Posted by Ever/CA on 4/1/07 6:52pm
Msg #183274
Demand Feature
Has anyone run into a loan that had a demand feature/clause? If so, how did the borrowers take it? Or did you intentionally skip it on the TIL?  I would not want it on my own loan.
Thanks,
Ever
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Reply by Susan Fischer on 4/1/07 7:13pm
Msg #183277
April Fool? n/m
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Reply by Linda_H/FL on 4/1/07 7:15pm
Msg #183278
Re: April Fool? ... I hope so... n/m
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Reply by Ever/CA on 4/1/07 7:18pm
Msg #183281
I don't get it. :(
Why can't it be a serious question? I did use the Orange search button and did not find anything. 
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Reply by ZeeCA on 4/1/07 7:20pm
Msg #183282
seriously you want to explain something to the BO? n/m
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Reply by Ever/CA on 4/1/07 7:21pm
Msg #183283
Thanks! That's the answer I was looking for. n/m
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Reply by ZeeCA on 4/1/07 8:00pm
Msg #183285
Re: Thanks! That's the answer I was looking for. you
are asking what to tell the bo? or?????
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Reply by Ever/CA on 4/1/07 8:14pm
Msg #183287
Re: Thanks! That's the answer I was looking for. you
I was originally asking what you would tell the BO if their loan had the demand feature checked. And from your answer, I assumed you meant, "No, we don't point it out to them.". If that is incorrect interpretation, please explain.
I just thought that it was a big deal if the loan had a demand feature and not pointing it out was equivalent to not pointing out, say, the prepayment penalty. And if I do point it out, they would likely ask what it is.
Thanks,
Ever
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Reply by ZeeCA on 4/1/07 8:42pm
Msg #183291
you are the notary. You are NOT there to explain the loan
or you are UPL... if they question the loan or any part your answer is: Call your LO to explain it to you why it is this way.
jmo, not an attorney
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Reply by CaliNotary on 4/2/07 1:26pm
Msg #183378
Not true at all
Our job as signing agents is to make sure the borrower has a basic understanding of the documents they are signing. Pointing out the terms is most certainly NOT UPL. If you don't understand what a demand feature is, then yeah, it's best to have them call the LO to explain.
But it's no different than pointing out the prepayment penalty, the interest rate, the loan amount, the payment amount, the first payment date, the payment and/or interest rate change date, or the late charges (all the things we should be pointing out to the borrower).
Simply reading something off of a document is not going to be construed as UPL.
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Reply by SueW/Tn on 4/2/07 1:30pm
Msg #183379
Agree with Cali n/m
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Reply by Ever/CA on 4/1/07 7:16pm
Msg #183280
Serious question. Really. n/m
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Reply by Susan Fischer on 4/1/07 8:08pm
Msg #183286
Ok. What does it say? That if the borrower defaults on
the loan, that the entire amount becomes due? Like an acceleration clause?
If so, then what remedy is there for a default? If a contract doesn't have such a provision, there is no way to collect the debt except suing every month for the payment - each month for the remainder of the term. I doubt you'll find a contract without one.
Cheers!
Susie, not a lawyer
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Reply by Ever/CA on 4/1/07 8:17pm
Msg #183288
Demand vs. Acceleration
Hi, Susie. I'm actually referring to the "real" demand feature. Some lenders check the demand feature even though they mean "acceleration". There are loans though that have the "real" demand feature, meaning, the lender can ask for full payment for ANY reason, which is admittedly weird, but that's its definition.
Thanks again,
Ever
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Reply by Susan Fischer on 4/1/07 8:41pm
Msg #183290
Re: Demand vs. Acceleration
Ok, got it. But whatever the terms of the deal, I don't "point them out" to borrowers. And, if I'm asked, I refer explanations of terms to their LOs. Of course, briefly describing the docs is routine...I just loved "Pay, you stay; don't, you won't," offered by one of the sage voices here. Makes folks laugh, 15 pages boiled down to six words...
Cheers,
Susie
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Reply by Dorothy_MI on 4/2/07 8:07am
Msg #183309
I got it down to 4 words
No pay, no stay
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Reply by Ever/CA on 4/2/07 11:29am
Msg #183354
May not be true
The demand feature allows the lender to demand full payment even if the borrowers are paying.
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Reply by Dorothy_MI on 4/2/07 12:14pm
Msg #183367
And where was I wrong
Guaranteed that if they DON'T pay they Won't be staying whether there is a demand feature or not.
