mortgage loan:

These features can give lenders more flexibility, but they can also be confusing for borrowers. It's essential to understand what you're dealing with before signing a loan agreement.