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Reply by Ever/CA on 4/2/07 12:43pm
Msg #183374
No pay, no stay
Okay, that may be true in either case. But don't you think that if you said just that, the borrowers would think that as long as they paid, they could stay?
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Reply by KBLedgard_CA on 4/1/07 9:29pm
Msg #183293
I have, although it was not applicable to this particular loan in the end.
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Reply by PAW on 4/2/07 5:54am
Msg #183299
A demand clause allows the lender to demand repayment for any reason. It protects the lender against having low-rate loans assumed by home buyers in a rising rate market just as effectively as a due on sale clause. But in addition, a demand clause permits the lender to raise your interest rate in a rising rate market even when you aren’t selling your house. The lender can force you to accept a higher rate by threatening that if you don't agree, the loan will be called.
A demand clause is also better (for the lender) than an acceleration clause. An acceleration clause allows the lender to call the loan if the borrower violates some contractual provision, such as a requirement that the loan must be repaid upon sale of the property.
The lender requiring a demand clause will no doubt disavow any intention of behaving in such a manner. But in my view you don’t put your head on a chopping block just because the executioner promises not to cut it off.
The Truth in Lending Disclosure has a statement that reads “This loan has a demand feature,” which is checked “yes” or “no.” Some lenders will check “yes”, even though the note has an acceleration rather than a demand feature. Nonetheless, if it is checked “yes”, you want to examine the relevant sections of the note.
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Reply by bfd110_IN on 4/2/07 7:25am
Msg #183304
I worked for a lender (MorEquity division of American General Finance) in the 90's that had a demand feature. They had 5 year demand option that stated that at year 5 the loan woud be reviewed and payment could be requested in full. It stated it in it's note and was a rider to the mortgage. I dont know what happened after year 4 cause AGF shut the division down and transferred all mortgages to the local branches and then couple years later opened Wilmington Finance. Not sure if their loans have a demand feature or not.
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Reply by Dorothy_MI on 4/2/07 12:22pm
Msg #183368
As I've never seen this in a note, exactly what is the wording that they put in the note? Thanks for the info.
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Reply by Leon_CO on 4/2/07 7:47am
Msg #183305
PAW, please give credit where credit is due.
>> The lender requiring a demand clause will no doubt disavow any intention of behaving in such a manner. But in my view ... "you don’t put your head on a chopping block just because the executioner promises not to cut it off." <<
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PAW, I have always respected your knowledge and experience, and what you bring to this board. But if you are going to quote someone, **please give them credit**. I do.
I'm sorry, but I can't sit back idly and let you take credit for something that Professor Jack Guttentag said. And if anyone wants to check for themselves, see page 48 of 'The Mortgage Encyclopedia'.
The honorable and respectful thing to do would have been to say something to the effect of , "According to Jack Guttentag, ..."
Again, I'm sorry. But I had to say something about this. I wrote about the demand feature yesterday, and I gave credit where credit was due. I don't believe in plagiarizing. I even provided a link that shows that just about every word in your post is taken directly from either his website or his book.
The least you could have done was mention his name, or the source where you got your material.
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Reply by Lee/AR on 4/2/07 8:47am
Msg #183312
Re: PAW, please give credit where credit is due.
I hear what you are saying, Leon, but, personally, don't think it's necessary to reference everything. The information is what's needed--not who said it. This is not a published book or article here... it's a message board. Besides, all that referencing could get to be a nuisance. JMHO
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Reply by Dave_CA on 4/2/07 8:56am
Msg #183314
completely agree with Lee n/m
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Reply by Leon_CO on 4/2/07 9:02am
Msg #183316
I strongly disagree
>> I hear what you are saying, Leon, but, personally, don't think it's necessary to reference everything. <<
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There is a huge difference between providing a "reference" and plagiarizing. If you read the article on Jack Guttentag's website you will see that the words are taken verbatim -- word for word.
That is what I am against. At least mention Jack Guttentag's name.
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Reply by Leon_CO on 4/2/07 9:08am
Msg #183319
copyrighted material
Read **every** word in his post. Then follow the link to Jack Guttentag's website, and read the article. At the end of the article you will see the words:
>> Copyright Jack Guttentag 2003 <<
Doesn't copyright mean anything to anyone?
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Reply by MikeC/NY on 4/2/07 9:46am
Msg #183324
Re: PAW, please give credit where credit is due.
I agree with Leon. The source material is copyrighted, did not come from a message board, and in fact has a copyright notice at the bottom of the page. It's only fair to provide an attribution, otherwise you give the impression that the words popped out of your own head
See for yourself - beginning with the second graph in the source, it's a verbatim copy:
http://www.mtgprofessor.com/A%20-%20Options/demand_clause.htm
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Reply by Susan Fischer on 4/2/07 11:28am
Msg #183353
Respectfully disagreeing, Lee. Plagiarizing is stealing
from the originator of the words or ideas, and lying to the reader. Blunt, but true.
A simple reference is all that is required, as it insures the integrity of both authors.
I'm sorry, PAW, I too have a great respect for your contributions, but not at the expense of other people's work passed off as your own.
Cheers,
Susie
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Reply by PAW on 4/2/07 11:50am
Msg #183361
Re: PAW, please give credit where credit is due.
When I quote someone, I always give credit **when I know where it came from**. In this case, I have (had) no idea who said it. It is in a long, long article (part of some other material) I have on demand clauses, features and benefits. There is no indication as to who the author of the text or texts actually is/are.
It certainly may have been Mr. Guttentag, or, as far as I know, it could have been Jack Spratt. As I said, I don't know the source, and rather than quote the provider of the information (which I'm sure was not the original provider), I just wrote what I already have.
I did not follow your link from your previous post, so I was not aware that it was published/republished from some other source.
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Reply by Susan Fischer on 4/2/07 12:57pm
Msg #183376
Re: PAW, please give credit where credit is due.
But there is no indication that you took the info from anywhere. When one reads, "But in my view you don’t put your head on a chopping block just because the executioner promises not to cut it off." in this post, the "my view" is not your view at all...it is someone else's. Had you used quotes, and said you didn't know the original author, but acknowledged you were not, then the problem would have been solved.
Cheers,
Susie
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Reply by Paul_IL on 4/2/07 1:43pm
Msg #183382
Leon! Do better research before you speak!
Hate to be the one to break this to you but I found that exact working was found on nearly 20 plus sites discussing the demand clause so there is a better than average chance that Jack Guttentag may not have been the original author. Instead he likely complied it from elsewhere!
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Reply by Leon_CO on 4/2/07 2:26pm
Msg #183388
Re: Leon! Do better research before you speak!
>> I found that exact working was found on nearly 20 plus sites discussing the demand clause <<
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Sir, with all due respect, I believe that it's you who needs to do better research.
For if you had checked the source of those articles, you would have seen that they all originate from one source: Professor Jack Guttentag.
Dr. Guttentag's articles are syndicated on many different sites, and can be found in many different publications.
So it's no wonder that you found his exact wording on nearly 20 plus sites. They're probably on more than 100 -- around the world.
And if you read Prof. Guttentag's book, you will see those words from that post -- verbatim. I doubt seriously that he would risk his reputation, and the certainty of lawsuits, by publishing and profiting from the copyrighted material of someone else.
Good luck.
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Reply by BrendaTx on 4/2/07 2:58pm
Msg #183393
Re: Leon! Do better research before you speak!
Paul IL - with all due respect, friend, it seems to me that two wrongs don't make a right. We should cite our resources with a "...remember reading this elsewhere, but..." if nothing else. IMHO, of course.
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Reply by David Kral on 4/2/07 10:07am
Msg #183325
3 words
Pay or else.
Cound not resist.
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Reply by Ever/CA on 4/2/07 11:29am
Msg #183355
Again, may not be true...
The demand feature allows the lender to demand full payment even if the borrowers are paying.
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Reply by David Kral on 4/6/07 2:28am
Msg #183922
Demand Note
It is exactly what the language says. The note may be payable on demand. It can state a rate, when interest payments or principal payments are due and may have a state maturity, but it can also be due upon demand by the lender at any time. Many banks still issue these types of loans althought likely not that common for home loans but more personal loans.
Lenders typically exists by their reputation that they have a history of note demanding early repayment. However, that will not do you much good if the lender changes its mind and demands repayment.
Explain it like it is.
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Reply by Ever/CA on 4/2/07 11:44am
Msg #183356
Now that everyone agrees as to what demand really is...
I think we should go back to my original question, which was what to say to the borrower.
I just read Leon's blog and I agree with his suggestion of just pointing it out (I'm assuming he did) but when asked what it means, just refer them to the LO (or whomever). We MUST NOT say "pay to stay" (or whatever variant you use) unless you're absolutely sure (by reading the note perhaps) that the lender mistook the demand feature for "acceleration". Man, even lenders need to be educated on it.
Thanks, all, as Ever (that's my name )
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Reply by James H. Lissemore on 4/2/07 7:19pm
Msg #183420
Re: Now that everyone agrees as to what demand really is...
In New Jersey the Notary sayith naught.
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